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TMI Blog2023 (7) TMI 572X X X X Extracts X X X X X X X X Extracts X X X X ..... ntract 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. From the terms and conditions of the MoU dated 22.02.2019; it is evident that the activity undertaken by the applicant for the Construction of Jetty for Indian Navy squarely falls within the ambit of Works Contract as defined in Section 2 (119) of the CGST Act, 2017. As per S. No. 6 (a) of Schedule II of the CGST Act, 2017; the composite supply of works contracts as defined in clause (119) of Section 2 shall be treated as a supply of services. Exemption as per Notification No. 12/2017 Central Tax (Rate] dated 28.06.2017 as amended by Notification No. 32/2017- Central Tax (Rate) dated 13.10.2017 - HELD THAT:- The conditions to be satisfied for exemption under the above entry are; a) The supply should be a supply of service; b) The supplier should be a government Entity. c) The recipient must be Central Government, State Government, Uni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax (Rate) dated 28.06.2017 as amended - it is seen that the entry at Item (vi) of SI No. 3 of Notification No. 11/2017 Central Tax (Rate) dated 28,06.2017 as amended has been omitted by Notification No, 03/2022 Central Tax (Rate) dated 13.07.2022 with effect from 18,07,2022. Therefore, the concessional rate of GST of 12% is applicable only in respect of the services supplied as per the said MoU for which the time of supply as determined in terms of Sections 13 and 14 of the CGST Act, 2017 falls between 21.09.2017 and 17.07.2022. The services supplied as per the said MoU for which the time of supply as determined in terms of Sections 13 and 14 of the CGST Act, 2017 falls on or after 18.07,2022 will be liable to GST at the rate of 18% as per entry at Item No. (xii) of SL No. 3 of Notification No. 11/2017 Central Tax (Rate) dated 25.06.2017. - DR. S.L. SREEPARVATHY, IRS SHRI ABRAHAM RENN S., IRS Authorized Representative : Mr Radhesh L. Bhat 1. M/s. Cochin Port Trust [hereinafter referred to as the applicant] is an entity formed under the Major Ports Act, 1963 and is engaged in providing Port Services . The Indian Navy, Naval Base, Kochi (hereinafter referred to as IN) and the Boar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28.06.2017 and not levy tax on invoice on CoPT? 3.5. Whether having regard to the background and details including the scope of work of the Deposit work contained in the MoU entered into between CoPT and IN, whether the contractors engaged by COPT to execute works would be eligible to avail the benefits of reduced rate of 12% GST as per Notification No 24/2017-Central Tax (Rate) dated 21,09.2017, in respect of the services provided by them to CoPT? 3.6 If CoPT is eligible to take the benefit of exemption Notification No 12/2017 dated 28.06.2017 read with CGST (Rate) Notification No. 32/2017 dated 13.10.2017 or the benefits of reduced rate of 12% GST as per Notification No. 24/2017- Central Tax (Rate) dated 21.09.2017 from the date of inception of the work, whether CoPT is entitled to claim the full amount of tax (if exemption notification is applicable) or to claim a refund of the excess remittance of GST (6% if 12 % is the rate applicable) as the case may be, from the date of inception of the project work? 4. The contentions of the Applicant: 4.1. The applicant submits that the Indian Navy [IN] and the Board of Trustees of Port of Cochin, a body corporate under the Major Port Tru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith administrative arrangement such as site discussion room with adequate equipment, provisions and storage for progress monitoring/discussions which may also function as site office of IN . 4.4. The scope of Deposit Work is explained in pages 14 and 15 of the MoU, A statement showing description of various tasks involved in execution of the project and the costs thereof is attached as Annexure -2. IN will pay CoPT engineering and supervision charges at the rate of 7% of actual expenditure for the project along with applicable GST. Pursuant to the MoU as above, the CoPT commenced the work. The said deposit work undertaken by CoPT is carried out by engaging various independent contractors. As per the existing procedure followed, the contractors/suppliers so engaged by the CoPT would raise invoice on the CoPT and CoPT would in turn raise invoices on the IN for the expenditure and also the departmental charge. The suppliers apply GST of 1.8% on the invoices issued to CoPT, CoPT currently raises monthly invoices on IN towards expenditure and also departmental charge of 7% of such expenditure, together with GST at the rate of 18%, being the said activities undertaken falls within the am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, commissioning, installation, completion, fitting out, repair, maintenance, renovation or alteration of a civil structure or any other original works meant predominantly for the use other than for commerce, industry or any other business or profession, the rate applicable would be 12%. In order to fall within the purview of the Notification No. 24/2017 dated 21.09.2017 the contract should be for construction, erection, commissioning, installation, completion, fitting out, repair, maintenance etc of a civil structure or any other original works. The activities undertaken by it, as per the MoU with IN satisfies all the conditions required to be satisfied in Order to qualify as a works contract as defined under Section 2(119) of CGST Act and hence is in the nature of supply of services. Therefore, the construction of jetty for IN squarely falls under the above said category of services provided to the Central Government or a Government authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation or alteration of a civil structure or any other original works meant predominantly for the use other than for commerce, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of,- (a) classification of any goods or services or both; (b) applicability of a notification issued under the provisions of this Act; (c) determination of time and value of supply of goods or services or both; (d) admissibility of input tax 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. 