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TMI Blog2022 (9) TMI 512X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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-ordination 0.12% 4. The applicant has attached the Letter of Acceptance and Schedule H of the Contract Agreement as per Exhibit - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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 amended), Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied by way of construction, erection, commissioning, installation, completi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the said Section, the Gujarat Authority for Advance Ruling has been constituted by the State government in order to pronounce the advance ruling sought by the applicant. 2. M/s. Iron Triangle Ltd. in JV with Krishna Corporation Pvt. Ltd. (herein after referred to as TTL-KCPL JV') has sought an advance ruling regarding applicable rate of tax (GST) on the design and construction of road. ITL-KCPL JV received the said contract fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial 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 provide suitable clarification to this office whether Mandal Bechrajji Special Investment Regional Development Authority (MBSIRDA) can be considered as Local Authority or otherwise at the earliest. Revenue's submission: 10. Revenue has neither submitted its comments nor appeared for hearing. Findings 11. We have considered the submissions made by the Applicant in their application for advance ruling as well as the submissions made by authorised signatory, during the personal hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ads 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 Features, Embankment & Pavement Design comprises Multipurpose Corridors (MPCs)/Footpath Pavement, Granular Sub-base Layer, Culverts, Bridges, Rail Road Bridges, Grade Separated Structures/ Flyovers, Underpasses, Level Crossing, Traffic Control Devices and Road Safety Works, Traffic Sign Material, Transverse Rumble Strip, PZebra Crossings, Raised Pavement Markers/ Road Studs, Roadside Furniture. Appendix BIV - Typical Cross Section Drawings Appendix B V - Potable Water Supply system 1.2 Scope of work The broad scope of work under this package for potable wat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion) 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 network of TP-1 to check clash detection. 13. We note that the applicant has submitted that the design and construction of roads and services on EPC Basis ofTP-1 Area covers under Entry No. 3 (iii) and 3 (iv) of Notification No. 11/2017-CT-(Rate) Dated 28-6-17 as amended. 13. First, we refer to the entry 3(iv), which read as follows: 3 (iv) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, other than that covered by items (i), (ia), (ib), (ic), (id), (ie) and (if) above supplied by way of construction, erection, commissioning, install ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, Recycled Water Supply, Sewerage Collection System, Industrial Effluent Collection System, Storm Water Drainage Network are not naturally bundled service and also do not supply in combination with each other. Infact construction of Road of TP-1 area and other utility services are independent work contract service to each other. Therefore, the applicant services are not composite supply in terms of Section 2(30) of CGST Act. 15. The applicant has argued that MBSIRDA is local authority therefore, is eligible to GST @ 6% under entry No. 3 (iii) of Notification No. 11/2017-CT (Rate). Now, we refer to entry No. 3(iii) of Notification No. 11/2017-CT (Rate) Entry No. 3 (iii) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied to the "Central Government, State Government, Union territory, a local authority, a Governmental Autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted. 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 Authority. We find that the contract submitted by the applicant specify that MBSIRDA is incorporated under Indian Companies Act, 2013, thus MBSIRDA is a company registered with Registrar of Companies. 15.3 We find that MBSIRDA is constituted under the Gujarat Special Investment Region Act, 2009 by the Govt, of Gujarat vide Notification No. GHU/12/23/SIR/112012/1276/1 dated 1-10-2012 issued by the Under Secretary. Govt, of Gujarat. Special Investment Region has been defined under Section 2 (s) of Gujarat Act No. 2 of 2009, is as under : (s) "Special Investment Region" means an Investment Region or an Industrial Area declared under section 3. 15.4 Section 4 of Gujarat Act No. 2 of 2009 stipulates that Special Investment region to be out of jurisdiction of local authority. Section 4 is reproduced as under: 4. Special Investment Region to be out of jurisdiction of local authority- (1) A Special Investment Region declared under this Act, except the villa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsformer 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 survey, geotechnical survey, detailed design of all proposed work under package of the TP-1. 16.1 The above mentioned works do not cover under the definition of composite supply as already discussed in the para 14.1 The above mentioned services are independent to each other and all the services i.e. TP Road and utility Services involves the component of goods and services. Thus all the services of which contract/ service order have been given to the applicant covers under the category of Work Contract Service as defined under Section 2 (119) of CGST Act. 16.2 We hold that supply of construction of Road of TP-1 area is work contract service and covers under Entry No. 3(iv) of Notification and is liable to GST @ 6% from 1-7-2017 to 17-7-2022. 16.3 Further, with effect from 18-7-2022, entry no. 3 (iv) has been omitted vide A (I)(a) of Notification No. 3/2022-CT (Rate) dated 13-7-22. Entry A (I) (a) is reproduced as under: In the said notification, - (A) in the Table, - (I) against serial number 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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