TMI Blog2022 (9) TMI 512X X X X Extracts X X X X X X X X Extracts X X X X ..... struction of TP-1 Road covers under this entry - under the entry No. 3(iv) of Notification only work contract service of construction of Road is covered and attracts concessional rate of GST @ 6%. The design and construction of utility service includes goods and service supply by the applicant is composite supply of work contract. Hence first condition is satisfied . The applicant has submitted that Mandal Becharaji Special Investment Regional Development Authority (MBSIRDA) is a local authority and in support of argument has submitted the screen shot of TAN wherein it is mentioned that Sub-category- local authority' also submitted another screen shot wherein mentioned Constitution of Business- local authority'. The applicant has not submitted any documents of State Govt. Authority by which it can be established that MBSIRDA is a local authority. Further even at the time of filing the Advance Ruling Application, the applicant itself was not aware that they are local authority as such applicant has put forth this argument during the Personal Hearing only. This facts shows that the applicant was aware that they do not fulfil the criteria of being local authority otherwi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g for Electrical, ICT and Gas Network (8) Utility Compound Development includes various miscellaneous items construction of boundary wall with gates and wire fencing, office room, secu rain water harvesting system, Toilet block, internal sewer and storm network internal approach roads and kerb stones as per requirements, parking sheds, internal lighting and CCTVs, transformer foundation and firewall as per design requirement etc. (9) SCADA System for TP-1 Control and Monitoring. The applicant has submitted that scope of work includes detailed topographical survey, hydrological survey, geotechnical survey, detailed design of all proposed work under package of the TP-1. 3. The applicant has submitted the weightage of an activity in proportion to the total Contract Price is specified below: Activity Weightage (in %) Road Work 53.35% Survey and Designing 5.00% Utility Services 41.09% Storm Water (Open Drain) 0.44% Inter Department Co-ordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gly, the definition provided in the General Clauses Act would be applicable and the same is reproduced below: Section 3(26) - immovable property shall include land, benefits to arise out of land and things attached to earth, or permanently fastened to anything attached to the earth. Section 3(36) - movable property shall mean property of every description, except immovable property . (vi) The whole contract on EPC basis for design and construction of roads and providing other utility services as per the scope of agreement will fall under the definition of works contract as per section 2(119) involving supply of goods as well as services pertaining to construction of an immovable property. (vii) Being a works contract under section 2(119), it is a composite supply and the predominant element of the entire project is the Construction of Roads constituting almost 53% of the entire contract price. And in terms of Section 8 of CGST Act, in case of composite supply, the tax rate applicable on the principal supply would be applicable on the entire composite supply. (viii) As per Entry 3(iv) of the Notification No. 11/2017-CT (Rate) dated 28.06.2017 (as amend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [CGST+SGST each]. 7. Question on which Advance Ruling sought: 1. Whether the supply of design and construction of Roads and Services of TP-1 Area Under Cluster-A of MBSIR on EPC Basis wherein both goods and services are supplied can be construed to be a Composite Supply of Works Contract in terms of Section 2(119) and section 2(30) of the CGST Act, 2017? 2. If yes, whether the Principal Supply in this case will be the Construction of Roads and attract rate of 6% [CGST and SGST each] as per Notification No. 11/2017-CT(Rate) dated 28.06.2017) as amended)? Personal Hearing 8. Personal hearing granted on 5-5-22 and 2-8-22 is attended by Shri Karan Shah, CA and he reiterated the submission. On being specifically asked he stated that applicant is local authority and in support will submit the documents to this effect. 9. Authority of Advance Ruling has written a letter No. GAAR/AR-2022/F-18/B-71/72 dated 24-05-22 to the Deputy Secretary, Govt. of Gujarat, Industries and Mines Department, Gandhinagar for the clarification in the subject matter. The same is reproduced as under: 1. Reference is invited to Section 96 of the GGST Act, 2017. As per the provision of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o put in place a legal framework and organizational mechanism with such powers and functions, which steer the development of mega investment regions and industrial areas faster and smoother. Section 5 and Section 8 of the aforesaid Act provides for establishment of Apex Authority and Regional Development Authority respectively for development regulation, management, planning and to grant permission and approval for any economic activity or amenity to be established in the Special Investment Region. 6. Sub-Section (1) of Section 4 of the GSIR Act provides that Special Investment Region declared under the said Act shall be out of the jurisdiction of the local authority. However, it does not clarify whether Special Investment Region can be considered as local authority or not. 7. As per Section 98(6) of the SGST Act 2017, Advance Ruling Authority is required to pronounce the Ruling within 90 days from the date of receipt of application. 