TMI Blog2020 (8) TMI 635X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o a Memorandum of Understanding dated 22.12.2016 with National Technical Research Organisation (hereinafter referred to as N.T.R.O. ) a Technical Intelligence Agency of the Government of India for construction of Jetty and development of sites for N.T.R.O. at Cochin on Deposit Work terms. 2. The sites on which the activity as per the M.O.U. is undertaken have been acquired by the N.T.R.O. from the applicant on long lease for 30 years as per the Registered Lease Deed dated 24.08.2014 at the Office of the Sub-Registrar of Mattanchery, Cochin. The estimated project cost as approved by the competent authority of N.T.R.O. is ₹ 122.30 Crores. The applicant has commenced the work as per the M.O.U. and the work is undertaken by the applicant by engaging various independent contractors. The applicant is entitled to get 7% of the actual expenditure for the-project as Engineering and Supervision charge which is also termed as project management service charges. The approved estimated cost also includes the 7% project management service charges of the applicant. The procedure presently followed by the applicant is that the contractors engaged by the applicant raise invoice on the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m GST are also taxable at the rate of 12% as composite supply of services? 4. The authorized representative of the applicant was heard. As per the M.O.U. for construction of Jetty and Development of site for N.T.R.O., the applicant shall undertake the design and execution of the work on turnkey basis. The activities agreed to be undertaken by the applicant includes the following; a) Construction of a Jetty and allied facilities; Conducting various studies and investigations, construction of a Jetty with all requisite statutory clearances and berthing infrastructure for the N.T.R.O. Ship, which includes various facilities like Main Berth, approach bridge, gate office building, fire pump station, substation, development of land, construction of reclamation wall and approach road, firefighting facilities, electrical facilities, telephone / network facilities, Jetty Crane (a standard rail M.O.U. nted electric level luffing crane of 15/10 ton capacity with 20m reach), CCTV System, Parking, site office, building with furnished rooms, air conditioning, solar panels, security post, port container etc. b) Development of 1.8 acre land including providing allied facilities which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government, State Government, Union Territory, a local authority, a Governmental Authority or a Government Entity by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of - (a) a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession; (b) a structure meant predominantly for use as (i) an educational, (ii) a clinical, or(iii) an art or cultural establishment; or (c) a residential complex predominantly meant for self-use or the use of their employees or other persons specified in paragraph 3 of the Schedule Ill of the Central Goods and Services Tax Act, 2017. Explanation .- For the purposes of this item, the term business shall not include any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities. (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 service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply, shall be treated as a supply of such principal supply; and (b) a mixed supply comprising two or more supplies shall be treated as a supply of that particular supply which attracts the highest rate of tax. 15. 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. 16. In view of the observations as stated above, the following rulings are issued: 1. Whether, having regard to the background and details including the scope of work of the Deposit work contained in the M.O.U. entered into between CoPT and N.T.R.O., what is the nature of the services rendered by CoPT under the M.O.U. entered Into between CoPT and N.T.R.O.? Whether it would be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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