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TMI Blog2022 (11) TMI 259X X X X Extracts X X X X X X X X Extracts X X X X ..... s, 2017 and Section 97 of KGST Act, 2017 read with Rule 104 of KGST Rules, 2017, in FORM GST ARA-01 discharging the fee of Rs.5,000/- each under the CGST Act and the KGST Act. 2. The Applicant is a Partnership concern registered under the provisions of Central Goods and Services Tax Act, 2017 as well as Karnataka Goods and Services Tax Act, 2017 (hereinafter referred to as the CGST Act and KGST/SGST Act respectively). The Applicant states that they execute government projects on tender basis and their main area of expertise is water supply and underground drainage works. The Applicant has been awarded contract for establishment of 1 x 12.5 MVA, 66/11kV Sub-station at B.V. Halli in Channapatna taluk, from Karnataka Power Transmission Corpor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cant states that the amount is being paid as compensation to the affected as per detailed work award Section V, clause 1.4 of special conditions of contract. Tree cutting, tree cut compensation, crop compensation would be arranged to be paid by the contractor. The owner shall render necessary help for fixing the compensation through horticulture / agriculture department. The compensation charges so paid shall be reimbursed separately by the owner as per actuals. Accordingly the compensation amount is paid and reimbursement as per actuals is received from KPTCL. PERSONAL HEARING / PROCEEDINGS HELD ON 22-06-2022 6. Ms. Vaishnavi, Administration Employee and Duly Authorised Representative appeared for personal hearing proceedings held on 22. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to farmers /land owners during execution of the project. The Applicant states that this compensation amount is not included in the contract amount (work order amount) and cheques are issued to beneficiary based on calculation and rates set forth by KPTCL in consultation with respective departments. On issue of these cheques and on realization of the amount in the beneficiary's account, the applicant raises a bill to KPTCL with necessary proofs and documents for reimbursement of the same. 11. The Applicant has also submitted brief note on the various compensations paid on behalf of KPTCL by them to the beneficiaries and the same is as below.- A) Land Compensation- There are two types of land compensation being paid for which reimburs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... compensation, crop compensation would be paid by the contractor and then the same is reimbursed by the owner as per actuals. 13. Now we proceed to examine whether the applicant qualifies to be a pure agent. In this regard we invite reference to rule 33 of CGST Rules 2017, which is reproduced below:- Rule 33. Value of supply of services in case of pure agent.- Notwithstanding anything contained in the provisions of this Chapter, the expenditure or costs incurred by a supplier as a pure agent of the recipient of supply shall be excluded from the value of supply, if all the following conditions are satisfied, namely,- (i) the supplier acts as a pure agent of the recipient of the supply, when he makes the payment to the third party on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crop compensation) paid to farmers once the cheques issued by the applicant to the farmers are realized in the bank. Now we proceed to examine whether the applicant falls into the category of 'Pure Agent' as per the explanation given under Rule 33 of CGST Rules 2017 mentioned supra. 15.1 The Applicant has emailed word document which states 'Special Conditions of Contract', but the same is not signed by any. However in the main contract agreement, in para 2.0 which lists the contract documents, includes this 'special conditions of contract' under contract documents. The Applicant in their email dated 12.10.2022, has stated that Special conditions of Contract is not signed at the time of concluding the agreement but, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the express feeder line as per norms. Where it is inevitable to cut the crops and trees during the course of execution of project, crop compensation and tree cut compensation is paid to the farmers. Thus the farmers or land owners are paid compensation either for cutting the trees or crops grown in their land or for not growing any trees or crops or to build any structures below the express feeder line. This is the service supplied by the farmers or land owners to the KPTCL and the same is covered under schedule II of CGST Act 2017 which is reproduced below: SCHEDULE II ACTIVITIES OR TRANSACTIONS TO BE TREATED AS SUPPLY OF GOODS OR SUPPLY OF SERVICES 1. ....................... 2. ....................... 3. ....................... ..... X X X X Extracts X X X X X X X X Extracts X X X X
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