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TMI Blog2022 (4) TMI 817X X X X Extracts X X X X X X X X Extracts X X X X ..... /2017-CTR dated 28.06.2017 - Relying of the said decision of the Appellate Authority and the discussion made, it is opined that the impugned is not covered under Sr. No. 3A of Notification No. 12/2017-C.T. (Rate) dated 28.06.2017, as amended - the first question is answered in the negative. Whether the said contract is covered under the term Earth Work and therefore covered under SI No - Chapter No. 9954 as per Notification No. 31/2017-Central Tax (Rate) dated 13th October 2017? - HELD THAT:- In the instant case, the applicant is rendering composite supply of works contract as defined in clause (119) of Section 2 of the CGST Act, 2017, a fact which is supported by the decision of Maharashtra Appellate Advance Ruling Authority in the case of SMJV - applying the ratio of the said decision and as per discussions made, it is found that such rendering composite supply of works contract involves predominantly earth work that is, constituting more than 75per cent. of the value of the works contract, (also seen from the submissions made by the applicant as well as the jurisdictional officer) - the GMIDC is a Government Entity. In the instant case, the applicant is rendering compo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. If we are covered any of above Notifications i.e. 31/2017-Central Tax (Rate) or 02/2018 Central Tax (Rate) then what is the meaning of Earthwork ? At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression `GST Act' would mean CGST Act and MGST Act. 2. FACTS AND CONTENTION - AS PER THE APPLICANT FACTS: 2.1 M/s. Mahalaxmi BT Patil Honai Constructions JV (Referred to as JV), a GST registered company, situated at 363/11, Balaji Niwas, Deep Bungalow Chowk, Shivajinagar, Pune-411 016, and engaged in Construction of infrastructure projects, was formed on 16/12/2008 to undertake construction of Jeur Tunnel Under (Linking Ujani Reservoir to Sina, Kolegaon reservoir) Krishna Marathwada Irrigation Project, Tal. Karmala, Dist. Solapur a work allotted by Executive Engineer, Lift Irrigation Division, Osmanabad Project ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not been defined under any GST provisions. The Webster Dictionary defines Earth Work as an embankment or construction made of earth specially one used as a field fortification. The Collins Dictionary defines Earth Work as excavation of earth as in engineering construction; a fortification made of earth. The Wikipedia defines Earth Work as Earth work are engineering works through the processing of parts of earth surface involving quantities of soil or unformed rocks. After going through different definitions of earth work, we find that Bulk earthworks include the removal, moving or adding of large quantities of soil or rock from a particular area to another. They are clone in order to make an area of suitable height and level for a specific purpose 2.10 It is evident that the work order is for supply of services with material. It is also seen from the work order that the first four parts of the work order are related with clearing of earth, excavation, supplying and laying of earth and impervious clay. The major part of the contract involves earth work i.e., more than 75% of the work involves earth work. 2.11 Since the major part of the work order, i.e., about 91%, is 'E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a tunnel and that in execution of this construction contract, transfer of property in goods supplied by the Applicants has taken place. In addition, services of excavation have also been provided. 2.17 It is a settled law that a contract cannot be vivisected and each activity be charged to tax separately at independent rates. Therefore, such vivisection of contract as proposed in letter dated 18.01.2022 is not permissible in law. Merely because some or any activity of the work entrusted to the Applicant by GMIDC, is or can be subcontracted by the Applicants is not determinative of composite nature of supply of goods and excavation services, in execution of contract of construction of a tunnel. Therefore, it may be held that the .1t/ and its sub-contractors are eligible for benefit of paying GST @ 5% under Sr. No. 3(vii) and 3(x) of the Notification No. 11/2017-CTR. 03. CONTENTION - AS PER THE CONCERNED OFFICER: OFFICER SUBMISSION DATED 30.07.2021:- 3.1 After verification of the documents, it appears that the said contract does not come under Notfn. No. 02/2018-CTR dated 25.01.2018, as no activity in the said contract is in relation to any function entrusted to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Patil Honai Constructions JV, the applicant, has been contracted to undertake construction of Jeur Tunnel Under (Linking Ujani Reservoir to Sina, Kolegaon reservoir) Krishna Marathwada Irrigation Project, Tal, Karmala, Dist. Solapur, by the Godavari Marathwada Irrigation Development Corporation (GMIDC), Aurangabad. 