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2019 (3) TMI 1953 - AAAR - GSTExemption from GST - contractors/sub-contractors involved in the construction of Indo-Nepal Border Road - Applicability of N/N. 12/2017-Central Tax (Rate) dated 28.06.2017 (as amended from time to time) - Whether the exemption available to PWD Uttarakhand and M/s NHPC Ld. can be extended to the sub contractor also? - HELD THAT:- Present case pertains to the GST period therefore we have to confine to the notification issued under CGST/SGST Act. With regard to the services rendered to the Government, initially notification no 11/2017 Central fax (Rate) dated 28-06-2017 was issued by which contractor & sub contractor were made liable to pay GST 18%. Further Notification no 24/2017 CT (Rate) dated 21 September 2017 was issued making govt. contractors liable to pay GST 12% - There is no specific entry in the notification no. 12/2019- CT (Rate) dated 28-06-2017 making sub contractor's supply of services to the main contractor as exempt. However, in the process, the sub contractors are to be taxed at the same rate as the main contractor not due to the reason of extrapolation. It is for the ease of calculation of ITC & tax liability, both the entities are made liable to be taxed at the same rate. The serial no. 9C of notification no. 12/2017 (amended vide notification no 32/2017), exempts the services by a govt. entity to another govt. entity. Neither this notification nor any other notification exempts the work contract services from govt. entity to private contractor or contractor to sub-contractor. The observation ni ade by the GST Council in reducing the tax liability of such contractor was made for the ease of calculations. This fortifies the fact that only the notification and the conditions specified therein, determines the taxability on supply of goods/ services. The pre GST circular no 147/16/2011-ST dated 21-10-2011 and Para 29(h) of the Mega exemption notification no. 25/2012-ST dated 20-06-2012 to exempt sub contractor cannot be referred, as Service Tax is now repealed and cannot be applied on the supply of services pertaining to GST regime. Thus the taxability on the sub contractor in such cases have to be decided in view of the notification issued under CGST/SGST Act. The works contract services for the road construction provided by the sub contractor to PWD, Uttarakhand, who in turn is providing works contract services of road construction to M/s NHPC Ltd is not exempted from GST.
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