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TMI Blog2023 (1) TMI 229X X X X Extracts X X X X X X X X Extracts X X X X ..... el buildings for S T work and other TMS Crew rest room at various five locations within 2.8Km length of siding area in connection with construction of rail infrastructure for providing Railways siding at SECL Kusmunda Project, District Korba, Chhattisgarh for dispatch of washed and raw coal - SAC 995421 covers 'General Construction services of highways, streets, roads, railways, airfield runways, bridges and tunnels' which by their very nature relates to work of civil engineering and there exists all plausible reasons to link the same to the aforementioned work awarded by RITES LIMITED, intended to be undertaken by the applicant. Therefore, the instant supply in question gets aptly covered under SAC 9954 in general. Accordingly, in the case in hand the basic requirement for eligibility to the said exemption as provided under S.no. 3 (v)(a) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended, of getting covered under SAC 9954 stands fulfilled. Whether the instant supply is a Composite supply? - HELD THAT:- 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 goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to railways. - STC/AAR/04/2022 - - - Dated:- 15-6-2022 - SMT. SONAL K. MISHRA AND SHRI RAJESH KUMAR SINGH, MEMBER PROCEEDINGS [U/s 98 of the Chhattisgarh Goods Services Tax Act, 2017 (herein- after referred to as CGGST Act, 2017)] No. STC/AAR/04/2022 Raipur Dated 15/06/2022 M/s Agrawal Buildcon, C/a Agrawal Traders, Main Road, Korba, Chhattisgarh, 495677 (here in after referred to as the applicant) GSTIN-22ASSPA1067D127 has filed an application U/s 97 of the Chhattisgarh Goods Services Tax Act, 2017 dated 02/02/2022 enclosing duly filled in Form ARA-01(the application form for Advance Ruling) along with certain annexure and attachments seeking advance ruling as to- What should be the rate of tax on their work, will it be 12% or 18%? ; What is the current tax rate of tax on their work, Is there any change on rote of Tax since 1.1.2022 or till date. 2. Facts or the case: - 2.1 As forthcoming from the above ARA-01 filed by the applicant, the applicant mainly deal with construction work and it has further been their submission that a firm / party had received a work order from RITES Ltd., and that the applicant too wishes to participate i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peared before us for hearing on 07.04,2022 and reiterated their contention. He also furnished a written submission dated 07.04.2022 along with sample copy of work order which has been taken on record. 5. The legal position, analysis and discussion: - At the very outset, we would like to make it clear that the provisions for implementing the CGST Act and the Chhattisgarh GST Act, 2017 [hereinafter referred to as the CGST Act and the CGGST Act] are similar and thus, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the CGGST Act, 2017. Now we sequentially proceed to discuss the issues involved in the ruling so sought by the applicant and the law as applicable in the present case. 6. Section 96 of CGST Act, 2017, Authority for advance ruling, stipulates as under: - Subject to the provisions of this Chapter, for the purposes of this Act, the Authority for advance ruling constituted under the provisions of a State Goods and Services Tax Act or Union Territory Goods and Services Tax Act shall be deemed to be the Authority for advance ruling in respect of that State or Un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral Tax (Rote) New Delhi, the 28th June, 2017 G.S.R (E).- In exercise of the powers conferred by sub-section (1), (sub-section (3) and subsection (4)] 1 of section 9, sub-section (1) of section 11, sub-section (5) of section 15[,]2 sub-section (1) of section 16 [and section 148] 3 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, and on being satisfied that it is necessary in the public interest so to do, hereby notifies that the central tax, on the intro-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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a sub-contractor to the main contractor providing services specified in item (vii) above to the Central Government, State Government, Union territory or a local authority. 2.5 [***] (xi) .. (xii) Construction services other than (i), (ia), (ib), (ic), (id), (ie), (if), (iii), (iv), (v), (va), (vi), (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 -]]]] 7.2 Thus from the above it gets abundantly clear that for availing the benefit as stipulated supra at 3 (v)(a), all the conditions mentioned therein is to be necessarily fulfilled viz. (i) the service should be under the Heading 9954 (Construction Service) (ii) the supply should be a 'C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services of other non-residential buildings such as educational institutions, hospitals, clinics including veterinary clinics, religious establishments, courts, prisons, museums and other similar buildings 10 995416 Construction services of other buildings nowhere else classified 11 995419 Services involving repair, alterations, additions, replacements, renovation, maintenance or remodeling of the buildings covered above 12 Group 99542 General construction services of civil engineering works 13 995421 General construction services of highways, streets, roads, railways and airfield runways, bridges and tunnels 14 995422 General construction services of harbours, waterways, dams, water mains and lines, irrigation and other waterworks Further, the 'Explanatory Notes to the Scheme of Classif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and commuter rails, street tramways and underground or elevated urban rapid transit systems; ix. railway electrification structures including laying services of ballots, and rails; x. installation services of switch gear, points and crossings; xi. construction services of control and safety systems for railway tracks; xii. construction services of funicular railways and cable car systems; xiii. construction services for airfield runways, including taxiways, aprons and related airport structures other than buildings; xiv. construction of bridges, highway. road and railway tunnels and tunnels for underground railway traffic 7.4 In the instant case under consideration, the applicant has furnished a sample copy of letter of acceptance dated 17.1.2020 issued by RITES LIMITED issued to the said third party / firm, for and behalf of SECL in respect of technical offer opened on 11.7.2019. From the submissions as put forth by the applicant and from the said sample letter of acceptance that RITES LIMITED for and on behalf of South Eastern Coalfields Limited, (SECL), Gevra awarded to the said party / firm it is seen that the work being awarded by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f washed and raw coal. 