TMI Blog2022 (5) TMI 1493X X X X Extracts X X X X X X X X Extracts X X X X ..... bridges, P. Way Linking work including supply of Track Ballast, PSC sleepers, P.Way Fittings, Points and Crossings, Drain, Road, FOB Geotechnical investigation etc. in connection with the proposed feeder line of East West Rail Corridor within the lease hold boundary of Project for coal evacuation through rail at Gevra Opencast of Gevra Area of SECL . SAC 995421 covers 'General Construction services of highways, streets, roads, railways, airfield runways, bridges and tunnels' which by their very nature relates to work of civil engineering and there exists all plausible reasons to link the same to the aforementioned work awarded to the applicant by RITES LIMITED. Therefore, the instant supply of the applicant gets aptly covered under SAC 9954 in general and more specifically under 995421. Thus, the basic requirement for eligibility t the said exemption as provided under S.no. 3(v) of Notification No. 1 1/2017 Central Tax (Rate) dated 28.06.2017 as amended, of getting covered under SAC 995421 stands fulfilled. Whether the instant supply is a Composite supply? - HELD THAT:- There exist all reasonable grounds to hold that natural bundle of supply of goods and services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duly filled in Form ARA-O1 (the application form for Advance Ruling) along with certain annexure and attachments seeking advance ruling as to- What is the rate of tax for the works contract like supply of goods or services or both pertaining to Railways based on order received from M/S. RITES Ltd. (on behalf of SECL) for construction of railway infrastructure facilities for the proposed feeder line of East West Rail Corridor within the leasehold boundary' of project for coal evacuation through Rail at Gevra Opencast of Gevera Area of SECL; Whether the work awarded can be covered under the definition of Works Contract as defined u/s 19) of the COST Act, 2017; Whether the rate of CST for the construction of rail infrastructure facilities will be under 3. No. OR Sl. No.3(xii) Notification No 11/2017-CT(Rate) dated 28/06/2017 as amended by various notifications as applicable and the said work can be considered as works contract pertaining to railways including monorail and metro? 2. Facts of the case: - 2.1 That the applicant is a private incorporation involved in works contract services. 2.2 That the work has been awarded by M/S Rites Limited, which is a Public Sector ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), (ii) (iii) , (iv), (v), (vi), (vii), (viii),(ix), (x) and (xi) above is taxable @ 1 8% 3.3 That original work, as defined under para 2(zs) of Notification No. 12/201 7-CT (Rate) dated 28/06/201 7, states: (zs) original works means- all new constructions; (i) all types of additions and alterations to abandoned or damaged structures on land that are required to make them workable; (ji) erection, commissioning or installation of plant, machinery or equipment or structures, whether pre-fabricated or otherwise; Perusal of the detailed scope of work as per the tender document and brief scope of work indicates that the work awarded to the applicant comprises of laying of track, Box Culverts, Major Bridges, Supply of P-Way Materials work as per layout plan, Construction of side drain cutting area works. Therefore, the applicant is of the understanding that ail the said work as mentioned in the scope of work are in the nature of new work to be executed and, thus, covered under the definition of original work as defined in dause (zs) of said Notification and the work awarded can be considered as original work. Thus, it was the contention of the applicant that the scope of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lways Act, 1 989, distinguishes between, but covers, Government Railway under Section 2(20) and Non-Covernment Railway under Section 2(25) of the Act, Section 2(20)of the Railways Act, 1989:- Government railway means a railway owned by the Central Government; Section 2(25)of the Railways Act, 1989:- (25) non-Government railway means a railway other than a Government railway; It is concluded that the ambit of the term railways is wide under the Railways Act and includes scope for both Government and private administrations. 3.7 That, Article 366(20) of the Constitution states that- 366. Definition in this Constitution, unless the context otherwise requires, the following expressions have I, the meanings hereby respectively assigned to them, that is to say (20) railway does not include (a) a tramway wholly within a municipal area, or (b) any other line Of communication wholly situate in one State and declared by Parliament by law not to be a railway: Article 366(20) of the Constitution clearly states the exemptions under the definition of railways. The Parliament excludes by law, apart from the tramways, the lines of rails mentioned under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... railways - Various items of work as per documents pertain to railways only - Conditions stipulated in Entry 3(v)(a) of impugned notification are fulfilled - Impugned activity is works contract involving original work pertaining to railways - Therefore, reduced CST of 12 per cent would be applicable [Paras 13, 16 to 20]. Thus, on the basis of the foregoing submissions, the applicant through the instant application is seeking certainty and clarity with respect to his four questions as mentioned above under the CST Act in order to avoid unnecessary litigation. 4. personal Hearing:- Keeping with the established principles of natural justice, personal hearing in the matter was extended to the applicant in person, as requested by them and accordingly, Shri Sandip Agrawal advocate and legal representative of the Applicant appeared before us for hearing on 09.03.2022 and reiterated their contention. He also furnished a written submission dated 13.01.2022 along with sample copies of work order which has been taken on record. 