TMI Blog2022 (4) TMI 403X X X X Extracts X X X X X X X X Extracts X X X X ..... mbankment, cutting and bridge approaches and construction of minor bridges and RUBs in the section between Beed to Parli from Ch. 175000 to 185000 m under Ahmednagar-Beed-Parli vajinath New Broad Gauge line project (project) by the Central Railway Department. From the submissions made by the applicant, it is found that in the subject case there is a supply of both, goods as well as services and therefore we have no hesitation in holding that the subject activity is a composite supply - thus, the impugned activity is a Composite supply of works contract as defined in clause (119) of section 2 of the CGST Act, 2017. The second condition mentioned in para 5.6 (b) is that the said Composite supply of works contract as defined in clause (119) of section 2 of the CGST Act, 2017 should be involving predominantly earth work (that is, constituting more than 75 per cent of the value of the works contract) - In the subject case as per the submissions, the impugned activities conducted by the applicant majorly involve, the supply consists majorly of activities such as Blasting/Cutting the Hard Rock, Removing of Excavated Stuff, levelling the ground, Cement Concreting, rock bolting, construc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Central Railway Department carried out by the tax payer, whether the Notification No. 31/2017-C.T. (Rate) dated 13.10.2017, in respect of composite supply of works contract the GST Rate @ 5% i.e. 2.50% CGST, 2.50% SGST as per sub clause (Vii) of the clause 119 of Section 2 of the CGST Act 2017 is applicable to the Tax Payer.? 2. What will be the GST Rate applicable to the tax payer as per attached work order? At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression 'GST Act' would mean CGST Act and MGST Act. 2. FACTS AND CONTENTION - AS PER THE APPLICANT FACTS: The submissions made by M/s. Shri Venkateshwara Infrastructure J V, the applicant are as under:- 2.1 The applicant is a Joint Venture partnership firm having its registered office at Padma Nagar, Barshi Road, Latur and has been allotte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rincipal supply. Composite supply and Principal Supply are defined under Section 2(30) and Section 2 (90) of the CGST Act, respectively. 2.7 A supply of goods and/or services will be treated as composite supply if: it is a supply of two or more goods or services together; It is a natural bundle, i.e., goods or services are usually provided together in the normal course of business; and they cannot be separated. To undertake the impugned supply, natural bundle of supply of goods and/or services is inevitable. Thus, the works contract allotted to the applicant shall fall within the ambit of composite supply. 2.8.1 As per Notification No. 12/2017-CTR dt 28.06.2017 amended by Notification No. 2/2018-CTR dt 25.01.2018, GST rate applicable is Nil under Sr. No. 3A under HSN 9954 for Composite supply of goods and services in which the value of supply of goods constitutes not more than 25% of the value of the said composite supply provided to the Central Government, State Government or Union territory or local authority or a Governmental authority. 2.8.2 In the instant case, it is seen from the Estimate Sheet enclosed with Tender Acceptance Letter that, cost of supply of services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. 2.11 In the instant case, the subsidiary agreement and the variation statement have detailed the works to be carried out by the Applicant under the given project which consists of activities such as Blasting/Cutting the Hard Rock, Removing of Excavated Stuff, Providing Steel Support, Cement Concreting etc. In view of the description of the activities in conjunction with the definitions elaborated above, the works of the Applicant would fall under the definition of Earthwork. 2.12 Further, the total contract value is for ₹ 33,05,06,116, in which the works are itemized into Part A to F. Out of those, Part A, B, C and F exclusively deal with Earthwork items amounting to ₹ 29,41,40,231 which constitutes 89% of the total contract by value. Thus, the major part of the contract involves earth work i.e. more than 75% of the work involves earth work. 2.13 In view of the above, in the subject case, all the pre-requisites of entry Sr. No. 3(vii) of HSN 9954 are satisfied, and therefore, the said work order qualifies for the benefit of said entry and GST would be applicable at the rate of 5%. General Rules of Interpretation 2.14 As per the Explanatory Notes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16, vide work order subsidy Agreement No. C A No CAO 9841 dated 25 June 2019. Out of the same, cost of the earth work is ₹ 28,33,90,343/-(i.e., 86% of the work order) and cost of the bridge work is ₹ 4,71,15,767/-(i.e., 14% of the work order). 