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TMI Blog2024 (10) TMI 878X X X X Extracts X X X X X X X X Extracts X X X X ..... ITC on the material. labour, installation and other overhead does not falls under block credit under section 17 (5) of the CGST Act, 2017. Hence, applicant is eligible for Input Tax Credit as per Section 16 of the CGST Act, 2017. - SHRI AMIT KUMAR AND SHRI HARILAL PRAJAPATI, MEMBER Represented by : Mr. Dishant Lodhi, Account Officer. ORDER UNDER SECTION 98(4) OF THE CGST ACT, 2017 UNDER SECTION 98 (4) OF THE UPGST ACT 2017 1. M/s. Pashchimanchal Vidyut Vitran Nigam Limited ( PVVNL ), having registered office at Urja Bhawan, Victoriya Park, Meerut, Uttar Pradesh-250001 (hereinafter referred as the applicant ) having GSTIN-09AAECP5610NIZ4, have filed an application for Advance Ruling under Section 97 of the CGST Act, 2017 read with Rule 104 of the CGST Rules, 2017 and Section 97 of UPGST Act, 2017 read with Rule 104 of the UPGST Rules, 2017 in Form GST ARA-01 (the application form for Advance Ruling), discharging the fee of Rs. 5,000/-each under the CGST Act and the UPGST Act. 2. The applicant has submitted an application for Advance Ruling dated 22.09.2023 (received on 13.05.2024) enclosing dully filled Form ARA-01 (the application form for Advance Ruling) along with written stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... system to a new location. (iii) ln terms of Section 40 of the Electricity Act, 2003 ( Electricity Act ) and Clause 4 of the Electricity Supply Code, 2005 ( ES Code ), the exclusive right to carry out deposit works remains with the DISCOMs, as per the technical standards of operation and maintenance of distribution lines specified by the Central Electricity Authority / Central Electricity Regulatory Commission. The deposit works is carried out at the behest of the consumer via two methods: (iv) First method (Deposit work is undertaken by consumers): where entire work with material are arranged by consumer/ intending agencies and installation work is done by the contractors hired by them. Our role is limited to supervise the work in this case. The consumer is required to pay supervision charges and shut down charges to the DISCOM computed at a fixed percentage on total cost estimate and shutdown charges along with GST. As per the current practice, the DISCOM is computing GST on the total estimate of expenditure. (v) Second method (Deposit work is undertaken by DISCOM ): where entire material and installation work is arranged by us on behalf/ instance of consumers/ intending agencies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as custodian of these lines and in our books of accounts and by the amount of construction of lines, customer contribution is credited in our books of accounts. 6. The application for advance ruling was forwarded to Assistant Commissioner, Central Tax Central Excise, Division-Meerut I vide letter dated 13.06.2024 to offer their comments/views/verification report on the matter. Bill no comments in the matter was offered. 7. The applicant was granted a personal hearing on 16.07.2024 which was attended by Mr. Dishant Lodhi, Accout Officer, the authorized representative of the applicant during which he reiterated the submissions made in the application of advance ruling. DISCUSSION AND FINDING 8. At the outset, we would like to make it clear that the provisions of both the CGST Act and the UPGST 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 UPGST Act. Further for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / UPGST Act would be mentioned as being under the CGST Act . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nswer to the above question is yes, then what shall be the value of such supply under the First mode and under the Second mode? c. When deposit work is executed Second method, whether DISCOM is eligible to avail ITC of GST on Material, labour, installation and other overhead ? 14. We discuss the first method where Deposit work is undertaken by consumers: Under this method, the responsibility to undertake the deposit work is on the consumer/intending agencies through the contractors, under supervision of PVVNL. The consumer is required to pay supervision charges to the PVVNL computed at a fixed percentage on total cost estimate. Since supervision charges are recovered by applicant from the consumer under this mode, the same shall, inter-alia, constitute value of supplies as per the GST Act. The further question, however, is whether the cost of works is also includible in value of such supplies. To answer this question, reference needs to be made to certain provisions of the electricity law. i. In this method, the works contract service supplied in course of electric line installation are neither supplied by nor the consideration for same has been received by applicant. The contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s unpaid for the services supplied by him, he can sue only the customer and not the PVVNL. So, there is no liability to pay on the part of PVVNL. ix. As the construction or dislocation work is not made on the behest of PVVNL and there is only a consent or tolerance for such shifting hence the PVVNL is not liable to pay for the expenses incurred in such shifting. Since there is no obligation to pay on part of PVVNL hence the provisions of section 15 (2) (b) of CGST Act, 2017 are not applicable in this case. x. In this case the consideration for works contract services is fully paid by concerned party and there is no shared / part payment by the same. In such cases it is not for having two considerations for a single supply. xi. Accordingly, we are of the view that in the facts and circumstances, where the value of materials and cost of execution of work for installation of electric lines are borne by the recipient of service and the applicant charges supervision fees only, the value of materials and cost of installation shall not be included in the value of supply for determination of taxable value under GST and the applicant shall be liable to pay GST only on the supervision charge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ruling as follows: RULING Question. A. Whether undertaking of deposit works under both modes qualifies to be supply in terms of Section 7 of the CGST Act? Answer : Replied in affirmative Question. B . If answer to the above question is yes, then what shall be the value of such supply under the First mode and under the Second mode? Answer : In first mode, the value of materials and cost of installation shall not be included in the value of supply for determination of taxable value under GST and the applicant shall be liable to pay GST only on the supervision charges. In second mode value of supply will be the value of material and cost of execution work reimbursed on cost basis for installation of for determination of taxable value under GST. Question. C. When deposit work is executed Second method, whether DISCOM is eligible to avail ITC of GST on material, labour, installation and other overhead ? Answer : Replied in affirmative subject to conditions of Section 17 (5) (c) and (d) of the CGST Act, 2017 and other rules. 17. This ruling is valid only within the jurisdiction of Authority for Advance Ruling Uttar Pradesh and subject to the provisions under Section 103 (2) of the CGST ..... X X X X Extracts X X X X X X X X Extracts X X X X
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