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TMI Blog2023 (1) TMI 139X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to the reduced rate of tax claimed by the applicant, as stipulated under S.no. 3 (v)(a) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended. Whether the instant supply is a Composite supply? - HELD THAT:- It is seen that the intended works to be undertaken by the applicant is construction of CBD Railway station. Now for the instant supply of Civil works to be undertaken by the applicant to be categorized as composite supply there needs to be supply of goods and services and the same should be a natural bundle of supply of both and supplied in conjunction with each other in the ordinary course of business. No such details of supply of goods for the intended civil works is forthcoming from the letter of acceptance furnished by the applicant. Thus without substantial evidence of the works contracted/undertaken, like materials/ goods to be supplied, related schedules, etc., it is practically impossible for this authority to conclude or for that matter hold that the works undertaken as is forthcoming form the letter of acceptance cum work order' and the tripartite agreement dated 25.4.2022 furnished by the applicant is composite supply' perse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Limited, H.No. 289, Behind C.S.E.B Office, Sunder Nagar, Raipur 492001, Chhattisgarh GSTIN- 22AALCS6689K1ZN. hereinafter also referred to as the applicant] has furnished application in Form ARA-01 dated 23.6.2022 U/s 97 of the Chhattisgarh Goods Services Tax Act, 2017 seeking advance ruling regarding applicability of GST Rate of 12% on receipt of contract for new construction of CBD railway station, platform, parking, building and all other civil constructions within the boundary of the station, as per Entry No.3(v) of Notification No.11/2017- Central Tax (Rate) Dated 28 June 2017. 2. Facts of the case:- 2.1 M/s. Shreejikrupa Project Limited is a company registered under The Companies Act, 2013 and is involved in construction of building and civil works (herein after called the Company). The company has a GST registration in the state of Chhattisgarh. 2.2 The company applied for a Tender for construction of CBD Railway Station in Sector 22, Naya Raipur, Chhattisgarh. The company was awarded the tender as per the prescribed rules by Nava Raipur Atal Nagar vikas Pradhikaran (hereinafter called NRANVP). 2.3 There is a tripartite agreement vide No 03/CBD-Rly-Stn/CE/SE-I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pertains to Railways i) Works Contract The Works Contracts has been defined in Section 2 (119) of the CGST Act, 2017 as 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. The service to be provided as per the agreement and clearly falls under works contract as per above definition which is a contract for 'Construction of railway station, platform, buildings, parking etc' on the land allotted by NRANSCCL in Sector 22 Atal Nagar Nava Raipur. ii) Composite Supply: As per Sec. 2(30) of CGST Act of 2017, 'Composite Supply' is a kind of supply made by a taxable person to a recipient that includes two or more taxable supplies of goods or services or both, or their combination, that are naturally bundled and supplied in conjunction to each other in the ordinary course of business out of which one constitutes to be a Principal Supply. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eople conversant with the subject matter understand it. It is hazardous to interpret a word in accordance with its definition in another statute or statutory instrument and more so when such statute is statutory instrument is not dealing with any cognate subject . Definition of 'Railways' as per section 2(31) of The Railway Act, 1989 as below: (31) railway means a railway, or any portion of a railway, for the public carriage of passengers or goods, and includes- (a) all lands within the fences or other boundary marks indicating the limits of the land appurtenant to a railway; (b) all lines of rails, sidings, or yards. or branches used for the purposes of, or in connection with, a railway; (c) all electric traction equipments, power supply and distribution installations used for the purposes of, or in connection with, a railway; (d) all rolling stock, stations, offices, warehouses, wharves, workshops, manufactories, fixed plant and machinery, roads and streets, running rooms, rest houses, institutes, hospital, water works and water supply installations, staff dwellings and any other works constructed for the purpose of, or in connection with, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Co. [2021] 130 taxmann.com 372 (AAR - KARNATAKA dated 30 July 2021 which has held that the new construction pertaining to railways will be taxable under Sr no 3 (v) of Notification no. 11/2017 dated 28 June 2017. The gist of the advance ruling is that the applicant was awarded a contract with Railways for construction of new building of railway station along with alterations and repairs of existing structure and question raised whether the same is original works and falls under Sr no 3(v) of the notification 11/2017 dated 28 June 2017 (one of the questions for which applicant has applied for advance ruling). The Ld Authority in this case has emphasized on the meaning of 'Original Works' and held in the ruling that: The new constructions involved in the contract are liable to tax at 12% (6% CGST and6% SGST) as per entry no.3(v) of Notification No. 11/2017 - Central Tax (Rate), dated 28-6-2017 as amended by Notification No. 20/2017 - Central Tax (Rate), dated 22-8-2017. 