8. Submission made by ITL-KCPL JV for considering MBSIRDA as local authority has implications on the revenue of the State as well as the Central Government. In light of the above facts and legal provisions, you are kindly requested to pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Street lightning and CD Structures (excluding SSNNL Canal Crossings) (2) Potable Water Supply System (3) Recycled Water Supply System (4) Storm Water System - Open Drainage for Interim Development of TP-1 (5) Sewerage and Industrial Effluent Collection System (6) Utility Compound Development includes various miscellaneous items like construction of boundary wall with gates and wire fencing, office room, security cabin, rain water harvesting system. Toilet block, internal sewer and storm network, internal approach roads and kerbs stones as per requirements, parking sheds, internal lighting and CCTVs, transformer foundation and firewall as per design requirements etc. complete. (7) SCADA (8) Any other work as suggested by client/ DPMC for the successful operation of the project under scope of this package. Scope of work includes detailed topographical survey, hydrological survey, geotechnical survey, detailed design of all proposed work under this package of the TP-1 Annexure B III- Design and Construction of Roads 1.0 Design and construction of Roads includes Road name and Typical Cross Sections. Geometric Design and other Feature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvey, Detailed design and Construction of pumping mains, Industrial effluent collection network and manhole, pump houses with required electromechanical work, SCADA, valve chambers, plot service connections (For plot on 9m, 12 m, 15m and 18m roads) and other necessary structures and fixtures for the sewerage mains and collection network and other required miscellaneous works as per requirements etc complete for TP-1 project area on EPC basis including Operation and Maintenance of 5 Years . Appendix B IX - Storm Water Drainage Network Scope of the work for the detailed design (not execution) 1. Storm water drainage network of north of Sitapur drain of Cluster-A and up to discharge location (which will include pipe drain/box drain as per design) considering ultimate development and up to discharge location including outfall structure. 2. A Storm water network shall be designed based on piped network and only few locations, a box culvert shall be considered to minimize the depth at final discharge as-shown in catchment area and subjected to approval of Client /DPMC 3. Detailed design of storm network needs to incorporate under BIM model along with other networ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s constituting almost 53% of the entire contract price. And in terms of Section 8 of CGST Act, in case of composite supply, the tax rate applicable on the principal supply would be applicable on the entire composite supply. The weightage of activity is as under: Activity Weightage (in %) Road Work 53.35% Survey and Designing 5.00% Utility Services 41.09% Storm Water (Open Drain) 0.44% Inter Department Co-ordination 0.12% We note that Section 2 (30) of GGST Act, defines the composite supply which specify that supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply. 14.1 We have observed that construction of TP Road and other Utility Service viz. Potable Water Supply system, R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Development Authority (MBSIRDA) is a local authority and in support of argument has submitted the screen shot of TAN wherein it is mentioned that Sub-category- local authority' also submitted another screen shot wherein mentioned Constitution of Business- local authority'. The applicant has not submitted any documents of State Govt. Authority by which it can be established that MBSIRDA is a local authority. Further even at the time of filing the Advance Ruling Application, the applicant itself was not aware that they are local authority as such applicant has put forth this argument during the Personal Hearing only. This facts shows that the applicant was aware that they do not fulfil the criteria of being local authority otherwise they should aware of this facts. The applicant during the course of Personal Hearing has stated that they will submit the State Govt. Authority letter stating that MBSIRDA is local authority but did not submitted. This authority has also not received reply of letter dated 24-05-22 written to the Deputy Secretary, Govt, of Gujarat, Industries and Mines Department, Gandhinagar to confirm whether MBISRDA covers under the category of local Authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utility do not cover entry No. 3 (iii) of Notification is not applicable in this case. 16. We find that design and construction of roads and utility services of TP-1 Area as per Schedule A and B together with Project Facilities as specified in Schedule C consist of following works : (1) TP Road Network with additional DP roads including Street Lighting and CD (2) Structures (3) Potable Water Supply System (4) Recycled Water Supply System (5) Storm Water System upto Final Discharge Location (6) Sewerage and Industrial Effluent Collection System (7) Ducting and Space Planning for Electrical, ICT and Gas Network (8) Utility Compound Development includes various miscellaneous items like construction of boundary wall with gates and wire fencing, office room, security cabin, rain water harvesting system, Toilet block, internal sewer and storm network, internal approach roads and kerb stones as per requirements, parking sheds, internal lighting and CCTVs, transformer foundation and firewall as per design requirement etc. (9) SCADA System for TP-1 Control and Monitoring Scope of work includes detailed topographical survey, hydrological su ..... 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