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2023 (7) TMI 183 - AAR - GSTClassification of supply - transaction is in the nature of a works contract or not - supply to local authority - Rate of GST - supply for construction of a sewerage treatment plant which involves supply of pumps as well as installation and commissioning work - supply for the purpose of sewerage treatment or disposal - attracts GST rate of 12% in terms of Notification No. 11/2017-CT (Rate) dated 28/06/2017 read with of Notification No. 20/2017-CT (Rate) dated 22/08/2017 or not. Works Contract Service - HELD THAT:- As per the definition of Works Contract, the essential feature for a service to be a ‘works contract’ service is that whether the service is in relation to an immovable property or not. Consequently, it needs to be examined whether the supply in this case could be considered as pertaining to immovable property - The pump in question could not be classified as land or benefits to arise out of land. On examining further, it could be observed that even though the term attached to the earth has not been defined in the General Clauses Act, 1897 - The civil structure in this case is a sewerage pumping station under KMC, the very purpose of which is pumping of sewerage for further treatment & disposal. The pump is essential to this activity and is thus expected to be installed and fastened at its place of installation throughout its operational life, and is thus installed for the permanent beneficial enjoyment of the civil structure to which it is attached to. Thus, in light of the facts of the case, the pump on installation would be an immovable property, and thus the installation, repair and maintenance of pump at the sewerage pumping station would qualify to be ‘works contact service as per Section 2(119) of GST Act. Supply to Local authority - HELD THAT:- The Notification would be applicable to supplies made to a local authority. In this case, the applicant is making supply to Kolkata Municipal Corporation, hereinafter also referred to as KMC - Kolkata Municipal Corporation (KMC) is a Municipality constituted under Article 243P of the Constitution; KMC is a local authority, as defined under Section 2(69) of the GST Act. The Notification would thus apply to this case, subject to other conditions being fulfilled. Purpose of sewerage disposal - HELD THAT:- The purpose of the pump in this case is pumping the sewerage from one location to other, which is an integral part of the process of sewerage disposal. Further, the applicant has also submitted a document issued by the Executive Engineer (Mech.) and Asst. Engineer (Mech.) from the S&D department of KMC which states that: ‘it is to confirm that the above mentioned contract is for disposal of drainage/sewage generated at the KMC area under the Kolkata Municipal Corporation and is in the nature of Composite supply of Works Contract - the contract is for the purpose of sewage disposal, and the Notification would apply to this case, subject to fulfilling other conditions. Applicability of serial no. 3(iii) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended - HELD THAT:- This case is a composite supply of works contract services as defined under section 2(119) of the GST Act, 2017 and the supply is made to the ‘local authority’ KMC for the purpose of sewerage disposal. Thus, the supply would be covered under entry 3(iii) of the Notification No. 11/2017-Central Tax (Rate) dated 28th June 2017 read with Notification No. 20/2017-Central Tax (Rate) dated 22th August 2017, which prescribes a rate of 12% (6% CGST and 6% SGST) for such supplies - This entry however, has been omitted vide Notification No. 03/2022-Central Tax (Rate) dated 13th July 2022, which has come into force with effect from the 18th July 2022. Consequent to this Notification, such supplies would attract tax rate of 18% (9% CGST and 9% SGST) on and from 18.07.2022. Time of supply - HELD THAT:- The applicant has not submitted any particulars regarding the extent of payment made by KMC against these two invoices, as submitted. No details have also been submitted regarding the extent of supply which has been made by the applicant to KMC under this works contract and nor have any details been made available regarding the mutual agreement between the applicant and KMC to the extent of supply which has been completed till 17th July 2022 after which the rate of tax has been changed - the time of supply as per the facts of the case, thus cannot be ascertained. Thus, the instant supply qualifies as a composite supply of works contract as defined in clause (119) of section 2 of the GST Act made to a local authority by way of erection, installation, and maintenance of a sewerage treatment plant and would be taxable at the rate specified in serial number 3(iii) of Notification No. 11/2017-CT (Rate) dated 28/06/2017 read with Notification No. 20/2017-Central Tax (Rate) dated 22/08/2017, as amended from time to time, subject to the provisions of section 14 of the GST Act.
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