TMI Blog2023 (6) TMI 1298X X X X Extracts X X X X X X X X Extracts X X X X ..... f supervision and shut down with GST duly charged thereon, which can be used in the shifting or modification of transmission lines. Every material and labour involved in the work is being purchased by the NHAI or its contractors and ITC is claimed against this transaction and TDS is being deducted by the NHAI on payments made to their contractors. The MVVNL is only supplying the services of supervision and shutdown to the NHAI. It is observed that MVVNL is not a supplier of goods or services in relation to shifting of transmission lines and other assets which are required to be shifted during construction or widening of roads, the work being undertaken by NHAI itself. Hence, there is no relationship between NHAI and MVVNL which can be categorized as that of supplier and recipient except for the services of the supervising the whole operation for which NHAI is paying consideration along with GST leviable thereon. The supplier in the instant operation is the contractor who is undertaking the work of shifting transmission lines and not the MVVNL who are just supplying services of supervision and not that of construction or replacement of transmission lines. MVVNL is not demandin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the Act, against the applicant. The applicant has submitted that- 3.1 That the applicant is currently doing the work of widening of National Highway no. 30 from Sitarganj to Bareilly, for which the existing electric poles are to be shifted from one place to another. These power lines are required to be shifted to keep the electrical clearances safe as per the Indian Electricity Rules 1956. 3.2 That for the purpose of highway modification, the existing transmission lines throughout the highway are required to be shifted/ raised for safe clearances. 3.3 That the shifting/ modification work of transmission lines for the widening of highway is done in two ways by MVVNL:- a. That the whole shifting/ raising/ modification is done by the MVVNL itself for which MVVNL charges for the work done or, b. That the whole work is done by NHAI under the supervision of MVVNL, for which MVVNL gets supervision charges, which are approximately 5% of the estimated value of the work for shifting / modification of the transmission lines. 3.4 That since these power lines are the assets of MVVNL and need to be shifted/modified as per the requirements of NHAI, all the expense ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is only concerned with the shifting of these transmission lines from one place to another for obtaining safe clearances and that too is done under the expert supervision of MVVNL. The entire shifting work is done by the contractors of NHAI and the NHAI duly deducts and deposits TDS on payments made to contractors. The MVVNL only supervises the shifting work and for this supervision charges are paid to MVVNL along with GST. The only service for which MVVNL is liable to get payment along with GST is supervision charges which have been already paid to MVVNL. 4. Statement of relevant facts having a bearing on the question(s) raised. 4.1 That the National Highway Authority of India (hereinafter referred to as NHAI or the applicant) is an authority established under the National Highway Authority of India Act 1956 for the development, maintenance and management of national highways and having its registered office at G 5 6, Sector 10, Dwarka, New Delhi-110075. 4.2 That the applicant is having its regional office at 3/248, Near SRS mall, Vishal Khand, Gomti Nagar, Lucknow, and concerning office at 26, Green park, Beesalpur Road, Bareilly, Uttar Pradesh. 4.3 That Madhyanchal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be incurred on such transfers shall be borne by intending agency/ consumer. 4.11 That it is pertinent to mention here that the entire shifting work is done by the contractors of intending agency/ applicant (NHAI), who purchases the material required for shifting/ modification of the transmission lines as per the technical specifications of MVVNL. 4.12 That the contractor who has made purchases of the material for shifting of transmission lines, has claimed I.T.C. on the same, has done the work of shifting I modification which includes cost of dismantling the existing sections, civil work for erection and cost of new work according to the specification of MVVNL. Therefore the aforesaid transaction is done between NHAI and its contractor, who has made the required purchases and has completed the work according to the specification of MVVNL. The NHAI also deducts and deposits TDS on payments made to contractors. 4.13 That MVVNL is demanding 18% GST on the work done because as per MVVNL, it is an asset transfer from NHAI to MVVNL and in this regard it is submitted that prior to and even after the shifting I modification, the transmission line belongs to MVVNL. That it is p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person e. Supply should be a taxable supply f. Supply should be made within the taxable territory 2. That the main parameter of supply is that there must be some consideration and transfer of ownership involved for a transaction to be treated as a supply. In the instant case, there is no consideration involved regarding the shifting of transmission lines. No amount, whatsoever, is being paid by NHAI to MVVNL for shifting work. The NHAI makes payment for shifting work to its contractors and since the MVVNL only supervises the work of shifting, only supervision charges are paid to MVVNL (along with GST). As stated earlier, the ownership and operational control of the transmission lines remains with MVVNL and are not at all transferred in any form to NHAI. The NHAI is only concerned with the shifting of these transmission lines from one place to another for obtaining safe clearances and that too is done under the expert supervision of MVVNL. 3. That the MVVNL does not transfer any asset to the applicant (NHAI). The transmission lines were the assets of MVVNL prior to and even after the shifting or modification. That even during the process of shifting, the entire rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been incurred by the recipient of the supply and not include in the price actually paid or payable for the goods or services or both. 11. That it appears that MVVNL is misinterpreting the section 15(2)(b) and is mixing two separate transactions namely (1) between NHAI and MVVNL and (2) between NHAI and its contractors. The plain and simple interpretation of this section is as follows-: The above provision states that the expenses which ought to be incurred by the supplier but has been incurred by the recipient and provided to the supplier shall be added by the supplier in the invoice to be raised on his customer/ recipient. It is merely seen in the construction project where the receiver of the service i.e. contractee procures some crucial material as per his choice of quality and price and provides it to supplier i.e. contractor for using it in the construction work. The contractor will have to add value of the goods received from contractee in his running bill and charge G.S.T. on total value. 