TMI Blog2021 (1) TMI 538X X X X Extracts X X X X X X X X Extracts X X X X ..... ed into a contract agreement with Public Health Department, Government of Haryana for Water Supply Scheme and Sewarage Scheme at Samalkha Town, Distt. Panipat (Haryana) - The Public Health Department is under the Ministry of Health of the Government of Haryana and hence, it is a State Government within the meaning of and for the purpose of Entry No. 3A of Notification No. 12/2017-CT(Rate), dated 28.06.2017 as amended by Notification No. 2/2018-CT, dated 25.01.2018 [Corresponding State Notification No. 47/ST-2, dated 30.06.2017 as amended by Notification No. 22/ST-2, dt. 25-01-2018]. It is evident that the said work order is in the nature of composite supply of work contract providing both goods and services. Supply of goods includes consumables such as diesel, petrol, grease, transformer oil, copper wires, nut bolts, rubber sheets etc. for repair/maintenance of water supply system. For sewerage system, consumables are kits and masks for sever men, diesel Mobil oil used in engines for cleaning of sever lines, appliances for cleaning of blocked sever lines, dewatering pumps etc. These goods are primarily for upkeep, repair and maintenance of the civil structures already in exist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application, Om Parkash Contractor, is registered under the provisions of the Central Goods and Services Tax Act, 2017 read with the provisions of the Haryana State Goods and Services Tax Act 2017 (hereinafter known as the Assessee/Applicant). 1.2 That the applicant is a civil contractor engaged in executing government works which include construction of civil structure, repair, maintenance and renovation of such works. 1.3 The applicant has applied for seeking advance ruling under section 97 (1) of the CGST Act, 2017 for a Work Contract allotted by Public Health Department, Government of Haryana as per the terms in their tender as annexed with the application. 1.4 That further it has been detailed by the applicant in the contract and appurtenant to other supporting documents that there are 2 contracts: a) Contract for Water Supply Scheme at Samalkha Town, Distt. Panipat (Haryana) Work has been allotted vide Tender Acceptance Memo No. 6971 dated 24.07.2019 issued by the Executive Engineer, Public Health Engineering Division No. 2, Panipat (Haryana). The various activities to be undertaken under this work are Operation Maintenance of structures ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SI. No. Component establishment Amount 1 Repair of civil structures, Pumping machinery 72,222 2 Consumables 63,000 3 Establishment 64,97,308 Total 66.32,610 (Say ₹ 66.35 Ices) Costs towards 'Repair of civil structures, Pumping machinery and Consumables' represent expenses on account of supply of goods and cost towards Establishment is towards supply of service. The cost of supply of goods (Repair of civil structures, pumping machinery and consumables) comes to ₹ 1,35,222/- and the balance amount of ₹ 64,97,308/- lacs is towards supply of services i.e. Establishment expenditures. In % terms, supply of goods accounts for 2.04% of the total cost of the works and supply of services accounts for 97.92%. Thus, the cost of supply of goods (2.04%) is less than 25% of the total cost of composite supply of goods and services. 25% of the total cost of composite s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o any function entrusted to a Municipality under article 243W of the Constitution. Nil Nil 1.7 That the two contracts awarded to the applicant by the Public Health Department, Government of Haryana, as mentioned above involve supply of both goods and services. Hence, the activities undertaken under the said contracts qualify to be a composite supply as defined under clause (30) of Section 2 of the CGST ACT, 2017/HSGST Act, 2017. 1.8 That as per the Estimate Sheet enclosed with the Tender Acceptance Letter No. 6971 dated 24.07.2019, which has been certified by the Executive Engineer of the concerned Public Health Department of the Government of Haryana, the cost of supply of services accounts for more than 75% of the total cost of the composite supply, and the cost of supply of goods accounts for not more than 25% of the total cost of the composite supply. In other words, as per the Estimate Sheet, the total cost of supply is ₹ 376.95 lacs out of which the cost of supply of services is ₹ 301.27 lacs (79.93%) and that of goods is ₹ 75.65 lakhs (20.07%). 1.9 That similarly, as per the Estimate Sheet enclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said Tender is to operate maintain the sewer lines and other works contingent thereto. Thus, applicant's activities are also covered under Article 243W(a)(ii) of the Constitution i.e. functions entrusted to a Municipality for provision and maintenance of sewerage system in towns and cities. 