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2020 (8) TMI 635 - AAR - GSTClassification of supply - composite supply or mixed supply - works contract or not - Construction and Commissioning of Jetty and the Development of Sites as per the M.O.U - benefit of reduced rate of tax - Liability and rate of GST applicable on the project management service charges, license fees for the building allotted to N.T.R.O. and the supply of electricity and water - Applicability of N/N. 24/2017-IT(R) dated 21.09.2017 and 08/2017 - Integrated Tax (Rate) dated 28.06.2017 as amended. - HELD THAT:- As per Section 2 (119) of the C.G.S.T. Act, 2017; “works contract” means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract - From the terms and conditions of the M.O.U. dated 22.12.2016; it is evident that the activity undertaken by the applicant for the Construction and Commissioning of Jetty and the Development of Sites as per the M.O.U. squarely falls within the ambit of “Works Contract” as defined in Section 2 (119) of the CGST Act, 2017. As per Sl.No. 6 of Schedule II of the CGST Act, 2017; the composite supply of works contract as defined in clause (119) of Section 2 shall be treated as a supply of services. The activity undertaken by the applicant as per the M.O.U. is for the National Technical Research Organisation, a Technical Intelligence Agency of the Government of India. Since the services rendered by the applicant falls under the definition of “Works Contract” as per Section 2 (119) of the CGST Act, 2017 and the services being rendered to the Central Government for an original work meant predominantly for use other than for commerce, industry or any other business or profession the rate of GST applicable is 12% as per Sl No. 3 (vi) (a) of the Notification No. 08/2017 - Integrated Tax (Rate) dated 28.06.2017 as amended. In view of the entry at Sl No. 3 (ix) of the Notification No. 08/2017 Integrated Tax (Rate) dated 28.06.2017 as amended the rate of GST applicable to the contractors / sub- contractors engaged by the applicant to execute the works as per the M.O.U. is also 12%. Liability and rate of GST applicable on the project management service charges, license fees for the building allotted to N.T.R.O. and the supply of electricity and water - HELD THAT:- It is evident from the terms and conditions of the M.O.U. that the principal supply is the supply of works contract services for construction of Jetty and Development of Sites for N.T.R.O. and the project management service charges, license fees of building, the supply of electricity and water are components of the main supply which are ancillary to the main supply. Therefore, the rate of GST applicable for such supplies are also the same rate as applicable to the main supply as the activities cannot be segregated or vivisected from the main supply for a differential tax treatment. Thus, the activity undertaken by the applicant as per the M.O.U. dated 22.12.2016 entered with National Technical Research Organisation of the Government of India are covered under “Works Contract” as defined in Section 2 (119) of the CGST Act, 2017 - the rate of GST applicable on the services provided by the applicant as per the said M.O.U. is 12% as per Sl No. 3 (vi) (a) of the Notification No. 08/2017 - Integrated Tax (Rate) dated 28.06.2017 as amended - the rate of GST applicable on the services provided by the contractors / sub contractors to the applicant as envisaged in the said M.O.U. is 12% as per Sl No. 3 (ix) of the Notification No. 08/2017 - Integrated Tax (Rate) dated 28.06.2017 as amended - applicant is entitled for refund of the excess GST paid if any; subject to the provisions of Section 54 of the CGST Act, 2017 and the Rules made thereunder - supply of electricity and water are components of the main supply and are ancillary to the main supply and hence cannot be segregated or vivisected from the main supply and is liable to G.S.T. at the same rate as the main supply.
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