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2021 (10) TMI 145 - AAR - GSTClassification of supply - HSN code - applicable rate of tax - Composite supply of works contract - supplies made by TS TRANSCO - supplies procure by TS TRANSCO and eligibility to obtain services at reduced rate of 12% as per entry 3(iv) of Notification 11/2017 CTR dated 28 June 2017 - input tax credit benefit on works contract services - restrictions imposed under sub-section (5) of section 17 of the CGST Act, 2017 - HELD THAT:- As seen from the estimate of contract, there is a significant involvement of goods in the composite supply of works contract. Therefore this is not a pure service as averred by the applicant and hence not eligible for exemption - it is evident from the entry 3 of N/N. 12/2017 CT (R) dated 28 June 2017 that only pure services which do not involve any works contract involving supply of goods or other composite supply involving supply of goods are exempted from tax under CGST/SGST. As seen from the above abstract of estimate of supply to GHMC, the applicant has executed works contract services for GHMC involving supply of goods. As the applicant has not made supply of pure services but has made supply of works contract services they are covered by exception to the exemption given under entry (3) of the above notification. It is evident that entry 3(vi) of the Notification is specific entry covering only certain construction services. This entry does not cover other works contract services under service head 9954 which include long-distance underground/overland/ submarine pipe lines, communication and electric power lines (cables); pumping stations and related works; transformer stations and related works i.e., General construction services. However there is a residual entry at 3(vii) of the above Notification covering all other construction services not mentioned in the preceding entries. The services supplied by the contractor to the applicant do not fall under entry 3 (vi) of Notification 11/2017 CTR dated.28.06.2017 as modified by Notification No.24/2017 dated.21.09.2017 and Notification no. 17/2018 dt:26.07.2018. Therefore this supply of works contract service is covered by Entry (vii) of Serial No. (3) of the said notification as inserted by way of substitution vide notification no. 24/2017 dt:21.09.2017. The same entry was later retained as Entry (xi) of Serial No. 3 to notification 11/2017 vide a substituted notification no. 3/2019 dt: 29.03.2019. Therefore this supply of works contract services to the applicant is taxable at the rate of 9% under both CGST & SGST Acts respectively. Supply of general construction services - HELD THAT:- The supply of general construction services which enumerated at entry 3 (vii) of Notification 24/2017 dt.29.01.2017 which is retained as entry 12 vide Notification 3/2019 Central Tax dt.29.01.2019 and are taxable @9% under CGST/SGST Acts - the works contract service supplied by the applicant are in nature of General Construction service for longdistance underground/overland/ submarine pipe lines, communication and electric power lines (cables); pumping stations and related works; transformer stations and related works. These works are taxable @9% under CGST & SGST Acts. The services are taxable as under: 1. Eligibility to exemption from tax on the supply of works contract services by the applicant to Greater Hyderabad Municipal Corporation (GHMC) - Taxable @18%. 2. Tax liability with respect to works contract services procured by the applicant from a 3rd party for supplying same services to GHMC - Taxable @18%. 3. Eligibility to exemption from tax on supply of works contract services by the applicant to I & CAD department - Exempt to the extent of grants are received against supplies by applicant 4. Tax liability with respect to works contract services procured by the applicant from a 3rd party for supplying same services to I & CAD department - Taxable @18%. 5. Tax liability for supply of works contract service by the applicant to south central railway - Taxable @18%. 6. Tax liability for procuring works contract services by the applicant from a 3rd party in order to supply the same to south central railway - Taxable @18%.
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