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TMI Blog2022 (4) TMI 1133X X X X Extracts X X X X X X X X Extracts X X X X ..... has sought Advance Ruling on the following questions:- 1. Whether the execution of works contract service at Kudankulam Nuclear Power Project would be covered under S.No vi (or) vii of Notification No.24/2017 dated 21.09.2017 attracting GST@12% or 18% 2. The assessee had already charged GST @12% on its invoices for the works contract service provided. In case the rate of GST is determined to be 18% instead of 12% should we pay the differential tax through debit note under GSTR 1? The Applicant has submitted the copy of application in Form GST ARA - 01 and also submitted a copy of Challan evidencing payment of application fees of Rs. 5,000/- each under sub-rule (1) of Rule 104 of CGST rules 2017 and SGST Rules 2017. 2.1 The applicant has stated that they are engaged in execution of civil engineering and other general construction contracts for various Government departments and organizations. The parties SOM Projects private limited and M/s Varin dera Constructions Limited have entered in to joint venture under the name "SOM VCL(JV)" solely for carrying out the works contract service for Kudankulam Nuclear Power project, a unit of Nuclear Power Corporation of India Ltd (NPCIL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for construction of residential complex only and there is no commercial activity involved which has been confirmed by NPCIL vide their letter dated 22.01.2021. They have also stated that as per column v to item vii of the Notification 31/2017 CT (Rate) when the services are supplied to a Government Entity , they should have been procured by the said entity in relation to work entrusted to it by the Central Government, State Government, Union territory or local authority. The applicant has stated that in their case the project has been awarded by the Government entity "NPCIL" and there is no intermediary involved in the whole scheme of transactions. The works contract service as per the work order has been procured wholly for the construction of residential quarters of Anuvijay township in Kudankulam Tirunelveli. In the light of above facts, the applicant is of the view that their services of construction of residential quarters to NPCIL will attract GST at 12%. 3.1 Due to the prevailing PANDEMIC situation and in order not to delay the proceedings, the applicant was addressed through the Email Address mentioned in the application to seek their willingness to participate in a virtua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Government of India'. ii. In the table relating to "shareholding pattern of top 10 shareholders" the tabulation clearly states and indicates the Hon'ble President of India to hold 100% of the shareholding of the company with 12,69,36,627 shares being held as at year ending 31.03.2020. iii. In the annual return form, Form No. MGT-7 filed by NPCIL, copy of which is available in its website has stated and declared itself to be a "Union Government Company" * In terms of Notification 24/2017 amended by Notification 46/2017 CT (rate), Clause c covers "construction of residential quarters for usage by the employees" As they have received the work order directly from NPCIL, the same is applicable to their service. Hence, they are eligible to adopt the tax rate as stated in Sl.No.(vi) of the said notification attracting GST at 12%. * In respect of the clarification pertaining to Q.No.2, they have stated that Section 97(2) of the Act, prescribes certain cases in which advance ruling application can be filed. They have applied for advance ruling to determine the tax rate applicability to their transaction, which is an allowable stand for Advance Ruling under sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the township namely Anuvijay Township in reference to the letter No. NPCIL/KKNPP/C&EMG/2021/S/148 dt. 22.01.2021 of M/s. NPCIL. (ii) Copy of the plan of township with reference to the project- KKNPP and the residential quarters being constructed by the applicant. 4.3 In response reply from the Office of the Joint Commissioner of GST, Tirunelveli vide letter dt.28.02.2022 was received wherein the following particulars were furnished:- * The tax payer i.e., M/s. SOM(VCL) JV stated that the requisite documents were not available with them and has to be obtained from NPCIL. * The jurisdictional Range Office had addressed letter to the Chief Engineer, NPCIL, Koodankulam on 23.12.21. As no response was received, the Additional Chief Engineer was addressed vide letter dt.29.12.21 by the RO. Further both these officers were contacted over telephone too. * As no reply was forthcoming, a letter dt.06.01.22 was addressed to the Additional chief Engineer and also reminder was sent to the Chief Engineer. Further reminders were also sent on 17.01.22 and 01.02.22. The Chief Engineer, vide