3.7 Thus it was applicant's opinion that in their case the works contract pertains to original works i.e., new construction of CBD Railway station platform, offices, buildings, foot over br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit of tax paid or deemed to have been paid; (e) determination of the liability to pay tax on any goods or services or both: (f) whether applicant is required to be registered; (g) whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both, within the meaning of that term. Further 103 of CGST Act, 2017 stipulates about the ruling pronounced as under: - The advance ruling pronounced by the Authority or the Appellate Authority under this Chapter shall be binding only - a. On the applicant who had sought it in respect of any matter referred to in sub-section (2) of section 97 for advance ruling: b. On the concerned officer or the jurisdictional officer in respect of the applicant. Thus, in view of the above section 103 of CGST Act, 2017, the ruling so sought by the Applicant would be binding only on the Applicant and on the concerned officer or the jurisdictional officer as stipulated above. 7. The applicant in support of their point of view furnished the copy of E-Tender Document for the construction of CBD Railway Station at Sector-22, Nava R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and on being satisfied that it is necessary in the public interest so to do, hereby notifies that the central tax, on the intra-State supply of services of description as specified in column (3) of the Table below, falling under Chapter, Section or Heading of scheme of classification of services as specified in column (2), shall be levied at the rate as specified in the corresponding entry in column (4), subject to the conditions as specified in the corresponding entry in column (5) of the said Table:- TABLE Sl.No. Chapter, Section or Heading Description of Service Rate (per cent.) Condition (1) (2) (3) (4) (5) 1 Chapter 99 All Services 2 Section 5 Construction Services 3 Heading 9954 (Construction services) (i) . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), (vii). (viii), (ix), (x)and (xi) above. Explanation . -For the removal of doubt, it is hereby clarified that, supply by way of services specified at items (i), (ia), (ib), (ic), (Id), (ie) and (if) in column (3) shall attract central tax prescribed against them in column (4) subject to conditions specified against them in column (5) and shall not be levied at the rate as specified under this entry. 9 -]]]] 9.2 The aforesaid Notification No. 11/2017-Central Tax (Rate), dated the 28 th June, 2017 was amended vide Notification No. 03/2022-Central Tax (Rate)New Delhi, the 13 th July effective from 18.7.2022 as under:- GOVERNMENT OF INDIA MINISTRY OF FINANCE (DEPARTMENT OF REVENUE) Notification No. 03/2022-Central Tax (Rate) New Delhi, the 13th July, 2022 G.S.R. 541 (E).- In exercise of the powers conferred by sub-section (1), sub-section (3) and sub-section (4) of section 9, sub-section (1) of section 11, sub-section (5) of section 15, sub-section (1) of section 16 and section 148 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 Heading 9954 Construction services 4 Group 99541 Construction services of buildings 5 995411 Construction services of single dwelling or multi dwelling or multi-storied residential buildings 6 995412 Construction services of other residential buildings such as old age homes, homeless shelters, hostels and the like 7 995413 Construction services of industrial buildings such as buildings used for production activities (used for assembly line activities), workshops, storage buildings and other similar industrial buildings 8 995414 Construction services of commercial buildings such as office buildings, exhibition and marriage halls, malls, hotels, restaurants, airports, rail or road terminals, parking garages, petrol and service stations, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... description shalt be preferred over a more general description. - EXPLANATORY NOTES FOR SUPPLY OF SERVICES UNDER GST [Chapter 99] 9954 Construction services : This heading includes : i. General construction services for all complete constructions. ii. Specialized construction services i.e., services related to parts of buildings or civil engineering works, rather than the complete construction object. .. .. 995421 General construction services of highways, streets, roads, railways, airfield runways, bridges and tunnels This service code includes construction services i. for formations of highways, including elevated highways, roads, streets, other vehicular and pedestrian ways and open car parks; ii. footpaths, traffic-calming structures, cycle tracks, etc.; iii. vehicular and pedestrian underpasses and overpasses; iv. construction or restoration of road surface and parking lots with asphalt, concrete: etc.; v. installation services of crash barriers, low separating walls, traffic signs, etc.; vi. creation, maintenance and signposting of tracks and paths; vii. painting serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be supply of goods and services and the same should be a natural bundle of supply of both and supplied in conjunction with each other in the ordinary course of business. No such details of supply of goods for the intended civil works is forthcoming from the letter of acceptance furnished by the applicant. Thus without substantial evidence of the works contracted/undertaken, like materials/ goods to be supplied, related schedules, etc., it is practically impossible for this authority to conclude or for that matter hold that the works undertaken as is forthcoming form the letter of acceptance cum work order' and the tripartite agreement dated 25.4.2022 furnished by the applicant is composite supply' perse. Accordingly, this authority on the basis of records furnished and available on record, is not in a position to conclusively hold that the works mentioned in the letter of acceptance cum work order issued by Chief Executive Officer, Nava Raipur Atal Nagar Vikas Pradhikaran supra or tripartite agreement, intended to be undertaken by the applicant qualifies being treated as 'Composite supply' as per Section 2 (30) of CGST Act, 2017. 