5. The legal position, analysis and discussion: At the very outset, we would like to make it clear that the provisions for implementing the CGST Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in hand, as appearing at S.No. 3(v) of Notification No. 11/2017 Central Tax(Rate) dated 28.06.2017 as amended, vide Notification 01/2018 Central Tax(Rate) dated 25.01.2018. In the instant case the eligibility or otherwise of the benefit of said Notification no. 11/2017 Central Tax (Rate) provided under S.no. 3(v) ibid, to the applicant is the subject matter of this proceeding. For the sake of brevity the relevant text of the same is reproduced hereunder. 7.1 Rate of GST on intra-State supply of specific services with Service Code Tariff (SAC) Government of India Ministry of Finance (Department of Revenue) Notification No. 11/2017-CentraI Tax (Rate) New Delhi, the 28th June, 2017 G.S.R......(E).- In exercise of the powers conferred by sub-section (I), [sub-section (3) and subsection I of section 9, sub-section (1) of section Il, sub-section (5) of section sub-section (1) of section 16 [and section 148] 3 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, and on being satisfied that it is necessary in the public interest so to do, hereby notifies that the central tax, on the intra-State s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rwise than as a part of a residential complex;- 6 7.2 Thus from the above it gets abundantly clear that for availing the benefit as stipulated supra at 3(v)(a), all the conditions mentioned therein is to be necessarily fulfilled viz. (i) the service should be under the Heading 9954 (Construction Service) (ii) the supply should be a 'Composite Supoly' (iii) the work should be ' works contract' a, defined in Clause (119) of Section 2 of CGST Act and (iv) The work should be 'by way of construction, erection, commissioning, or installation of original works pertaining to railways , including monorail and metro. 7.3 On going through the Scheme of Classification of Services as provided in the Annexure to Notification No. 11/201 7-C.T.(Rate) dated 28.06.2017 supra, the SAC relating to the works of railways are as under: ANNEXURE : SCHEME OF CLASSIFICATION OF SERVICES S. No. Chapter, Section, Heading or Group Service Code (Tariff) Service Description 1 2 3 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14 995422 General construction services of harbours, waterways, dams, water mains and lines, irriation and other waterworks Further, the 'Explanatory Notes to the Scheme of Classification of Service', indicates the scope and coverage of the Scheme of classification of service and is a guiding tool for classification Of services, the Explanatory notes to SAC 995421 are as follows: EXPLANATORY NOTES TO SCHEME OF CLASSIFICATION OF SERVICES UNDER GST Preface The Scheme of Classification of Services adopted for the purposes of GST is a modified version Of the United Nations Central Product Classification. 2. The Explanatory notes for the said Scheme of Classification of Services is based on the explanatory notes to the UNCPC, and as recommended by the committee constituted for the purpose, is annexed. 3. The explanatory notes indicate the scope and coverage of the heading, groups and service codes of the Scheme of Classification of Services. These may be used by the assessee and the tax administration as a guiding tool for classification of services. However, it may be noted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said letter of acceptance issued on 25.10.2021 that RITES LIMITED for and on behalf of South Eastern Coalfields Limited, (SECL), Gevra has awarded to the applicant the work of Earthwork in formation, minor bridges, P. Way Linking work including supply of Track Ballast, PSC sleepers, P.Way Fittings, Points and Crossings, Drain, Road, FOB Geotechnical investigation etc. in connection with the proposed feeder line of East West Rail Corridor within the lease hold boundary of Project for coal evacuation through rail at Gevra Opencast of Gevra Area of SECL SAC 995421 covers 'General Construction services of highways, streets, roads, railways, airfield runways, bridges and tunnels' which by their very nature relates to work of civil engineering and there exists all plausible reasons to link the same to the aforementioned work awarded to the applicant by RITES LIMITED. Therefore, the instant supply of the applicant gets aptly covered under SAC 9954 in general and more specifically under 995421 . Thus, the basic requirement for eligibility t the said exemption as provided under S.no. 3(v) of Notification No. 1 1/2017 Central Tax (Rate) dated 28.06.2017 as amended, of gett ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tallation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract. Thus, from the above it can be seen that the term works contract has been restricted to contract for building construction, fabrication etc. of any immovable property only. Any such composite supply undertaken on goods say for example a fabrication or paint job done in automotive body shop will not fall within the definition of term works contract per se under GST. Such contracts would continue to remain composite supplies, but will not be treated as a Works Contract for the purposes of CST. As per Para 6 (a) of Schedule Il to the CGST Act, 201 7, works contracts as defined in section 19) of the CGST Act, 2017 shall be treated as a supply of services. Thus, there exist a clear demarcation of a works contract as a supply of service under CST. Besides this, as per section 17(5) (c) of the COST Act, 201 7, input tax credit shall not be available in respect of the works contract services when supplied for construction of an i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attached to earth merely for operational efficiency of the said property such as to prevent it from wobbling during the operations. There is an intention of permanently