TMI Blog2019 (3) TMI 1953X X X X Extracts X X X X X X X X Extracts X X X X ..... t due to the reason of extrapolation. It is for the ease of calculation of ITC tax liability, both the entities are made liable to be taxed at the same rate. The serial no. 9C of notification no. 12/2017 (amended vide notification no 32/2017), exempts the services by a govt. entity to another govt. entity. Neither this notification nor any other notification exempts the work contract services from govt. entity to private contractor or contractor to sub-contractor. The observation ni ade by the GST Council in reducing the tax liability of such contractor was made for the ease of calculations. This fortifies the fact that only the notification and the conditions specified therein, determines the taxability on supply of goods/ services. The pre GST circular no 147/16/2011-ST dated 21-10-2011 and Para 29(h) of the Mega exemption notification no. 25/2012-ST dated 20-06-2012 to exempt sub contractor cannot be referred, as Service Tax is now repealed and cannot be applied on the supply of services pertaining to GST regime. Thus the taxability on the sub contractor in such cases have to be decided in view of the notification issued under CGST/SGST Act. The works contract services f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heir activity is exempted from GST in terms of Notification No. 12/2017-CT (Rate) dated 28.06.2017. Now the applicant has sought the advance ruling whether the same work allotted to sub-contractor is also exempted or otherwise. In this context, I find that there is no entry in the exemption Notification No. 12/2017-CT (Rate) dated 28.06.2017 which exempts the supply in question being carried out by the sub-contractors rather entry (iv) of serial no. 3 of Notification No. 11/2017-CT (Rate) dated 28.06.2017 prescribed GST rate @ 12% [CGST 6% + SGST 6%] for supply in question i.e 'construction of road'. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that: In the present case I find that Minis try of External Affairs (herein after referred to as MEA) has allotted the work i.e. 'construction of road' to the NHPC (applicant). The applicant sub-let the said work to PWD, Uttarakhand who further sub-let the work to a contractor, The applicability of CST 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 Not cation 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 (per cent.) Condition 1 2 3 4 5 9C Chapter 99 Supply of service by a Government Entity to Central Government, State G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the real purpose or intent of the legislature. In this context I find that the legal facts given under Fiscal Interpretation of Statutes has to be read in conjunction with the recommendation of 25th GST Council (supra) and I observe that where literal interpretation may not serve the purpose or may lead to absurdity, the doctrine of purposive interpretation can be adopted which is based on the understanding that the authority is supposed to attach that meaning to the provisions 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%, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tification No. 12/2017-Central Tax (Rate) dated 28th June, 2017 (as amended from time to time) vide Advance Ruling bearing No10/2018-19 dated 22-10-2018. RULING:- In light of the aforementioned. facts, as both the members have divergent views, as discussed supra, a ruling has been made, whereby, in terms of Section 98 (5) of the Act ibid, a reference to the Appellate Authority for hearing and decision on said issue has been made. PERSONAL HEARING A personal hearing was held on 13.02.2019. Shri J.C. Pant, Sr. Manager (Law), appealed for personal hearing and reiterated the points made before the Advance Ruling Authority, Uttarakhand. He also mentioned the points contained in their fresh application before the Advance Ruling Authority. Further he submitted that he will submit additional documents within a weeks time. Shri Sunil Kr. Shah, Superintendent, CGST, reiterated the reasoning given by the Shri Amit Gupta, Member, Advance Ruling Authority, Uttarakhand. Ms. Preeti Manral, Deputy Commissioner, SGST, reiterated the reasoning given by Shri Vipin Chandra, Member, Advance Ruling Authority, Uttarakhand, in Ruling No. 17/2018 dated 30.01.2019, and prayed that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax liability, both the entities are made liable to be taxed at the same rate. The serial no. 9C of notification no. 12/2017 (amended vide notification no 32/2017), exempts the services by a govt. entity to another govt. entity. Neither this notification nor any other notification exempts the work contract services from govt. entity to private contractor or contractor to sub-contractor. The observation ni ade by the GST Council in reducing the tax liability of such contractor was made for the ease of calculations. This fortifies the fact that only the notification and the conditions specified therein, determines the taxability on supply of goods/ services. It is further to be mentioned that constitution Bench (Bench of five Judges) of the Hon'ble Supreme Court of India in the matter of Commissioner of Custom (Import) Mumbai (Civil appeal No. 3327 of 2007) (Dated July 30, 2018) M/s. Dilip Kumar and Company has held that (1) Exemptions notification should be interpreted strictly, the burden of providing applicability would be on the assessee to show that his case comes within the parameters of the exemptions clause or exemption notification. (2) When there is am ..... 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