9.7 Now we move on the third ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hole work. The subcontractor will charge GST in the tax invoice raised on the main contractor. The main contractor will be entitled to take ITC on the tax invoice raised by his sub-contractor as his output is works contract service. However, in case the main contractor provides works contract service (other than for plant and machinery) to a company say in the IT business, the ITC of GST paid on the invoice raised by the works contractor will not be available to the said IT Company. From the definition, a work shall be treated as Works Contract if that work is done for land or earth or for immovable property and there is transfer of property in goods involved in the execution of such contract, Immovable property by its very definition means that it cannot be moved and cannot be detached or dismantled from the land or earth and further that dismantling of the some would render it defunct / redundant. Immovable property would include in its ambit land and the things which are attached to or embedded in the land such as buildings, bridges etc. However not everything that is attached to the land would automatically constitute an immovable property. Whether the particular property is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the applicant as provided under Notification supra is applicable only when the said civil work intended to be undertaken by the applicant fulfils all the conditions stipulated therein for being treated as 'Works Contract' as defined under Section 2 (119) of CGST Act, 2017, as discussed herein above. 9.8 The other prerequisite to be satisfied in the instant case is that the supply should be by way of 'construction, erection, commissioning, or installation of original works pertaining to railways, including monorail and metro. Original work is defined in Para 2(zs) of the Notification No. 11/2017-C.T.(Rate) dated 28.06.2017 is that : original works means- all new constructions: (i) all types of additions and alterations to abandoned or damaged structures on land that are required to make them workable; (ii) erection, commissioning or installation of plant, machinery or equipment or structures, whether pre-fabricated or otherwise; From the documents furnished by the applicant and in view of the elaborate discussions above regarding the work undertaken by the applicant as is forthcoming from the same, it is seen that the work awarded to the applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government as well as non-Government. However, for both of them to qualify as ''railway it should be used for the public carriage of passengers or goods. In case for the railways, the track in question is meant exclusively for the private use of the project owners for transport of goods upto/from their plant, the same cannot qualify as railway as it is not used for public carriage of passenger or goods. Hence, even though the said track may be constructed by using Rails as per the specifications of the Railway Act, 1989, the same cannot qualify as fairway and not eligible for exemption provided in the statute. It is actually a private siding as explained in Section 94 of the Railway Act, 1989, which deals with the liability of damage to in transit goods on the owner of the private siding upto the specified point of interchange of wagons between the siding and the railway administration. 9.9.1 Hon'ble Delhi High Court after examining the provisions of the Indian Railways Act, 1989 in the case of DMRC vs. Municipal Corporation of Delhi in the context of levy of local taxes reported in 2008(103) DRJ 369 held as follows: 9. The word Railway as per the above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted for the purpose of, or in connection with, railway. What NRANVP has awarded the applicant is the work of construction of commercial building / complexes/ station/ boundary etc. on the land owned by NRANVP which by no reasoning can be attributable as being pertaining to railways , it not being related to Government railway or non-Government railway. Besides this, on perusal of the copy of drawings of the said project furnished by the applicant we find that at the site where the construction is being undertaken, the applicant appears to have been awarded the construction work of commercial buildings and other business complexes as well, which by no stretch of imagination can be treated as pertaining to railways or works constructed: for the purpose of, or in connection with, railway. Any construction project directly related to railways such as railway line / track, railway siding etc. where railway is involved would be attributable as being pertaining to Railway , which incidentally is not the case here. In the instant construction project being undertaken by the applicant there is neither any involvement of 'Government railway nor any non-Government railway . Just be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b-section (2) of section 97 for advance ruling; b. On the concerned officer or the jurisdictional officer in respect of the applicant. Thus, in view of the above section 103 of CGST Act, 2017, the ruling given in the cited case would be binding only on the Applicant and on the concerned officer or the jurisdictional officer as stipulated above Accordingly on the basis of the above discussions, we come to the considered view that it would be appropriate to conclude that till 17.7.2022, the applicability of Sl.no. 3 (v)(a) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended to the applicant, M/s Shreejikrupa Project Limited, H.No. 289, behind C.S.E.B Office, Sunder Nagar, Raipur-492001. Chhattisgarh GST1N-22AALCS6689K1ZNfor the said work, is subject to the fact that apart from the other stipulated conditions therein as discussed, the works undertaken by them satisfy the condition of it being Composite supply as defined under Section 2 (30) of the CGST Act, 2017, the same are 'Works Contract' as per Section 2 (119) of the Act and that the same pertain to railways . As the applicant has been found wanting in compliance of the stipulations p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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