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TMI BlogStandard Operating Procedure (SOP)/Directive for post-GST payments of pending bills related to work orders issued during pre-GST period.X X X X Extracts X X X X X X X X Extracts X X X X ..... oods and Services Tax (GST) has come into force w.e.f 1st July 2017 by subsuming various indirect taxes such as Central excise duty, Service tax VAT, CST, Entry tax, etc. Subsequent to the enactment of GST Act w.e.f. 01.07.2017, different work departments of State Government have sought clarifications on modalities of treatment of pending bills of different contractors where in the contract was awarded in pre-GST regime, i.e., VAT regime and the works has completed partly/wholly after the implementation of GST. Hon'ble Jharkhand High Court has directed the Government of Jharkhand to issue guidelines on this matter in its order dated 16-03-2021 in WP (T)- 2108/2019. The main issue under consideration is for the payment of pending bills rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e construed as composite supply*. 4. The term composite supply is defined under Sec 2(30) of the GST Act as follows:- *Composite supply means a 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. Illustration: Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply. In such cases the rate of tax shall be determined by applicable rate on principal supply. 5. Before introductio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21,CT (Rate) Dated - 31/12/2021, rate has been changed to - Services Rate of Tax w.e.f Work contract services provided to Government authorities and Government entity. 18% 01-01-2022 Vide Notification No. 03/2022, Dated - 13/07/2022 Services Rate of Tax W.e.f Work contract services provided to central Government, state Government and local authorities. 18% 18-07-2022 Composite supply of works contract involving predominantly earth work (that is constituting more than 75 % of the value ofthe work contract) provided to the central Government, state Government, local authorities. 12% 18-07-2022 So in the period between 22.08.2017 till 17.07.2022 the rate of GST on Works contract has been @ 12% for the service supplied to cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f goods and/or services used or intended to be used inthe course of furtherance of business is permissible. Works Contractor is eligible to avail ITC credited to his electronic credit ledger on GST portalsubject to conditions prescribed therein. It is also pertinent to mention that under GST regime cross utilization of credit of Goods and Services are available to offset ones liability which was not available during the pre GST regime. ii. It is also important to mention that under GST works contractors are eligible for availing transitional ITC on stock of Goods purchased from 01.07.2016 onwards and declared in the returns filed, by way of filing TRAN-1 and TRAN-2. 11. Payments for Work Contracts The contract price is generally inclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Rate of tax on major commodities used in Works contract were as under:- Commodities VAT(Rate of Tax) Central Excise Duty (Rat e ofTax) Steel 5 % 12.36 % Cement 14.5 % 12.36 % Bitumen 5.5 % 12.36 % For rate of Tax on other commodities Part B of schedule II of JVAT 2005 and First Schedule and the Second Schedule to the Central Excise Tariff Act,1985 may be referred to. Similarly under GST, Rate of Tax on Goods and Services were:- Commodities GST(Rate of Tax) Steel 18 % Cement 28 % Bitumen 18 % For detailed rates of tax on other Goods and Services involved in execution of work contracts, schedule I, II, III and IV to JGST 2017 may be referred to. iv. The same format can be used to compile the information for each ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both in case of GST unlike in the VAT regime where ITC of services were not available. 13. After comparing the net increase/decrease in tax liability to the total tax levied under VAT regime and GST regime and also accounting the ITC availability, any conclusion regarding negative or positive impact on cost may be arrived at. 14. It may be clarified that under no circumstances there will be a revision of any contractual values in the contract, in cases where the work has to be completed before 30.06.2017 as per the contract, but the execution got delayed as a result of delay on part of the contractor. 15. No revision of contractual value should be considered if there is no clause for revision in contractual value due to ch ange in thera ..... X X X X Extracts X X X X X X X X Extracts X X X X
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