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2020 (3) TMI 190 - AAR - GSTActivity of operation and maintenance part of Contract/s entered prior to implementation of GST - operation and maintenance part of contract/s entered post implementation of GST - applicability of N/N. 12/2017- CT(R) as amended by Notification No.02/2018- CT(R)dated 25.01.2018 S.No.3A. HELD THAT:- In the case at hand, from the documents furnished in respect of contracts (2) and (3), it is evident that the contract is for execution of works and Post-work maintenance for a specific period. The Operation and Maintenance in both the contracts are dealt in Section-II of the Agreement. The applicant has to bear the charges for chemicals, consumable, labour and other services in the course of execution of ‘Operation and Maintenance’. Thus, the ‘Operation and Maintenance’ undertaken as per the contracts (2) and (3) are supplies which are ‘Composite Supplies’ as per Section 2(30) and are taxable to GST. In respect of Contract 1, the applicant has not furnished the RA bills/ Invoices/any documents to establish the Time of supply and therefore the applicability of GST on the ‘Operation and Maintenance of the said contract’ is not discussed. In respect of Contract (2), the Time of Supply for the composite supply of ‘Operation and Maintenance’ under the said contract starts from March 2018 only as seen from the submissions before us. Hence on the entire activity of ‘Operation and Maintenance’ under Contract (2) GST is leviable. In respect of Contract (3), the first RA bill is raised on 20.12.2017 for the main works as per Section-I of the contract and the applicant has furnished details upto L.S.9,h & Part Bill dated 25.01.2019 and it is seen that the supply of ‘Operation and Maintenance’ agreed to in the said contract as per Section -II of the Agreement for a receivable of ₹ 69,64,307.76 is not billed in any of these bills and the services are yet to be supplied. Therefore, it is amply evident that GST is leviable in respect of ‘Operation and Maintenance’ agreed to be supplied under Contract (3). Applicability of SI. No. 3A of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017 as amended by Notification No. 02/2018-C.T.(Rate) dated 25.01.2018 - HELD THAT:- In the case at hand, M/s, TWAD Board is a Board, constituted by an Act of Tamil Nadu State Legislature called Tamil Nadu Water Supply and Drainage Board Act, 1970 with 100% contribution by way of Government and controlled by Government by way of appointing Directors of the TWAD Board entrusted with the development of Water Supply and Sewerage facilities in Municipalities and Panchayats in the State of Tamil Nadu, except Chennai Metropolitan Development. Thus M/s. TWAD is a ‘Governmental Authority’ as defined under 2(zf) of the Notification No. 12/2017-CT (Rate) as amended effective from 13.10.2017 and the supply is made to the ‘Government Authority’ by the applicant - The contracts under consideration are for providing Combined Water Supply Scheme (CWSS) to various regions. Thus, it is clear that the supplies as per the contracts are works received by TWAD and are in relation to functions entrusted to Panchayat or Municipality. In respect of Contract (2), the Operation and Maintenance of the executed project is undertaken after implementation of GST and is a composite supply. The contractor is obligated to borne the cost of water, gas, consumables, chemicals and other services during the period of Maintenance as seen from the ‘ VIII. Special Conditions of Contract’. The details of the quantum of materials and Labour involved in the said contract are not furnished separately before this authority. In respect of contract (2), the exemption provided at SI.No. 3A of Notification No. 12/2017-C.T.(Rate) is applicable if the total value of the supply of goods involved in the RA bills raised for such supply do not constitute more than 25 percent of the value of such bills which are raised after 25.01.2018 and the break-up of the value of goods and other supplies are mentioned in such bills and all the other required conditions of the said entry stands fulfilled. In respect of Contract 3, the maintenance is to be undertaken after the execution of the project. In this contract also, the vivisection of the material and labour component is not furnished before this authority. Therefore, we hold that in respect of this contract, if the value of supply of goods involved in such supply as raised in each such bill does not constitute more than 25 percent of the value of such bill, then the exemption under SI.No. 3A of the Notification No. 12/2017-CT (Rate), inserted vide Notification No. 02/2018 -C.T.(Rate) dated 25.01.2018 is applicable to the Operation and Maintenance Part(Section-II) of the Contracts, in as much as all the other required conditions stands fulfilled.
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