attaching the said property to the ground. In the present case under consideration, the letter of acceptance supra dated 25.10.2021 furnished by the applicant, issued by RITES to substantiate their claim of exemption supra only provides a peripheral aspect and indicates towards the outline description of the works and the activity to be undertaken by the applicant. The other aspects of the property as required for categorizing the same under the definition of 'Works Contract' is a prerequisite and can in no way be ignored with. Under GST, only those defined works carried out on any immovable property is covered under 'Works Contract'. Thus, without substantial evidence of the works contracted/undertaken like related diagrams /plans / schedules/ Pictures/ detailed write-up on the works, etc., it is practically impossible for this authority to conclude or for that matter to hold that the works as is forthcoming form the letter of acceptance supra, undertaken is 'Works Contract' per se, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Tax (Rate) dated 25.01 .2018. we find that the entry at 3(v)(a) do not specify the class of service provider to whom it applies. The entry is specific to the composite supply of works contract pertaining to railways including monorail and metro. We would also like to cite reference to recommendation of the Fitment Committee to the 25th GST Council meeting and though the same was related to metro rail, the ratio of the said decision is squarely applicable in the case in hand for arriving at a decision. The said recommendation of the Fitment Committee to the 25th GST Council meeting (available in Volume -2 of the Agenda) which facilitated the downward revision of the GST rate from 18% to 12% for composite supply or works contract supplied by way of construction, erection, commissioning or installation of original works pertaining to Metro rail reads as under: Discussion on Agenda Items Agenda Item 10: Issues recommended by the Fitment Committee for the consideration of the GST Council Agenda Item IO(ii): Recommendations on Services The Summary Sheet of the recommendations of the Fitment Committee on Services was circulated as Aaenda Item IO(ii) in Volume - I of the Detailed Agen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstruction of metro and monorail projects (construction, erection, commissioning or installation of original works). Fitment Decision Agreed 7.8 Now coming to the aspect of railways , it is seen that the term railways is not defined in the GST Act. It, however, is defined under Section 2(31) of the Railways Act, 1989. meaning a railway, or any portion of a railway, for the public carriage of passengers or goods, and includes (a) All lands within the fences or other boundary marks indicating the limits of the land appurtenant to a railway; (b) All lines of rails, sidings, or yards, or branches used for the purpose of, or in connection with. a railway; (c) All electric traction equipment, power supply and distribution installations used for the purpose of, or in connection with, a railway; (d) All rolling stock, stations, offices, warehouses, wharves, workshops, manufactories, fixed plant and machinery, roads and streets, running rooms, rest houses, institutes, hospitals, waterworks and water supply installations, staff dwellings and any other works constructed for purpose of, or in connection with, railway; (e) All vehicles which are used and any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner, Central Excise, Nagpur, 2017 (47) S T.R. 17 (CESTAT, west Zonal Bench, Mumbai)] Art. 366(20) of the Constitution excludes from the ambit of 'railway'. only (a) a tramway wholly within a municipal area and (b) any line of communication wholly situate in one State and declared by Parliament by law not to be a railway. The Parliament excludes by law, apart from the tramways, the lines of rails mentioned under Section 2(31)(ii) of the Railways Act, 1 989, being rails built solely for the purpose of recreation. The term 'public carriage', therefore, cannot be given any meaning that may add more exclusion than specifically provided under Section 2(31)(ii) of the Railways Act, 1989. It is also worthwhile to mention here that M/S South Eastern Coal Fields Limited, SECL a public sector undertaking would be the owner of the proposed feeder line of East West Rail Corridor being built for coal evacuation through rail at Cevra Opencast of Gevra area of SECL. The purpose of the carriage of coal is, therefore, not recreation, but producing public goods like electricity. It is, therefore, not excluded under Section 2(31)(ii) of the Railways Act, 1989. Further as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttisgarh, 496001 [GSTlN-22AABCT4589RIZN], the applicant, subject to the fact that the works undertaken by them are 'Works Contract' as per Section 2(119) of the Act and if so the applicable GST would be @ 1 2% effective from 25.01.2018. 8. Having regard to the facts and circumstances of the case and discussions as above, we pass the following order:- ORDER (Under section 98 of the Chhattisgarh Goods and Services Tax Act, 2017) No.STC/AAR/06/2022 Raipur Dated . .. ....,5.2022 The ruling so sought by M/S Triveni Engicons Private Limited Flat No.- 3, B-BIock, Mehta Bhawan, First Floor, Kalindi Kunj, Sarangarh Road, Raigarh, Chhattisgarh, 496001 [CSTIN22AABCT4589Rl ZN], the applicant is accordingly answered as under: RULING i. For the proposed feeder line of East West Rail Corridor within the leasehold boundary of project for coal evacuation through Rail at Gevra Opencast of Gevera Area of SECL the rate of tax would be 12% [ COST @6% + CGGST @6%] as stipulated under entry No.3 (v)(a) of Notification No. 1 1 /201 7 amended vide Notification No. 1/2018- Central Tax(rate) dated 25th January 201 8, effective from 25.01 .2018, provided the works undert ..... X X X X Extracts X X X X X X X X Extracts X X X X
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