12. That in view of the above submissions, the MVVNL is not the contractor or supplier because shifting/modification work is not done by MVVNL and the transmission lines are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o NHAI is supervision over the work of shifting of the transmission lines, for which the NHAI is already paying supervision charges along with GST. The demand of only GST by MVVNL, without any basic value of goods, is totally false and misconceived and against the provisions of CGST Act and UPGST Act. 16. That if MVVNL was itself performing the work of shifting the transmission lines and had raised running bills for the same, then it would have been possible to pay G.S.T. But since this is not the case, GST is only being paid on the supervision charges and not on the entire work done because the entire work of shifting is being performed by the contractors of NHAI. The MVVNL is not justified in demanding GST on an amount which is being paid by NHAI to its contractors. 17. That in the exactly identical matter of NHAI, the Rajasthan Authority of Advance Ruling has ruled in favour of the applicant (NHAI) vide its ruling no. RAJ/AAR/2019-20/09 dt. 28.05.2019 . Similar work of shifting of transmission lines, belonging to Rajasthan Rajya Vidyut Prasaran Nigam Ltd. (MVVNL), was being carried on by NHAI in Rajasthan. The questions on which advance ruling was sought are as follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the CGST Act would also mean a reference to the same provision under the UPGST Act. Further for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / UPGST Act would be mentioned as being under the 'CGST Act'. 10. We have gone through the Form GST ARA-01 filed by the applicant and observed that the applicant has ticked following issues on which advance ruling required- (1) Determination of the liability to pay tax on any goods or services or both At the outset, we find that the issue raised in the application is squarely covered under Section 97(2) of the CGST Act 2017. We therefore, admit the application for consideration on merits. 11. We have gone through the submissions made by the applicant and have examined the same. We observe that the applicant has sought advance ruling on the following questions- 1. Whether the work done by the applicant (NHAI) in shifting the transmission lines for the widening of road under the supervision of MVVNL comes under the definition of supply as per section 15(2)(b) of C.G.S.T. Act, 2017? 2. Whether GST is to be paid to MVVNL on the full amount of work done for shift ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty Owning Entity. In the event of any delay in shifting thereof the Contractor shall be responsible for failure to perform any of its obligations here under if such failure is not as a direct consequence of delay on the part of the entity owning such electric lines, water pipes or telephone cables, as the case may be. The dismantled material/scrap of existing Utility to be shifted dismantled shall belong to the Contractor who would be free to dispose-off the dismantled materials as deemed fit by them. The work of shifting of utilities can be taken up by the Contractor any time after signing of the Agreement. As per above clause, the supervision charges only shall be paid by the Authority i.e. National Highway Authority of India to the Utility Owning Entity i.e. MVVNL. 14. While going through the submission (cost estimate and correspondence letters between the applicant and MVVNL), we find that applicant is/will:- (a) Purchase the material with GST charged on them; (b) The dismantled component of previous transmission lines will be handed over to MVVNL; (c) MVVNL is stating that GST Is applicable on not only supervision charges but also on cost estimate which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, it is observed that MVVNL is not a supplier of goods or services in relation to shifting of transmission lines and other assets which are required to be shifted during construction or widening of roads, the work being undertaken by NHAI itself. Hence, there is no relationship between NHAI and MVVNL which can be categorized as that of supplier and recipient except for the services of the supervising the whole operation for which NHAI is paying consideration along with GST leviable thereon. The supplier in the instant operation is the contractor who is undertaking the work of shifting transmission lines and not the MVVNL who are just supplying services of supervision and not that of construction or replacement of transmission lines. 16.4 We have gone through the relevant letters/instruction of UP Power Corporation Limited wherein section 15(2)(b) of CGST Act has been quoted as a 'sine qua non' for demanding GST on estimated value of work to be done although there is nothing to establish supplier recipient relationship between MVVNL and NHAI. Section 15(2) (b) defines value of supply as under- any amount that the supplier is liable to pay in relation to such supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. No payment is made to MVVNL except supervision charges for the entire operation. If there is any consideration being paid, it is only to the contractors of the NHAI who are engaged in the shifting of transmission lines and NHAI is paying GST on the payment made to their contractors apart from deducting TDS thereon. The consideration involved between NHAI and MVVNL is confined to the limited task of supervision of the shifting work being done by NHAI and its contractors. 18 .2 We have gone through the demand letter of Kesco dt 26-8- 2022 wherein the estimated cost of widening of roads is shown as Rs 1,71,74,060 where as demand has been made only for the supervision charge Rs 632795/ and GST Rs 26,19,772/ which is calculated on the amount of total project cost. Again letter of MVVNL dt 11-08-22 asks for supervision charge Rs 37,17,146 and GST Rs 14050812 against estimated project cost of Rs 1,77,67,955/. It is amply clear that MVVNL is not demanding the cost of total project of shifting of transaction lines rather they are only concerned with supervision charges and GST on the estimated project cost. It is nothing but a case of double taxation because the project cost is being ..... X X X X Extracts X X X X X X X X Extracts X X X X
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