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 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 sample letter of acceptance furnished by the applicant. Thus without substantial evidence of the works contracted/undertaken like materials/ goods to be supplied, related schedules/detailed write-up on the civil works, etc., it is practically impossible for this authority to conclude or for that matter to hold that the works as is forthcoming form the fetter of acceptance supra, undertaken is 'composite supply' per se. Accordingly, this authority on the basis of records furnished and available on record, is not in a position to conclusively hold that the works, as is forthcoming form the letter of acceptance issued by RITES LIMITED supra, intended to be undertaken by the applicant qualifies being treated as 'Composite supply' as per Section 2 (30) of CGST Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... portion of the whole 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 same 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 parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y when the said civil work intended to be undertaken by the applicant qualifies being treated as 'Works Contract' as defined under Section 2 (119) of CGST Act, 2017, as discussed herein. 7.7 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. 12/2017-C.T.(Rate) dated 28.06.2017 as follows: 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 sample letter of acceptance furnished before us by the applicant, and in view of the elaborate discussions above regarding the work undertaken by the applicant as is forthcoming from the letter of acceptance supra, it is seen that the work awarded to the applicant are 'Original work' as defined in the notificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al position of metro companies. The metro companies facilitate easy and quick movement of people and has positive impact on economic growth, apart from reduction in traffic congestion, pollution, road and parking cost. Reduces both cost and time of travel and improves competitiveness of the city. Services provided by way of construction, erection, commissioning, or installation of original works pertaining to monorail or metro were exempt till 1-3-2016. Thereafter, the said services provided under a contract entered into prior to 1-3-2016 were exempt. Exemption to the said services was withdrawn in Budget, 2016 with a view to minimize exemptions in the run up to GST as exemptions break ITC chain, increase cost and result in distorted tax structure. However, GST rate on most of the services provided to the Govt. which were exempted under service tax has been reduced from 18% to 12% so as to reduce cost of Govt. projects. Service of transportation of passengers by a monorail or metro rail has been exempted under GST so as to reduce the cost of supply of the said public transportation service to the public. Reduced rate of GST of 12% has been extend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rks to be undertaken by them, issued by RITES the subject of work allotted is civil works for of Construction of Kusmunda S T block cabin, East and West Panel buildings for S T work and other TMS Crew rest room at various five locations within 2.8Km length of siding area in connection with construction of rail infrastructure for providing Railways siding at SECL Kusmunda Project, District Korba, Chhattisgarh for dispatch of washed and raw coal , Whether the phrase public carriage of passenger or goods prevents a proposed feeder line of East West rail Corridor from being included in the definition of 'railways' has repeatedly come up for judicial scrutiny involving the issue akin to the case in hand. The courts generally held that the phrase 'public carriage of passengers or goods' cannot be construed in such manner as to exclude from the ambit of 'railways' other works related to Railway. [Cases relied upon: DMRC v. Municipal Corporation of Delhi, 2008 (103) DRJ 369 (Delhi High Court); Commissioner, Central Excise, Raipur v. Anand Construction,2017 (51) S.T.R. 435 (CESTAT, Principal Bench, New Delhi); SMS Infrastructure Ltd. v. Commissioner, Cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entry claimed for exemption supra, that this work must be executed to the Railways but it is sufficient that it must be pertaining to Railways , meaning therein that the supplier and the recipient is immaterial. Thus, we are of the considered opinion that the work intended to be undertaken by the applicant for RITES Limited pertains to railways and accordingly this pre-requisite stands fulfilled. 7.9 In view of the above discussions we come to the considered view that it would be appropriate to conclude that the benefit of the entry at SI.no. 3(v)(a) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 is amended, vide Notification 01/2018 Central Tax (Rate) dated 25.01.2018 and various other amendments from time to time, lastly amended vide Notification no. 22/2021-Central Tax (Rate) dated 31.12.2021 would be eligible to M/s Agrawal Buildcon, C/o Agrawal Traders, Main Road, Korba, Chhattisgarh, 495677 (GSTIN-22ASSPA1067D1Z7), the applicant, subject to the fact that the works undertaken by them are Composite supply and 'Works Contract' as per Section 2 (119) of the Act and if so the applicable GST would be @ 12% effective from 25.01.2018. In cases other tha ..... 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