5.3 The applicant has submitted that, the impugned contract/work order consists of Earth Work, such as Excavation for Tunnel, removing of excavated stuff, fabrication, transporting, providing steel support, rock bolting, reinforcement, fixing of chain link, cement concerting, providing drainage arrangement etc. wherein total earth work is around 91% and remaining 9% is construction work wherein, transfer of property is involved. According to the applicant, impugned activity is a Composite supply of works contract as defined in clause (119) of section 2 of the CGST Act, 2017, where such supply is to a Governmental Authority/Government Entity. 5.4 The applicant has further submitted that, in respect of the impugned supply, it is eligible for benefit of exemption under Sr. No. 3A of the Notification No. 12/2017-CTR dated 28.06.2017, as amended by Notification No. 2/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, the Appellate Authority observed that, 'the services procured by GMIDC was in relation to the work entrusted to it by the Central Government, State Government, Union Territory or Local Authority' in as much as the tunnel work undertaken was very much in relation to the purpose for which the GMIDC was set up. The function and powers of the corporation has been listed in the Maharashtra Act XXIII of 1998 wherein GMIDC has been entrusted with the work of investigation, Planning, Designing of Projects, Maintenance of Completed Projects, Construction of Projects and Irrigation Management of the Major, Medium and Minor projects in the Godavari River Basin, promotion and development of irrigation projects, command area development and schemes for development of hydro electric energy to harness the water of the Godawari river pertaining to the State of Maharashtra and other allied and incidental activities including flood control in the Godawari River Valley. 5.7.5 Citing the various dictionary meanings of the word Earthwork , the Appellate Authority, in the SMJV case, has held that Earthwork includes both, Excavation and Fortification. Further the Appellate Authority has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mended by Notification No. 2/2018-C.T. (Rate) dated 25.01.2018, w.e.f. 25.01.2018. 5.9.1 We find that Sr. No. 3A of Notification No. 12/2017-CT. (Rate) dated 28.06.2017, as amended covers Composite supply of goods and services in which the value of supply of goods constitutes not more than 25 per cent. of the value of the said composite supply provided to the Central Government, State Government or Union territory or local authority or a Governmental authority or a Government Entity by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution . 5.9.2 To fall under Sr. No 3 A mentioned above, the primary requirement is that the supply should be in the form of a 'Composite supply of goods and services'. We have already found above in para 5.8 above that, the impugned activity is a 'Composite supply of works contract' as defined in clause (119) of section 2 of the CGST Act, 2017. Being a Composite supply of works contract, the impugned activity cannot be covered under Sr. No. 3A mentioned above. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2017. 5.10.3 We also rely on the ratio of the decision of the Maharashtra Appellate Advance Ruling Authority in the case of Soma Mohite Joint Venture mentioned above which is squarely applicable in the subject case. 5.11 Further, we find that Notification No.11/2017-CT (Rate) dated 28/6/2017, was further amended vide Notification No. 15/2021-CTR dated 18.11.2021 (with effect from 01.01.2022) and against Sr. No 3, in column (3), in the heading Description of Services , in item (vii) for the words Union territory, local authority, a Governmental Authority or a Government Entity the words Union territory or a local authority shall be substituted that means the words Governmental authority or a Government Entity are omitted. Therefore, with effect from 01.01.2022, the impugned services supplied by the applicant will not be covered under Sr. No. 3 (vii) of Notification No. 11/2021 - CTR dated 28.06.2017 as amended from time to time. 06. In view of the above discussions, we pass an order as under: ORDER (Under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) For reasons as discussed in the bod ..... X X X X Extracts X X X X X X X X Extracts X X X X
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