TMI Blog2021 (10) TMI 635X X X X Extracts X X X X X X X X Extracts X X X X ..... s executed earlier to introduction of GST are not taxable under CGST/SGST Acts. Refund of excess deductions made - HELD THAT:- The refund of excess deductions both statutory and non-statutory made against the bills raised for the works completed in pre-GST period do not constitute consideration for supplies made under GST period. Therefore these amounts are not taxable under CGST/SGST Acts. Interest on delayed payments of interim payment certificates - HELD THAT:- In the present case, Arbitration as service was supplied independently after the introduction of GST i.e., the tribunal was constituted conclusively on 20.11.2017 and rendered its orders on 09.05.2019 and therefore this supply is liable to tax on reverse charge basis under GST. Liquidated damages - HELD THAT:- The time of supply of the service of tolerance is the time when such determination takes place. However, the contractee/employer has not determined the cost of delay prior to arbitration award. It was determined only by arbitration award on 09.05.2019. Therefore the time of supply of this service as per Section 13 of the CGST Act is 09.05.2019. The Consideration received for such forbearace is taxable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for delay in execution, payment of difference in rates and other contractual breaches which was referred to a dispute resolution board on 1606-2017. The applicant after notifying to contractee on 25.09.2017, approached an arbitration tribunal which initiated proceedings on 20.11.2017 and passed an order on 09.05.2019 for ₹ 169,58,22,197/- to be paid to the applicant under following heads. NATURE OF CLAIM CLAIM NO. CLAIM AMOUNT WORK RELATED 1 Compensation for delay in execution of the Works and Prolongation Costs 1,15,80,62,000 2 Claim for release of wrongful deduction of Liquidated Damages 16,60,40,728 3 Payment difference in rates for varied work of 'Hard Rock Excavation with Controlled Blasting plus applicable Price Adjustment 3 (Variation Order 9) 9,95,65,351 4 Non-certification / non-payment of the work of providing and laying selected granular soil. behind reinforced earth structures i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the answer to the above question is Yes then under what HSN Code and GST rate the liability is to be discharged by the applicant? 6. Grounds submitted Personal Hearing: The applicant M/s. Continental Engineering Corporation has filed an application for clarification before Authority for Advance Ruling on 24-08-2020 manually. After receipt of the application, the concerned Jurisdictional Authority i.e. Assistant Commissioner (ST), Rajendranagar-I Circle was asked to inform if any similar issue is pending before him that were raised by the applicant M/s. Continental Engineering Corporation. In the meanwhile due to the COVID-19 pandemic, personal hearings could not be issued. However, Government of India, CBIC have issued certain instructions on 21-08-2020 to takeup Personal Hearings through virtual method. Hence, the Authority for Advance Ruling has decided to takeup personal hearings through virtual method. In the mean time, the Jurisdictional Authority was once again reminded on 25-11-2020 to submit the information whether any issued raises by applicant are pending before him. However, the Jurisdictional Authority has submitted his reply on 03-02-2021 (through ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services then CGST/ SGST cannot be levied as enumerated under Section 142(11). The applicant therefore concluded his arguments by asserting that the amount received on arbitration for execution of work in pre-GST period cannot be taxed under CGST / SGST Act. The applicant relied on catena of case law to assert that receipt of money cannot be considered as taxable event as the entire work was completed in the Pre-GST regime and only money is receivable in the GST regime. These case laws include: i. Commissioner of C.Ex Cus, Vadodara Vs. Schott Glass India Pvt. Ltd., 2009 (14) STR 146 (Guj). ii. Sudesh Sharma Vs. Commissioner of Central Excise 2010 (19) STR 512 (Tri- Dl). iii. Commissioner of Service Tax Vs. Consulting Engineering Services (I) P. Ltd., 2013 (30) STR 586. iv. Vistar Construction (P) Ltd., Vs. Union of India (2013) 30 Taxman.Com 269 Delhi. The applicant further stated that there is no man power and operation after the GST as seen from the financial statements. 7. Discussion Findings: We have considered the submissions made by the applicant in their application for advance ruling as well as the submissions made during the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Damages claimed Compensation for delay in execution 1158062000 6 Interest on arbitration amount Interest on arbitration amount 16000000 1. Unpaid amounts including escalation of price for works executed in pre-GST period: The liability to tax under CGST/SGST Acts for works contracts is determined by the time of supply of services in Section 13 read with Section 31 i.e., the provisions pertaining to tax invoice. The time of supply of service according to Section 13(2) is the earliest of the date on which invoice is issued or date of provision of service or date of receipt of payment or date on which recipient shows the receipt of services in his books. As seen from the averments of the applicant the supply was made prior to introduction of GST. Therefore it is not covered by Section 13(2) of the CGST/SGST Acts. Hence the amounts claimed pertaining to the works executed earlier to introduction of GST are not taxable under CGST/SGST Acts. 2. Refund of excess deductions made: The refund of excess deductions both statutory and non-statutory made against the bi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f site the engineer shall determine the extension of time and amount of cost that the contractor may suffer due to such delays in consultation with the employer and the contractor. Therefore the time of supply of the service of tolerance is the time when such determination takes place. However, the contractee/employer has not determined the cost of delay prior to arbitration award. It was determined only by arbitration award on 09.05.2019. Therefore the time of supply of this service as per Section 13 of the CGST Act is 09.05.2019. The Consideration received for such forbearace is taxable under CGST and SGSt @9%. Each under the chapter head 9997 at serial no. 35 of Notification No.11/2017- Central/State tax rate. 6. Interest on Arbitration Amount: The applicant is claiming interest on the amounts determined by the arbitrary tribunal under various heads. Under Section 15(2)(d) of the CGST/SGST Acts interest for delayed payment against a supply is consideration which is taxable under CGST/SGST Acts. Therefore the interest on amounts exigible to tax under CGST/SGST forms part of value of taxable supply. 8. Advance Ruling In view of the observations stated above, the f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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