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TMI Blog2022 (11) TMI 207X X X X Extracts X X X X X X X X Extracts X X X X ..... part of the work as specified in the agreement made between NHAI and M/s KCC Buildcon Private Limited. From the documents produced by the applicant, it is noticed that all the provisions of Articles 9.0 of EPC Agreement, Letter of Award dated 15th October, 2019 and relevant clauses of scope of work mentioned in the EPC Agreement shall apply on back to back basis to the applicant. In the said article, as it is found, that the contractor shall undertake the work of shifting of any utility (including electric lines, water pipes, gas pipelines and telephone cables) to an appropriate location or alignment and the cost of such shifting, as per estimates prepared by the entity owning the utility and approved by the Authority, shall be reimbursed by the Authority to the contractor. In the instant case, the applicant has entered into the agreement with M/s KCC Buildcon Pvt Ltd i.e., the main contractor for shifting of electrical utilities and for this work, the main contractor is liable to pay the consideration to the applicant. So, in terms of sub-clause (a) of clause 93 of section 2, there can be no dispute that the applicant is supplying the services to M/s KCC Buildcon Pvt Ltd and n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 2022 ,Order Number 12/WBAAR/2022-23 - - - Dated:- 21-10-2022 - MR BRAJESH KUMAR SINGH, AND MR JOYJIT BANIK, MEMBER Applicant s representative heard : Mr. Rishabh Mishra, C.A Mr. Arup Dasgupta, C.A Preamble A person within the ambit of Section 100 (1) of the Central Goods and Services Tax Act, 2017 or West Bengal Goods and Services Tax Act, 2017 (hereinafter collectively called the GST Act ), if aggrieved by this Ruling, may appeal against it before the West Bengal Appellate Authority for Advance Ruling, constituted under Section 99 of the West Bengal Goods and Services Tax Act, 2017, within a period of thirty days from the date of communication of this Ruling, or within such further time as mentioned in the proviso to Section 100 (2) of the GST Act. Every such appeal shall be filed in accordance with Section 100 (3) of the GST Act and the Rules prescribed thereunder, and the Regulations prescribed by the West Bengal Authority for Advance Ruling Regulations, 2018. 1.1 At the outset, we would like to make it clear that the provisions of the Central Goods and Services Tax Act, 2017 (the CGST Act, for short) and the West Bengal Goods and Services Tax Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12%? 1.5 The aforesaid question on which the advance ruling is sought for is found to be covered under clauses (a) and (b) of sub-section (2) of section 97 of the GST Act. 1.6 The applicant states that the question raised in the application has neither been decided by nor is pending before any authority under any provision of the GST Act. 1.7 The officer concerned from the revenue has raised no objection to the admission of the application. 1.8 The application is, therefore, admitted. 2. Submission of the Applicant 2.1 The applicant submits that the Government of India entrusted the development, maintenance and management of National Highway No. 34 including the section from km 48.533 to km 115.272 (approx. 66.72 km) to the National Highway Authorities of India (NHAI). 2.2 The NHAI resolved to take up the Balance work for construction of 4 laning of Barasat - Krishnagar section of NH-34 from km 48.533 to km 115.272 (length 66.72 km) pertaining to Nadia District in the state of West Bengal on EPC Mode (hereinafter called the NH 34 on Engineering, Procurement, Construction ( EPC ). 2.3 The NHAI accordingly invited the proposals (the Request for Proposa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure required to be executed for the successful execution and completion of the Works, to the satisfaction of the Contractor and the Authority. Such Temporary Works shall also include any other temporary works which in the opinion of the KCC/Authority/Relevant Utility Board, the Sub-Contractor is required to execute. 2.7 In the light of the foregoing activities being undertaken by him, the applicant contends as under: a) National Highways Authority of India (in short NHAI ) is set up by an Act of Parliament as an Authority for the development, maintenance and management of National Highways and for matter connected therewith or incidental thereto. b) The National Highway Authority of India ('NHAI') is an Agency of the Central Government which carries out the function of construction of roads and matters incidental thereto. The task of development of highways by the NHAI is a multi-faceted process which involves various phases that must be carried out. In such cases, organizations like the NHAI may get this work executed through contractors. c) The Applicant is currently undertaking electrical utility shifting which is directly connected with construction o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 - g) Works Contract as defined in section 2(119) of the CGST/WBGST Act 2017 is as follows: - (119) works contract means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract; h) As per the above definition, the essential requirements for a contract to qualify as a 'works contract' are: a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of