TMI Blog2021 (2) TMI 1249X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,94,51,394.98 towards the operation maintenance of only sewage treatment plant of 26 MLD capacity at LakkarGhat, Rishikesh which is not correct and thus the bifurcation of the cost of each item including cost of goods given in their letter dated 19.11.2020 cannot be relied upon - as per contract, design build cost of ₹ 72,42,94,625/- is not only for the (A) part of the said contract but it also includes the cost of design build cost of sewage treatment plant of 26 MLD capacity at LakkarGhat, Rishikesh as shown at (B) part of the said contract. Besides Operation Maintenance of sewerage treatment plant of 26 MLD capacity at LakkarGhat, Rishikesh for 15 years, the applicant has also to design and build the same which is a composite supply for that particular work also and as per Contract, design build cost of ₹ 72,42,94,625/- and operation maintenance cost of ₹ 53,94,51,394.98 are inclusive of design build cost and O M cost of sewerage treatment plant of 26 MLD capacity at LakkarGhat, Rishikesh and therefore value of supply of goods in the outward supply for operation maintenance of sewerage treatment plant of 26 MLD capacity at LakkarGhat, Rishikesh cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es before the appellate authority for advance ruling constituted under section- 99 of the Uttarakhand Goods and Services Tax Act, 2017, within a period of 30 days from the date of service of this order. 1. This is an application under Sub-Section (1) of Section 97 of the CGST/SGST Act, 2017 (herein after referred to as Act) and the rules made thereunder filed by M/s. GDCL - EMIT JV, Gali No.6, Nirmal Bagh-B, Vishthapit Colony, Pashulok, District- Dehradun, Uttarakhand there in after referred to as 'the applicant') is registered with the GSTN having Registration No. 05AAEAG3088P1Z9and seeking advance ruling on the following question:- i) Whether the outward supply for operation and maintenance of sewage treatment plant of 26 MLD capacity at LakkarGhat, Rishikesh, Dehradun, State of Uttarakhand, India to Uttarakhand Pay Jal Nigam (an entity working under the Ministry of Drinking Water Sanitation, Govt, of Uttarakhand as an undertaking of Uttarakhand Government) is exempt from CGST/SGST and IGST as per notification no. 2/2018-Central Tax (Rate) dated 25.01.2018, 2/2018-Integrated Tax (Rate) dated 25.01.2018 and 138/2018/18(20)/ XXVH(8)/ 2017/ CTR-2, Dehradun dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew the design, redesign where necessary and build new/replace outfall/interceptor sewer line of about 15 km length including survey, design and construction of 03 nos. new sewage pumping stations, upgradation/ rehabilitation of 02 no. existing sewage pumping station and all appurtenant structures and operation and maintenance of outfall/interceptor sewer line and pumping stations for a period of 01 year in Rishikesh, State of Uttarakhand, India. B) Design build operate and transfer of sewage treatment plant of 26 MLD capacity including 15 years O M at LakkarGhat, Rishikesh, Dehradun, State of Uttarakhand, India. The total contract price for the aforesaid works is ₹ 126,37,46,020/-with design build cost of ₹ 72,42,94,625/- and operation and maintenance cost of ₹ 53,94,51,394.98. 6. 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:- i) Whether the notification no. 2/2018-Central Tax (Rate) dated 25.01.2018, 2/2018-Integrated Tax (Rate) dated 25.01.2018 and 138/2018/18(20)/XXVIl(8)/2017/CTR-2, Dehradun dated 06.02.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to any function entrusted to a Municipality under Article 243W of the constitution For any exemption, all the three conditions should be satisfied simultaneously. Relevant portions of the said notifications arc reproduced as under: Notification No. 2/2018- Central Tax (Rate) New Delhi, the 25th January, 2018: G.S.R....(E).- In exercise of the powers conferred by sub-section (1) of section 11 of the Central Goods and Services Tax Act, 2017(12 of 2017), the Central Government, on being satisfied that it is necessary in the public interest so to do, on the recommendations of the Council, hereby makes the following further amendments in the notification of the Government of India, in the Ministry of Finance (Department of Revenue), No. 12/2017- Central Tax (Rate), dated the 28thJune, 2017, published in the Gazette of India, Extraordinary, Part U, Section 3, Sub-section (i), vide number G.S.R. 691(E), dated the 28th June, 2017, namely:- In the said notification, in the Table,- (a) against serial number 3, in the entry in column (3), after the words a Governmental Authority the words 'or a Government Entity shall