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2024 (4) TMI 101

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..... GST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the RGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / RGST Act would be mentioned as being under the "GST Act" A. SUBMISSION OF THE APPLICANT (in brief):- M/s. Jaipur Metro Rail Corporation Ltd. ("JMRC" in short) awarded the contract to M/S. Continental Engineering Corp ("CEC" in short) for the Designing and Construction of Tunnel between Chand Pole and Badi Chaupar and reversal line by Shield TBM, Underground Metro Stations at Choti Chaupar & Badi Chaupar by Cut & Cover Method on East-West Corridor at Jaipur Metro (Phase 1B) at Jaipur, Rajasthan on 5th Oct. 2013. In this agreement the amount quoted was lump sum including all taxes except VAT, the then tax instead of GST, because the VAT was exempt for the JMRC Project vide Notification issued on 06.10.2010 by Rajasthan Government. The Contractor was supposed to pay all taxes, duties and fees .....

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..... re Projects mentioned above. Thus, it may happen that the main infrastructure projects of execution of works contract in respect of roads, airports, railways, transport terminals, bridges tunnel and dams, is sub-divided into several sub-projects and each such sub-project is assigned by the main contractor to the various sub-contractors. In such cases, if the sub-contractors are providing works contract service to the main contractor for completion of the main contract, then service tax is obviously not leviable on the works contract service provided by such sub-contractor." Hence, the above clarifications issued by the CBEC make it clear that there are two categories of sub-contractors for works contract services: (i) those to whom the support services are outsourced and (ii) those to whom part of the main work is outsourced. Work done by (ii) is treated as work of the same nature as the service of the main contractor and the same exemption is available for such work. On the other hand, subcontractors of category (i) provide services that are different in their nature, and these are treated differently. They are, at best, input services for the main works contract service .....

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..... Section 2 of the Central Goods and Services Tax Act, 2017, supplied by way of construction, erection, commissioning, or installation of original works pertaining to metro is liable to the slab of 12% (6% CGST and 6% SGST). State Government exempts from the payment of tax payable on purchases of taxable goods and equipment mentioned in annexure -"A" of the notification, made by registered dealer for exclusive use of in execution of Work Contact for Jaipur Metro Rail Project. As per the contract agreement, Value Added (VAT) and Rajasthan State Entry Tax were exempted. As per Section 15(1) of CGST Act, 2017, the VAT paid was adjusted, and accordingly the value of supply was to be determined. In this matter, JMRC started making payment of GST by deducting the amount Of VAT payable by the CEC (other Party), adjustment of the Central Taxes, CST etc. as per the prevailing laws of the period on the date the agreement was executed, because the amount of taxes included in the cost of the works as per the agreement was kept the duty/liability of the CEC only. The Service Tax portion was part of the Agreement, to be paid by the CEC itself, and accordingly, the same was presumed .....

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..... K.K. Sharma (G.M. Finance),(all are Authorized Representatives of the applicant)appeared for personal hearing. They reiterated the submission already made in written submission. They requested for early disposal of the application. E. COMMENTS OF THE JURISDICTIONAL OFFICER Comments received from the Assistant Commissioner, Div-H, Sector 10, Vidhyadhar Nagar, Jaipur, vide letter V(GST-H) 30 /02/Misc. Reports/25/2021/Pt-1/27 dated 06.04.2023 are as under: - 1. How to assess the net impact of GST on the cost of a pre-GST lump sum contract? Ans- With regard to works contracts where the supply is of both goods and services: Works Contracts executed on or after 1st July 2017 and invoice bill raised on or after 1st Jul 2017 SGST and CGST rates will be applicable. 2. How to compute the value of supply to levy GST of a lump sum work contract entered under pre-GST tax regime? Ans- When invoices are to be raised by the contractor, the value of the bill together with the applicable tax under GST (i.e. SGST + CGST within the State) should not exceed the value that such contractor/ supplier would have billed for prior to 1st July, 2017 inclusive of VAT and Service Tax, if any. Fo .....

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..... "The contract price shall be adjusted to take account of any increase or decrease in cost resulting from a change in the laws of the country." 5) The questions on which Advance Ruling is sought are as under- (i) How to assess the net impact of GST on the cost of a pre-GST lump sum contract? (ii) How to compute the value of supply to levy GST of a lump sum work contract entered under pre-GST tax regime? 6) We find that before the GST Era, the VAT was exempted by the Rajasthan Government and after enactment of GST Act, it was subsumed in the GST including Service Tax, Central Excise duty and many other Taxes so there is increase in cost of CDC. 7) Hence, there is a conflict between JMRC and CEC regarding the computation of the GST liability under the new GST regime and the calculation of the amount of reimbursement for CDC. 8) We find that the applicant submitted that Clause 13.7 (Adjustment for change in Law) of General Condition Clause (GCC) of Agreement states that "The contract price shall be adjusted to take account of any increase or decrease in cost resulting from a change in the laws of the country." So the dispute between applicant and CEC after .....

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