03. CONTENTION - AS PER THE CONCERNED OFFICER: Officer Submission dated 09.03.2022: The impugned contract includes Earthwork and construction of bridge work and includes supply of two or more taxable supplies of goods or services or both, which are naturally bundled and supplied in conjunction with each other, hence, the said service seems to be falls under the category of Composite Supply as defined under Section 2(30) of CGST Act, 2017. 3.2 As per the calculation sheet submitted by the applicant, the total material cost of earth work including bridge work is ₹ 4,71,15,767/- which is 14% of total cost of the work order (Gross Revised CAV) i.e. ₹ 33,05,06,111/-. Accordingly, pure earth work cost is ₹ 28,33,90,344/-, which is 86% of the total cost of the work order dated 26.09.2017. 3.3 The CGST rate for the intra-State supply of services as per item No.(vii) against Serial No.3 (HSN 9954 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idered the submissions both oral and written made by the applicant as well as the written submissions made by the jurisdictional officer. 5.2 We observe that, the applicant has been allotted a tender to undertake the earthwork in embankment, cutting and bridge approaches and construction of minor bridges and RUBs in the section between Beed to Parli from Ch. 175000 to 185000 m under Ahmednagar-Beed-Parli Vaijnath New Broad Gauge line project ('project') by the Central Railway Department. As per the submissions, the Tender allotted vide Notification dated 25.09.2017 is for ₹ 24,22,47,153/-, which has been enhanced, vide Work Order dated 25.06.2019, to ₹ 33,05,06,116/- out of which ₹ 29,41,40,231/- is earth work cost and cost of bridge work which includes supply of goods is ₹ 3,63,65,880/-. Thus, according to applicant's initial submissions, the total percentage of the Earth work is 89% of the Work order amount and bridge work is 11% of the Total Work Order amount of ₹ 33,05,06,116/-. As per later submissions of the applicant, the cost of the earth work is ₹ 28,33,90,343/-(i.e., 86% of the work order) and cost of the bridge work is.4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government, Union territory, local authority, a Governmental Authority or a Government Entity. 5.7.1 To answer the point at para 5.6 (a) above, we have considered the submissions made by the jurisdictional officer as well as the Work Order and Work Sheets submitted by the applicant. 5.72. In the subject case, as per the impugned tender, the applicant is to undertake the earthwork in embankment, cutting and bridge approaches and construction of minor bridges and RUBs in the section between Beed to Parli from Ch. 175000 to 185000 m under Ahmednagar-Beed-Parli vajinath New Broad Gauge line project ('project') by the Central Railway Department. From the submissions made by the applicant, we find that in the subject case there is a supply of both, goods as well as services and therefore we have no hesitation in holding that the subject activity is a composite supply. Further, by way of fabrication, providing steel support, rock bolting, reinforcement, fixing of chain link, cement concreting, etc. there is a transfer of property like steel etc. Thus, we find that the impugned activity is a Composite supply of works contract as defined in clause (119) of section 2 of the CG ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been formed by the Central Government. The main functions of the Railway board are towards the administration, technical supervision and direction of the country's railways, etc. The Indian Railways carry out the function of operating railways in the country, a function entrusted by the Central Government, and the Central Railway, being a division of Indian Railways also carries out the same function. 5.7.4.3 As per section 2(53) of the CGST Act, 2017, the term 'Government' means the Central Government. As per clause (23) of section 3 of the General Clauses Act, 1897 the term 'Government' includes both the Central Government and any State Government. As per clause (8) of section 3 of the said Act, the 'Central Government', in relation to anything done or to be done after the commencement of the Constitution, means the President. As per Article 53 of the Constitution, the executive power of the Union shall be vested in the President and shall be exercised by him either directly or indirectly through officers, subordinate to him in accordance with the Constitution. Further, in terms of Article 77 of the Constitution, all executive actions of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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