1.13 That, therefore, when all the pre-requisites of entry No. 3A of Notification No. 12/2017-CT (R), dated 28.06.2017 as amended by Notification No. 2/2018-CT, dated 25.01.2018 are satisfied, the applicant is of the view that his services are exempt from levy of GST. 1.14 That the applicant's view-point as above also gets support from C.B.I.C. Circular No. 51/25/2018-GST, dated 31-7-2018. Vide the said Circular, it has been clarified that the service tax exemption under SI. No. 25 (a) of Notification No. 25/2012-ST, dated 20-6-2012 has been substantially, although not in the same form, continued under GST vide SI. No. 3 and 3A of the Exemption Notification No. 12/2017-CT (R), dated 28.06.2017. SI. No. 25(a) of Notification No. 25/2012-ST exempts services provided to the Government, a local authority or a governmental authority by way of water supply, public health, sanitation, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use (e) of Section 97 (2) of CGST/HGST Act,2017 i.e. Determination of the liability to pay tax on any goods or services or both. 1) Whether applicant's activities, as briefly mentioned at sl. No. 12 (B) of Form ARA-01 i.e. i). Operation maintenance of structures/components, Staff Quarters, Pump Chamber, Boundary Wall, Distribution System, Tube wells, Pumping Machinery, OHSR etc under Water Supply Scheme, Samalkha Town, Haryana ii) Operation maintenance of various sizes of sewer lines, repair of civil structures, supply of consumables etc., qualify to be a composite supply of goods and services and exempt from GST under entry No. 3A of Notification No. 12/2017-CT(R), dated 28.06.2017 as amended by Notification No. 2/2018-CT(R), dated 25.01.2018. 2) Whether the service recipient, Public Health Department, State of Haryana, is required to deduct TDS under Section 51 of the CGST Act, 2017 given the fact that as per applicant's version his aforementioned services are exempt from GST under Notification No. 12/2017-CT(R), dated 28.06.2017 as amended Notification No. 2/2018-CT(R), dated 25.01.2018. 3. Record of Personal Hearing Personal hearing i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mobil oil used in engines for cleaning of sever lines, appliances for cleaning of blocked sever lines, dewatering pumps etc. These goods are primarily for upkeep, repair and maintenance of the civil structures already in existence such as tube wells, pump chambers, boundary walls, repair and reconstruction of manholes on severe lines, replacement and repair of defective sever lines etc. The Service portion includes deployment of manpower such as tubewell operators, fitters, electricians, helpers, key men, valve operators, supervisors, bill clerks, bill distributors, bill collectors etc. for water supply system, and sever men, daily wagers, machine operators, supervisors, tractor drivers, electricians, fitters, fitter- helpers for operating sewerage system. 4.5 That as per the certificate issued by the Executive Engineer, Div. No. 2 Panipat, the percentage of material to be consumed in execution of works contracts are 20.05% in the first contract and 2% in second contract. Thus, the major part of the contract involves services i.e. more than 75% of the work involves services which is required for fulfilment of this notification, we hold the same. 4.6 The activities undertaken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial No. 3AChapter 99 of the Notification No. 12/2017-Central Tax (Rate), dated 28.06.2017 as amended by Notification No. 2/2018-CT(R), dated 25.01.2018 under the CGST Act, 2017and the corresponding State Tax notification under HGST Act, 2017, The work carried by the applicant is a Composite supply of goods and services in which the value of supply of goods constitutes not more than 25 per cent. of the value of the said composite supply provided to the State Government by way of an activity in relation to the function entrusted to a Panchayat under article 243G of the Constitution or in relation to the function entrusted to a Municipality under article 243W of the Constitution and thus exempt under GST. Thus, the Serial No. 3A of Notification No. 12/2017-Central Tax (Rate), dated 28.06.2017 as amended by Notification No. 2/2018-CT(R), dated 25.01.2018 under the CGST Act, 2017 is applicable to the applicant. 5.2 As per the Standard Operating Procedure issued by Law Committee of GST Council on 28.09.2018, if the services received by deductor from deductee are exempt, then there is no requirement for tax deduction under GST. Therefore, the service recipient being Public Health Dep ..... X X X X Extracts X X X X X X X X Extracts X X X X
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