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2020 (5) TMI 412 - AUTHORITY FOR ADVANCE RULING, RAJASTHANClassification of services - rate of tax - works contract or not - sub-contract - NHAI has executed an agreement with a Contractor for the development of a four-lane highway - applicability of Entry (iv) of Heading 9954 of the Rate Notification - HELD THAT:- The applicant is proposing to submit a bid for shifting / erection of electrical lines only to M/s Sadbhav Jodhpur Ring Road Pvt. Ltd who is the main Contractor of NHAI. Thus the activity to be carried out by the applicant is restricted to shifting / erection of electrical lines only - Further, the details mentioned in the Article XI of the agreement as well 05.12.2019, as description of work mentioned in said letter dated specifically indicates the independent nature of work to be carried out by the applicant for which such cost will be borne by the authority or by the owning entity of the respective utility. As per the details mentioned in the Article XI of the agreement and description of work mentioned in the letter dated 05.12.2019, the supply made by the applicant is regarding Electrical utility shifting / erection of 11 KV < lines and is of independent nature. Further, such cost will be borne separately by the Authority or the utility owning entity. Hence, the payment of the above said work which will be made to the concessionaire (Main Contractor) is not part of the/main contract (concession agreement) which also indicates the work is of independent nature. The entry number 3(iv)(a) of the Notification No 11/2017-CT (Rate) dated 28.6.2017allows concessional rate in case of works contract is for construction of road, bridge, tunnel or terminal for road transportation for use by general public - in the present case the proposed activity carried out by the applicant is of shifting /erection of 11 KV < lines only and the same cannot be categorised as construction of road as classified under Entry number 3 (iv)(a) of the Notification No 11/2017-CT (Rate) dated 28.6.2017 (as amended). Since such cost of the above said activity will be borne by the Authority or by the entity owning such utility therefore such payment of above mentioned activity is not the part of the main contract i.e. construction of road as awarded to main contractor by NHAI. Thus, there establish no nexus between the main contract awarded for construction of road by the NHAI and the work proposed to be undertaken by the applicant. Therefore, the question of covering the activity under entry number 3(iv)(a) of the Notification No 11/2017-CT (Rate) dated 28.6.2017 does not arises - activity proposed to be undertaken by the applicant does not fall under entry no. (iv)(a) of the Notification No. 11/2017- CT(R) dated 28.6.2017. Whether the activity carried out by the applicant fall under entry no. (ix) of N/N.11/2017-CIYR? - HELD THAT:- The proposed activity carried out by the applicant is of shifting /erection of 11 KV< lines only as already discussed above. We further, observe that the cost of the above said activity will be borne by the Authority or by the entity owning such utility as such payment of above mentioned activity is not the part of the main contract which is evident from the lines “The cost of such shifting shall be borne by the Authority or by the entity owning such utility” written in the Article XI of the main contract (concession agreement) awarded to main contractor by NHAI. Thus, there establish no nexus between the main contract awarded for construction of road by the NHAI and the work proposed to be undertaken by the applicant - the activity to be undertaken by the applicant cannot be treated as a part of main contract of NHAI thus the applicant who is supposed to execute an independent work cannot be treated as sub-contractor of the main contractor. The activity proposed to be undertaken by the applicant does not fall under entry no. (ix) of the Notification No. 11/2017-CT(R) dated 28.6.2017.
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