7.5. Section 103 of the CGST Act governs the applicability of Advance ruling wherein it is specified that; (1) 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 subsection (2) of section 97 for advance ruling; (b) on the concerned officer or the jurisdiction officer in respect of the applicant, (2) The advance ruling referred to in sub-section (1) shall be binding unless the law, facts or circumstances supporting the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The first question is regarding the nature of the services provided as per the MoU As per the MOU dated 22.02.2019 the applicant has to execute the project for the Reconstruction of North Jetty after Demolition of existing Jetty at Naval Base, Kochi for Indian Navy on Deposit Work Terms . 7.11. As per Section 2 (119) of the CGST Act, 2017; 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. From the terms and conditions of the MoU dated 22.02.2019; it is evident that the activity undertaken by the applicant for the Construction of Jetty for Indian Navy squarely falls within the ambit of Works Contract as defined in Section 2 (119) of the CGST Act, 2017. As per S. No. 6 (a) of Schedule II of the CGST Act, 2017; the composite supply of works contracts as defined in clause (119) of Section 2 shall be treated as a supply of services. 7.12. The second question raised by the applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Trusts Act, 1963 and sub-section (3) of Section I - Short title, commencement and application reads as follows; An Act to make provision for the constitution of port authorities for certain major ports in India and to vest the administration, control and management of such ports in such authorities and for matters connected there with 1(3) It applies in the first instance to the major ports of Cochin, Kandla and Vishakhapatnam and the Central Government may, by notification in the Official Gazette, apply the provisions of this Act to such other major port and with effect from such date, as may be specified in the notification. 7.18. Further as per Section 3 of the Major Port Trusts Act, 1963 which governs the constitution of board of trustees it is seen that 100% control of applicant is with the Central Government. Hence the applicant falls within the definition of Government Entity and accordingly the second condition is satisfied. The recipient of the services is the Indian Navy, which is the Central Government and hence the third condition is also satisfied. However, there is nothing in the MOU dated 22.02.2019 or in any other document submitted with the application to show that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fitting out, repair, maintenance, renovation, or alteration of- (a) a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession; (b) a structure meant predominantly for use as (i) an educational, (ii) a clinical or (iii) an art or cultural establishment; or (c) a residential complex predominantly meant for self-use or the use of their employees or other persons specified in paragraph 3 of the Schedule III of the Central Goods and Services Tax Act, 2017. Explanation . - For the purposes of this item, the term business shall not include any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities. - Rate - 6 % - Condition Provided that where the services are supplied to a Government Entity, they should have been procured by the said entity in relation to a work entrusted to it by the Central Government, State Government, Union territory or local authority, as the case may be. 7.22. We have already discussed and concluded that the services provided by the applicant is works contract services as defined in s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 32/2017 dated 13.10,2017, can it avail the benefit of exemption notification no. 12/2017 - Central Tax (Rate) dated 28.06.2017, as amended and not levy tax on invoice on IN? Ruling : No. The service provided by the applicant to the Indian Navy as per MoU dated 22.02.2019 is not eligible for exemption under the entry at SI. No. 9C of Notification No. 12/2017 CT (Rate) dated 28.06.2017 as inserted by Notification No. 32/2017-CT (Rate) dated 13.10.2017, Question 3: If, for any reason, the benefit of exemption notification 12/2017 dated 28.06.2017 cannot be availed, whether, having regard to the background and details including the scope of work of the Deposit work contained in the MoU entered into between CoPT and IN, whether CoPT is eligible to take the benefits of reduced rate of 12% GST as per Notification No. 24/2017- Central Tax (Rate) dated 21.09.2017, in respect of the services provided by it to IN under the MoU? Ruling : The applicant is eligible for the concessional rate of GST of 12% [6% -CGST + 6% SGST] as per the entry at Item (vi) bf SI. No. 3 of Notification No. 11/2017 Central Tax (Rate) dated 128.06.2017 as amended in respect of the services supplied as per the MoU ..... X X X X Extracts X X X X X X X X Extracts X X X X
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