immovable property and ownership of goods used for execution of contract is transferred. Therefore, the above-mentioned criterion needs to be fulfilled for a contract to be regarded as a Works Contract. i) That since there exists a written agreement between the applicant and the contractor for a part of the work of the highway expa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ines, water pipes, gas pipelines and telephone cables) to an appropriate location or alignment, if such utility or obstruction adversely affects the execution of Works or Maintenance of the Project Highway in accordance with this Agreement. The cost of such shifting, as per estimates prepared by the entity owning the utility and approved by the Authority, shall be reimbursed by the Authority to the Contractor. The scope of work of such shifting of Utilities shall be as indicated in Schedule-B-1. In the event of any delay of such shifting on the part of the contractor, no extension of time for completion of the project and no claims, in any manner, shall be admissible on this account against the Authority. m) That on a reading of Article 9 of the Agreement dated 20.05.2020, it is clear that each component of the scope of work as listed in the Agreement has to be carried out by the contractor in order for the Agreement to be fulfilled. Since the Agreement includes the obligations as given in Article 9 of the Agreement as well, it is evident that carrying out the work as prescribed therein is a part of the process and a vital component of the work of construction of a four-lane ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nities and equal level playing fields to business entities and avoid discrimination. Based on this reason, as well as the interpretation of the notification as explained above, it is submitted that the rate that should be applicable on the Applicant should be the same as that of the main contractor for providing the service of a works contract in relation to construction of roads. r) That this intent of the GST Council has also been recognised by the Maharashtra AAR in the case of Shree Constructions, [2018] 97 taxmann.com 317/69 GST 866 (A.A.R. - GST), which has been upheld by the Appellate Authority as well Shree Construction, [2019] 103 taxmann.com 448/73 GST 456 (App. A.A.R. - GST). The relevant text of the Maharashtra AAAR is reproduced below for reference: It is very much clear that any supply of works contract pertaining to the railways including monorail and metro is subject to concessional rate of 12% GST. In the instant case, though the respondent i.e., M/s Shree Construction is providing works contract services to its main contractor who has entered into works contract agreement with railways, the composite supply of works contract being carried out b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent, has drawn attention to the Advance Ruling No. RAJ/AAR/2019-20/34 dated 05.03.2020 pronounced by the Rajasthan Authority for Advance Ruling [2020(37) GSTL 121 (AAR-GST-Raj)]. 4. Observations Findings of the Authority 4.1 We have gone through the records of the issue as well as submissions made by the authorised representatives of the applicant during the course of personal hearing. We have also considered the submission made by the officer concerned from the revenue. 4.2 In the instant case, contract for construction of National Highway pertaining to Nadia District in the state of West Bengal has been awarded to M/s KCC Buildcon Private Limited on Engineering, Procurement, Construction (EPC, for short) mode. The main contractor i.e., M/s KCC Buildcon Private Limited thereafter, has entered into a sub-contract with the applicant for shifting of electrical utilities in respect of the said project. 4.3 The applicant, therefore, has been awarded a sub-contract from the main contractor for shifting of electrical utilities which requires removing of old materials from the project site along with erection of materials/lines. The applicant thus has been awarded to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot question involved in the case is to decide whether the work of such shifting of electrical utilities can be regarded as services provided by way of construction of road or not. Admittedly the Scope of Project in respect of the main contractor means and includes construction of Project Highway which demands shifting of obstructing utilities as and where required and for that purpose, such shifting work can be considered as an ancillary to the main work. However, when the sub-contractor, on being awarded, provides services of shifting of electrical utilities only, can it be said that the sub-contractor is supplying services by way of construction of road. The issue may be examined with an example. A contractor, say Mr X is engaged in construction of a building pursuant to a work order awarded to him by Mr Y. The scope of work of the said contract includes laying of pipe under the ground for water connectivity and Mr X awards that specific work i.e., laying of underground pipeline to Mr Z on sub-contract basis. Admittedly the services provided by Mr Z to Mr X is an ancillary services to construction of building but such services itself, in any way, cannot be considered as service ..... X X X X Extracts X X X X X X X X Extracts X X X X
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