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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 ..... ion amount paid to farmers and land owners during the course of execution of work is chargeable to GST as the Applicant does not qualifies to be a Pure Agent. - KAR ADRG 39/2022 - - - Dated:- 27-10-2022 - DR. M.P. RAVI PRASAD AND SRI. KIRAN REDDY MEMBER Represented by : Ms. Vaishnavi, Administration Employee ORDER UNDER SECTION 98(4) OF THE CGST ACT, 2017 AND UNDER SECTION 98(4) OF THE KGST ACT, 2017 M/s. Sree Subha Sales, (hereinafter referred to as The applicant ), No. 1150, 3rd Floor, 13th Cross Road, 1st Stage, 1st Phase, Behind Siddaganga Public School, Chandra layout, Bangalore-560072 having GSTIN 29ADDFS9427R1Z1 have filed an application for Advance Ruling under Section 97 of CGST Act, 2017 read with Rule 104 of CGST Rules, 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 stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ERSONAL HEARING / PROCEEDINGS HELD ON 22-06-2022 6. Ms. Vaishnavi, Administration Employee and Duly Authorised Representative appeared for personal hearing proceedings held on 22.06.2022 and reiterated the facts narrated in their application. FINDINGS DISCUSSION 7. At the outset we would like to make it clear that the provisions of CGST Act, 2017 and the KGST Act, 2017 are in pari-materia and have the same provisions in like matter and differ from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the KGST Act. 8. We have considered the submissions made by the applicant in their application for advance ruling. We have also considered the issues involved on which advance ruling is sought by the applicant and the relevant facts and the submissions made by their authorized representative during the time of hearing. 9. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... down in due course qualifies the land owner to receive compensation from government. The rates for the compensation are decided by the horticulture or forest department, depending on the tree which is cut. Hence Tree Cut compensation reimbursement bills are raised. 12. The Applicant states that as per section V - Special conditions of contract, tree cutting, tree cut 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 authorisation by such recipient; (ii) the payment made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot signed at the time of agreement are binding on them. Para 1.4 of the 'Special Conditions of Contract' is reproduced below:- 1.4 Tree cutting and tree cut compensation, crop compensation, electrical inspectorate charges would be organized 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 by the Contractor shall be reimbursed separately by the owner as per actuals. 15.2 This document can be considered as the agreement with KPTCL to act as his pure agent to incur expenditure or costs in the course of supply of goods or services, assuming that, this document (Special conditions of Contract) is a part of the main agreement. However, the above mentioned para 1.4 of 'Special Conditions of Contract' does not mention anything about land compensation. Thus the first condition to be a pure agent is satisfied only to the extent of Tree cut compensation and crop compensation. 16. The Applicant states that land compensation is paid to the land owner on whose land the express feeder line passes and to any land within 9 meter vicinity on eith ..... X X X X Extracts X X X X X X X X Extracts X X X X
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