mail dt.02.02.22 certified as follows:- "This is to certify that Anuvijay Township is within t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icant was addressed vide a notice dt. 01.11.2021 seeking their justification for admission of the said question for Advance ruling as questions on procedural nature does not fall into the ambit of Section97(2) of the CGST Act,2017. In response to the notice, applicant has vide their letter dt.08.11.21 submitted that the question is on the mechanism of tax payment, if the tax is determined at a rate higher than that at which tax has already been paid and that in their opinion, the question sought relating to mechanism of tax payment is ancillary and directly related to the determination of tax liability. It is observed that the question for ruling is on how to pay the differential duty if the tax to be paid is determined at 18% as they have already charged 12% GST, i.e., the question is on the modality of paying the differential duty and hence this cannot be construed as relating to determination of tax liability. Hence this question, being purely procedural, is not under the purview of Section97(2) and hence it need not be answered by this forum. 7.1 The first question seeking ruling is whether the execution of works contract service at KKNPP would be covered under S.No. vi (or) v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e III of the Central Goods and Services Tax Act, 2017. 6 Provided that where the services are supplied to a Government Entity, they should have been procured by the said entity in relation to a work entrusted to it by the Central Government, State Government, Union territory or local authority, as the case may be It is observed from the above entry that the following conditions are required to be satisfied for availing concessional rate of 6% in terms of SI.No. 3(vi) of said Notification:- a) Supply must be,- i. works contract as defined in clause 119 of Section 2 CGST Act, 2017 rendered by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession; ii. provided to the Central Government or State Government or Union Territory, a local authority, a Governmental authority or a Government entity. iii. procured by the said Government entity in relation to a work entrusted to it by the Central Government, State Government, Union territory or local authority, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... city, in pursuance of the schemes and programs of Government of India under the Atomic Energy Act and the entire shares are held by the Central Government. Thus, NPCIL is a PSE established under Department of Atomic Energy, (Central Government Department) with 100 percent equity held by the Central Government to implement atomic projects for the generation of Electricity as entrusted by the Central Government and therefore is a 'Government Entity' 7.5 Now that it is established that the service recipient is a Government entity, the condition in clause 'c' of SI. No. vi, which stipulates that the supplies should be procured by the said Government entity in relation to a work entrusted to it by the Central Government, State Government, Union territory or local authority, as the case may be is taken up for consideration. In the instant case, the work of construction of residential quarters has been awarded to the applicant by NPCIL. The entity procuring such work is KKNPP and the work of construction of the Residential Quarters for the employees of KKNPP is not a work 'in relation to the work entrusted to KKNPP' as envisaged in 'clause c' of the entry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rulings given by the advance ruling authority has a binding influence on tax authorities and has revenue consequences. The authority cannot therefore proceed, on assumptions and presumptions. This authority under the powers vested with it undertook to ascertain whether the said condition stands .satisfied, but the jurisdictional authority has expressed non-cooperation on the part of the applicant and M/s.KKNPP. Hence in the absence of substantiation with regard to the fulfillment of the condition that the services are procured by M/s.KKNPP in relation to the work entrusted to them by the Central government, the concessional rate provided is not available to the applicant and the applicable rate is governed by the residual entry of Sl.no.3 of Notification no. 11/2017-CT(Rate) dt. 28.06.2017 as amended which is 18%GST. 9. Further, we find that the applicant has relied on the decisions of the AAR, Kerala in the case of M/s. Ray Constructions. Advance Ruling is applicable only to the applicant, the Jurisdictional Officer and the Concerned Officer as per Section 103 of the GST Act. However, it is seen that the issue raised in the cited case relates to the construction of building for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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