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2018 (9) TMI 545 - AAR - GSTLevy of GST - operation and maintenance work order given by such Municipal Corporation - Admissibility of ITC (input Credit tax) of purchases against such work order - Determination of responsibility of municipal authority of discharging such GST Liability payable to the contractor - service Contract where labour job Contribute 95% to 98% if Contract Value and 2-3 % as Oil and Lubricant and pertains Purchase to operate the Existing Plant - Pure Services or not? Whether the Applicant is exempted from payment of GST on Operation and Maintenance contracts/ work orders entered into by them with Navi Mumbai Municipal (NMMC), Panvel Municipal Corporation (PMG), Municipal Council, Pandharpur (MCP) and City & Industrial Development Corporation of Maharashtra, Ltd. (CIDCO)? Whether the Applicant is entitled to Input Credit Tax (ITC), of purchases against such work order and whether it is the responsibility of municipal authority to discharge such GST Liability payable to the Applicant? Held that:- The services rendered by the applicant, as is seen from the terms of the contracts, is a composite contract consisting of supply of services and also supply of goods in the form of materials, spares, consumables, etc., there is clearly a tax liability @ 9% each of CGST and SGST till 21.07.2017 and further @ 6% each of CGST and SGST with effect from 22.07.2017 - it is very clear that the services provided by the applicant are not pure services and rather involve supply of materials and consumables, the supply which is in the nature of composite supply and works contract, is not exempt from levy of GST as per N/N. 12/2017 and is therefore clearly taxable at the rates. With effect from 25.01.2018, the applicant can avail the benefit of the above said Exemption N/N. 2/2018 Central Tax (Rate) dated 25.01.2018 only if the value of supply of goods does not exceed 25% of value of composite supply. A fact to be noted from the submissions made by the Applicant, is that they themselves were aware that, on implementation of GST, 2017 the said supply of Operation & Maintenance work was taxable as per notification no. 11/2017 dated 28.06.2017 and notification no. 20/2017 dated 22.08.2017. However, the Municipal Corporation has disregarded levying of GST on the said work saying it is exempt and have rejected the claims made by appellant. It can be seen from the submissions of the applicant as well as the contracts that along with the services rendered they also supply to the Local Bodies, spares, materials and consumables such as oil, lubricant etc. Hence their services cannot be termed as pure services attracting exemption as per sr.No .3 of under N/N. 12/2017 and the applicant would have to pay the GST on the services provided by them to such Local Bodies - It appears that this ARA has been filed not because the applicant had doubts regarding levy of GST but because the Local bodies have refused to pay them the said GST. Also, the applicant is entitled for Credit for purchases made against the said work orders entered into by them. Ruling:- Under GST Act, 2017, their services attracted CGST & SGST @ 9% each with effect from 01.07.2017 and CGST & SGST @ 6% each with effect from 22.08.20171 Post 25.01.2018, their services would be exempt only subject to fulfilment of conditions that the value of supply of goods does not exceed 25% of value of composite supply. The applicant is eligible for availing ITC (input Credit Tax) of purchases against such work order under the GST Act/ Rules subject to the terms and conditions mentioned in section 16 to 22 of the GST ACT and rules 36 to 45 of the GST Rules, 2017. The liability to pay GST is on the supplier, being a legal liability and no comments are offered in respect of recovery or otherwise from the recipient. Under GST Act, 2017, their services attracted CGST& SGST @ 9% each with effect from 01.072017 and CGST & SGST @ 6% each with effect from 22.08.2017. Post 25.01.2018, their services would be exempt only subject to the fulfilment of condition that the value of supply of goods does not exceed 25% of value of composite supply.
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