be inserted; (b) after ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity or a Governmental authority or a Government Entity by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution. NIL NIL ; In both the above referred notifications value of supply of goods should not constitute more than 25 percent of the value of the said composite supply. While going through the contract details and payment schedule, we find at para- g of Form of Contract that, the total contract value is INR 126,37,46,020.02 wherein Design Build Cost is INR 72,42,94,625.04 and Operation Maintenance Cost is INR 53,94,51,394.98. We further find that Operation Maintenance is a part of same supplies and qualifies as composite supply in which the principal supply is Design Building. The operation maintenance is supplementary supply which is secondary to design building cost. The same view of composite supply is supported by judgement of Hon'ble Gujarat High Court in the matter of Torrent Power Ltd. R/SPECIAL CIVIL APPLICATION NO.5343 of 2018, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid contract but it also includes the cost of design build cost of sewage treatment plant of 26 MLD capacity at LakkarGhat, Rishikesh as shown at (B) part of the said contract. The applicant has tried to split the contract and shown the value of only Operation Maintenance part in AR-application in order to avoid GST liability. Because, if complete value of contract is taken into consideration, the value of supply of goods turns out to be much higher than 25% of the contract value and the applicant will not get exemption. Therefore, entry no. 3A of Notification No. 2/2018-Central Tax (Rate) and 2/2018-Integrated Tax (Rate) does not apply in applicant's case and the full amount of contract attracts GST rates as applicable for such composite supplies/works contract services. To further support this, reliance is placed on payment schedule of the contract. The whole contract of ₹ 126.37 Cr is divided into Design, Built, operate transfer. Payment of design, built, operate maintain is specified under a single schedule of payment (Schedule-6 of Contract) under various clauses. There is neither a separate contract nor a separate schedule for payment of Operation Maint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty in view of aforesaid notification. Under Article 243-W of the Constitution, the following functions are entrusted to the Municipality:- 1. Urban planning including town planning. 2. Regulation of land use and construction of buildings. 3. Planning for economic and social development. 4. Roads and bridges. 5. Water supply for domestic, industrial and commercial purposes. 6. Public health, sanitation conservancy and solid waste management, 7. Fire services. 8. Urban forestry, protection of the environment and promotion of ecological aspects. 9. Safeguarding the interests of weaker sections of society, including the handicapped and mentally retarded. 10. Slum improvement and upgradation. 11. Urban poverty alleviation. 12. Provision of urban amenities and facilities such as parks, gardens, playgrounds. 13. Promotion of cultural, educational and aesthetic aspects. 14. Burials and burial grounds, cremations, cremation grounds and electric crematoriums, 15. Cattle ponds; prevention of cruelty to animals. 16. Vital statistics including registration of births and deaths. 17. Public amenities including ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions as may be entrusted to the Nigam by the State Government by notification in the Gazette. Further aforesaid Section 14 was amended vide The Uttaranchal (The Uttar Pradesh Water Supply and Sewerage Act, 1975) Adaptation and Modification Order, 2002 to the following extent: 5(i) In section 14(1) between the words the preparation and 'execution' the word 'construction ' shall be inserted. 5(ii) After Section 14(1)[iii] and before 14(1)[xiv) the following subsection shall be added namely:- To function as Construction Agency for other Departments of State Government and also outside the state. Thus from the aforesaid provisions, it is evident that UPJN has been entrusted with the function of all the necessary services in regard to sewerages which is an activity in relation to any function entrusted to a Municipality under article 243W of the Constitution. Thus from the above provisions, we come to the conclusion that though outward supply of operation maintenance of sewerage treatment plant to UPJN is exempt under entry no.3A of the notification no. 2/2018-Central Tax (Rate) dated 25.01.2018 and 2/2018-Integrated Tax (Rate) dated 25.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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