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2019 (3) TMI 837

licable to the contractors/ sub- contractors involved in the construction of Indo-Nepal Border Road or otherwise - difference of opinion - Held that:- There are different views on the applicability of GST on the sub-contractors - since, there are different views on that particular issue, we are making a reference to the Appellate Authority for hearing and decision on said issue in terms of Section 98(5) of the Act ibid which provide that where the members of the Authority. differ on any question on which the advance ruling is sought, they shall state the point or points on which they differ and make a reference to the Appellate Authority for hearing and decision on such question. - Ruling No. 17/2018-19 In Application No. 17/2018-19 - 30-1-2019 - Shri Vipin Chandra (Member) And Shri Amit Gupta (Member) Jurisdictional Officer: Assistant Commissioner, CGST Division, Rudrapur Present for the Applicant: Shri N.K. Gupta, DGM (Finance), Shri J C Pant, Senior Manager (Law) Present for the Jurisdictional Officer: None Present for Concerned Officer: None Note : Under Section. 100(1) of the Uttarakhand Goods and Services Tax Act, 2017, an appeal against this ruling lies before the appellate .....

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ed documents during the proceedings. No body appeared from the side of Revenue for the hearing. 6. From the documents submitted by the applicant we find that applicant is registered in Uttarakhand with GSTIN bearing no. 05AAACN0149C4Z2. On going through the 'Office Memorandum' dated 02.05.2018, We find that 1.2 Km long link canal is to be constructed by India from Tanakpur Barrage to the Indo-Nepal border under Mahakali Treaty signed between India & Nepal in 1996. Besides construction of canal, 1.3 Km road is also to be constructed which is the issue in hand to be discussed later on. DPR of the project has been prepared by NHPC. The construction of 1.2 Km long link canal from Tanakpur Barrage to the Indo-Nepal border including the construction of 1.3 Km link road will be financed out of the budgetary outlays of MEA under the budget head "Aid to Nepal". Initially NHPC can spend the money, if required, subsequently the same can be recouped from the budget of MEA to NHPC directly. Budget releases will be made by MEA to NHPC which is executing the project as a turnkey agency of MEA based on the recommendation of the Ministry of Power. 7. The applicant further subm .....

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ized representative of client/ department. 8. In the present case we are restricting our conclusion to the facts and circumstances which was filed for our consideration in the application. Now we proceed to decide the issue in hand: 8.1 Whether the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 (as amended from time to time) is applicable to the contractors/ sub-contractors involved in the construction of Indo-Nepal Border Road or Otherwise. 8.2 In the instant case we find that the work is allotted to the applicant by MEA is related to "construction of road". The applicant sub-contracted the said work to PWD, Govt. of Uttarakhand who further sub-contracted to a contractor. 8.3 From the record we find that NHPC Ltd has been entrusted the work of construction of road by Ministry of External Affairs, Govt. of India (in short "MEA") wherein the funds will be provided by MEA from its head "Aid to Nepal" to M/s NHPC Ltd. It means that the funds provided by MEA to M/s NHPC Ltd are in the form of grants. The function of M/s NHPC Ltd in the said work has been defined as "turnkey agency". The issue of GST liability on the applicant on thi .....

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and Services Tax Act, 2017, supplied to the Government, a local authority or a Governmental authority by Way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of, - (a) a historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under the Ancient Monuments and Archaeological Sites and Remains Act, 1958 (24 of 1958); (b) canal, dam or other irrigation works; (c) pipeline, conduit or plant for (i) Water supply (ii) water treatment, or (iii) sewerage treatment or disposal 6 (iv) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied by Way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of,- (a) a road, bridge, tunnel, or terminal for road transportation for use by general public; (b) a civil structure or any other original works pertaining to a scheme under Jawaharlal Nehru National Urban Renewal Mission or Rajiv Awaas Yojana; (c) a Civil structure or any other original works pertainin .....

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relation to a work entrusted to it by the Central Government, State Government, Union territory or authority, as the case may be (viii) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017 and associated services, in respect of offshore works contract relating to oil and gas exploration and production (E&P) in the offshore area beyond 12 nautical miles from the nearest point of the appropriate base line. 6 I further find that Notification No. 11/2017-Central Tax (Rate) dated 28th June, 2017 was further amended vide Notification No. 1/2018-Central Tax (Rate) dated 25th January, 2018 and the relevant portion of the same reproduce as under: 3 4 5 "(ix) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017 provided by a sub-contractor to the main contractor providing services specified in item (iii) or item (vi) above to the Central Government, State Government, Union territory, a local authority, a Governmental Authority or a Government Entity. 6 Provided that where the services are supplied to a Government Entity, they should have been pr .....

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applicant sub-let the said work to PWD, Uttarakhand who further sub-let the work to a contractor. The applicability of GST on the applicant for "construction of road' has already been decided by the authority vide Advance Ruling No 10/2018-19 dated 22-10-2018 wherein it was held that the services provided by the applicant to MEA is exempted in terms of Notification No. 12/2017-Central Tax (Rate) dated 28-06- 2017 [amended vide Notification No. 32/2017-Central Tax (Rate)] and the relevant portion of the same is reproduced as under: S.No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (percent.) Condition 1 2 3 4 5 9C Chapter 99 Supply of service by a Government Entity to Central Government, State Government, Union territory, local authority or any person specified by Central Government, State Government, Union territory or local authority against consideration received from Central Government, State Government, Union territory or local authority, in the form of grants. Nil Nil I find that the Notification No. 11/2017-Central Tax (Rate) dated 28th June, 2017 supra (amended vide Notification No. 20/2017- Central Tax (Rate) dated 22.08. .....

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which serve the purpose behind such a provision and the same was upheld by the Hon ble Supreme Court in its judgment (supra). Therefore I observe that the purpose or object of the GST Council is to extend benefit to the last chain of said supply and reason for the same is to provide equal opportunities and equal level playing fields to business entities and avoid discrimination. Thus I am of the view that the recommendations made by the GST Council in this regard makes it clear that if GST rate on the work contract is 12% or 5% then sub-contractor is also liable to discharge his GST liability @ 12% or 5% as the case may be. Similarly if GST rate on the said work contract is exempted or 0%, then supply of service in the form of work contract by the sub-contractors will also come in the purview of exempted or 0%. Thus I observe that if the principal contractor is providing an exempt works contract service to Government in terms of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 (as amended from time to time) and in such case if works contract is partially or wholly sub-contracted then the sub-contractors would also be exempted from payment of GST. In support of my view, .....

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