TMI Blog2018 (9) TMI 854X X X X Extracts X X X X X X X X Extracts X X X X ..... lable to the applicant only if the Works Contract services provided by them are Composite supply of works contract as defined in clause(119) of 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 railways. In respect of Sr. No. 3 of Notification No. 11/2017 dated 28.06.2017 as amended uptill today, even the sub-contractor providing services of composite supply of works Contract in respect of original works pertaining to railways would be covered for concessional rate of GST @ 12% as given under Sr. No. 3 of Notification No. 11/2017 as amended Ruling:- The tax rate to be charged by the sub-contractor to the main contractor would be @ 6% of CGST and SGST each, in the present case - The tax rate to be charged would be 12% in the present case. - GST-ARA-09/2018-19/B-65 - - - Dated:- 11-7-2018 - SHRI B.V. BORHADE AND SHRI PANKAJ KUMAR MEMBER PROCEEDINGS (under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) The present application has been filed under section 97 of the Central Goods and S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in other cases. 2. The contract for original works pertaining to railways remains the same works contract, 3. As there is difference of opinion after reading of press release of 25th meeting of GST council dated 18-01-2018 and notification No 1/2018 dated 25-01-2018, we are not in position to levy correct rate of GST on original sub-contracting work pertaining to railways carried on by us for our main contractor. 4. This advance ruling is sought clarification for rate of tax to be levied by the sub-contractor to main contractor for original contract work pertaining to railways. Further submissions, as reproduced verbatim , could be seen thus- Our Submission is in Part 1 and Part 2 hereunder 1. Part 1 - The Issue put before your honour. 2. Part 2 - The submission and explanation in support of our issue Part 1: Issue a. We are a Works Contractor. b. We execute and undertake composite supply of works contract as defined in clause (119) of section 2 of Central Goods and Services Tax Act, 2017. c. We have been awarded a subcontract by another works contractor to execute the original work of civil construction for Railways. d. As per the schedule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave 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. 12 (x) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017 provided by a sub-contractor to the main contractor providing services specified in item (vi) d above to the Central Government; State Government, Union territory, a local authority, a Governmental Authority or a Government Entity. 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. 12 f. Even though, we being subcontractor providing civil construction services to main contractor effecting original works contract for Railways which is not covered in 9954 (ix) and 9954 (x), we believe that the rate applicable to us. is 12% only which is the rate applicable for Composite supply of works contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rk to be performed by the contractor as well as subcontractor remains same and identical to what is specify in the contract between the main contractor and the employer. 6. It can also be seen from the definition quoted above that subcontractor is not doing anything other but only what is specified in the contract between the main contractor and the employer. 7. As per the definition of agent above a agent is a person who carries on the same business of supply and / or receipt of goods or services or both on behalf of another. Thus we can call a subcontractor as an agent also who is undertaking the same supply of service for main contractor. 8. It can also be said that, the sub-contractor is only an agent of the contractor and the works job undertaken by him passes directly from the sub-contractor to the employer. 9. As the work get transferred directly to the employer by the subcontractor the works contract remains the same and therefore leads to the conclusion that there is only one contract which is undertaken by the contractor as well as subcontractor. 10. In our case, it is the transaction of a works contract, where the property in goods passes directly to the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s prescribed as 12%, Other than these services, rate of tax is prescribed at the rate of 18% as shown in serial number (vi). There is no Specific inclusion of WCS services provided by sub contractor to main contractor. Therefore, it appears from the said Notification No.20/2017Central Tax (Rate) dated 22.08.17 that the category of WCS services provided by sub-contractor to main contractor are not covered by the said notification. (iv) As per amending Notification No.01/2018-Central Tax (Rate) dated 25.01.2018, in para (C) it is substituted that in serial number (ix) and (x) that for Composite Supply of WCS provided by subcontractor to main contractor specified in item (iii) or item (iv) to the Government Entity, rate of tax prescribed is 12%. However, for construction services other than (v), rate of tax is prescribed as 18%. Therefore, Notification 01/2018-Central Tax (Rate) dated 25.01.2018, the services provided by sub contractor to main contractor for railway original works contract services are excluded from the main entry (ix) and (x) of the said notification. All other construction services other than specified services are therefore attract rate of 18% tax which includ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of GST is 12% for composite supply of works contract supplied by way of construction, erection, commission or installation of original works pertaining to railways. They are claiming that since the tax rate is 12% for the main contractor, the same rate should be applicable to them too. They have also submitted that Notification No-01/2018- Central Tax( Rate) dated 25-01-2018 has made certain amendments to the earlier Notification No. 20/2017, but has not provided clarification with respect to services provided by sub- contractor to main contractor for railway original works contract services. They have also cited SR.No-12 in press release of 25th meeting of GST council held at New Delhi on 18-01-2018, and stated that the rate of GST applicable to main contractor should be levied by sub-contractor. We find that Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, has specified the rate of central tax to be levied on Intra State supply of services of description specified in Column 3 of the Table in the said Notfn, falling under scheme of classification of services mentioned therein. The relevant clauses (v) as mentioned by the applicant in their favour, of the said Notfn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, commissioning, or installation of original works pertaining to railways. Thus, in respect of Sr. No. 3 of Notification No. 11/2017 dated 28.06.2017 as amended uptill today, even the sub-contractor providing services of composite supply of works Contract in respect of original works pertaining to railways would be covered for concessional rate of GST @ 12% as given under Sr. No. 3 of Notification No. 11/2017 as amended referred above. 06. In view of the deliberations as held hereinabove, we pass an order as follows: ORDER (under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) NO.GST-ARA-09/2018-19/B-65 Mumbai, dt.11/07/2018 For reasons as discussed in the body of the order, the question is answered thus - Q. No. 1 : What Tax rate to be charged by the sub contractor to main contractor on Works Contract Services ( WCS) pertaining to railways original works contract? Answer : The tax rate to be charged by the sub-contractor to the main contractor would be @ 6% of CGST and SGST each, in the present case. Q. No. 2: Whether to charge tax rate of 12% GST or 18% GST? Answ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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