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2021 (12) TMI 109 - AAR - GSTClassification of services - composite supply of mining service or supply of works contract service - services of construction of the R&R Colony supplied by the Applicant - Eligibility to avail Input Tax Credit of tax paid to the sub-contractor on works contract services for construction of R&R colony - Section 17(5)(c) of the CGST Act, 2017 - HELD THAT:- As per para 8.2 (c), of agreement signed between the Applicant and APMDC, it is only mentioned that R&R activities provided at clause 1B of Schedule 2 of this Agreement. The said para is mentioned under the heading of Mine operator obligation during the development stage of the Agreement - as per the Agreement with APMDC, Applicant as a Mine Operator planning, engineering, financing, construction, development, operation and maintenance of Suliyari coal mine and subsequent delivery of coal to the Owner. It is observed that in the said Agreement mainly the work is given related to mining of Coal and during the development stage of mines, there are certain obligation to the Mine operator including construction of R&R colony. In the Agreement, each and every work define separately in the said Agreement/Schedule of Agreement. The construction of R&R colony service is not in any way in combination with mining service as the construction of R&R colony is one time job whereas the mining service is a regular job for longer period, hence both the services are not going together or not depend on one another, supplied independently - Further, the terms of payment of each service mentioned separately in the Agreement and there is no connection/combination of payment of both the services. Invoices of the services is also raised separately. Hence both the services can be identifiable separately and has no conjunction with each other for qualify the same as composite service. Thus, the services of construction of R&R colony is not composite supply with mining service. Works contract service or not - HELD THAT:- As per definition of Works Contract Service, any construction of colony/building wherein transfer of property in goods is involved in the execution of such contract is covers under the definition of Works contract service for payment of GST. In this case as per the submission of the applicant, satisfied the condition for construction of Building and transfer of property in goods is involved inasmuch as the title of the steel, cement, etc. which goes in the construction of the building i.e. R&R colony is transferred to APMDC, hence, the construction of R&R colony is covers under the definition of Works Contract Service and GST is leviable on the said service under the Works contract service. Whether the applicant will be eligible to avail ITC of tax paid to the sub- contractor on Works Contract Service for construction of R&R Colony or the same would be disallowed in terms of Section 17(5) (c ) of the CGST Act, 2017? - HELD THAT:- Section 17(5) of the CGST Act, 2017 deals with blocked credits under the GST law and enlists various circumstances under which the Input Tax Credit cannot be availed by the Recipient of Supply, notwithstanding the provisions of Section 16(1) & (1) of CGST Act. The Sub-Section (c) of Section 17(5) deals with blocked/ineligible credit relating to “Works Contract Services”. The applicant is receiving the Work contract services i.e. construction of R&R colony from the sub-contractor in the course of further supply of the same as Works contractor to APMDC, hence the restriction of section 17(5)(C) shall not applicable to the Applicant. Hence, it is found that in respect of the construction of RR colony, the applicant is eligible to take ITC of tax paid to sub-contractor under works contract service which will be used for providing the same to the APMDC - the Applicant is eligible for ITC of the tax paid to the sub-contractor for construction of R&R Colony under Works contract service but the said ITC is not allowed to utilize for payment of tax for mining services. The construction of the R&R colony by the applicant is supply of works contract service and also eligible for ITC of tax paid to sub-contractor for providing further Works contract service only.
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