In re NHPC Limited (GST AAR Uttarakhand)
Q1. Whether NHPC Limited required to pay GST under reverse charge of Notification No. 13/2017 while making payment to PWD, Uttrakhand for construction of road?
A1. No GST is applicable on the activity of the applicant since the same falls under exempted services in terms of Notification No. 12/2017-Central Tax (Rate),dated 28.06.2017 (as amended time to time)
Q2. What is the time of supply when advance payment is released to PWD Uttarakhand;
A2. On the issues of time of supply and applicability of GST on reimbursement , no provisions of GST is applicable on said issues as supply of service in question falls under exempted services.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING UTTARAKHAND
Note : Under Section. 100(1) of the Uttarakhand Goods and Services Tax Act, 2017, an appeal against this ruling lies before the appellate authority for advance ruling constituted under section-99 of the Uttarakhand Goods and Services Tax Act, 2017. within a period of 30 days from the date of service of this order.
1. This is an application under Sub-Section (1) of Section 97 of the CGST/SGST Act, 2017 (herein after referred to as Act) and the rules made thereunder filed by M/s NHPC, Admin Building, Tanakpur Power Station, Banbasa, Uttarakhand seeking an advance ruling on following issues:
(a) Whether they are required to pay GST under reverse charge in terms of Notification No. 13/2017 dated 28.06.2017 while making payment to PWD, Uttarakhand for construction of road;
(b) What is the time of supply when advance payment is released to PWD Uttarakhand;
(c) Whether the amount deposited with Central Fund i.e Uttaranchal CAMPA and reimbursed by MEA considering as part cost of the road is liable for GST.
2. Advance Ruling under GST means a decision provided by the authority or the appellate authority to an applicant on matters or on questions specified in sub section (2) of section 97 or sub section (1) of section 100 in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant.
3. As per the said subsection (2) of Section 97 of the CGST/SGST Act, 2017 advance ruling can be sought by an applicant in respect of :-
(a) Classification of any goods or services or both
(b) Applicability of a notification issued under the provisions of this Act,
(c) Determination of time and value of supply of goods or services or both,
(d) Admissibility of input tax credit of tax paid or deemed to have been paid
(e) Determination of the liability to pay tax on any goods or services or both
(f) Whether the applicant is required to be registered
(g) Whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both within the meaning of that term
4. In the present case applicant has sought advance ruling on applicability of Notification No. 13/2017 dated 28.06.2017 on their activity and time & value of supply of services. Therefore, in terms of said Section 97(2) (b) & (c) of CGST/SGST Act, 2017, the present application is hereby admitted.
5. Accordingly opportunity of personal hearing was granted to the applicant on 27.09.2018. Shri. N K Gupta (Senior Manager) and Shri J C Pant (Manager Law) of the applicant appeared for personal hearing on said date and submitted documents describing therein exact nature of work being undertaken. Nobody appeared from the side of Revenue for the hearing.
6. From the documents submitted by the applicant we find that applicant is registered in Uttarakhand with GSTIN bearing no. 05AAACNO149C4Z2. We further find that MOU to be signed between TPS, NHPC and PWD Govt, of Uttarakhand for construction of road from Tanakpur Barrege to Brahmdev (Nepal) on deposit work, basis under Mahakali Treaty signed between India & Nepal. M/s NHPC (implementing agency) in consultation with State Government of Uttarakhand will submit the road aligment and prepare project report. The said work has been entrusted by MEA to NHPC and PWD, Uttarakhand and the funding for the said project will be done by MEA from its own budget under the head “Aid to Nepal”. Initially NHPC can spend the money, if required, subsequently the same can be recouped from the budget of MEA to NHPC directly. Budget releases will be made by MEA to NHPC which is executing the project as a turnkey agency of MEA based on the recommendation of the Ministry of Power.
7. In the present case we are restricting our conclusion to the facts and circumstances which was filed for our consideration in the application. Now we proceed by taking the issue one by one:
(A) Whether they are required to pay GST under reverse charge in terms of Notification No. 13/2017 dated 28.06.2017 while making payment to’ PWD, Uttarakhand for construction of road.
In the instant case the work allotted to the applicant is related to “construction of road” which involves both supply of goods as well as supply of services. As per Schedule II of the Act ibid the following activity shall be treated as supply of service-
i. construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly,
ii. works contract including transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract
Thus the activity of the applicant comes under the purview of supply of services.
Before initiating proceedings, we have gone through the official web-site of NHPC Ltd & Ministry of Power, Govt, of India and we find that the promoter of M/s NHPC Limited is Hon’ble President of India through Ministry of Power, Govt, of India. M/s NHPC Limited is a Govt. of India Enterprise, incorporated in the year 1975 with an objective to plan, promote and organize an integrated and efficient development of hydroelectric power in all aspects. At present, NHPC Ltd is a Mini Ratna Category-I Enterprise of the Govt, of India. M/s NHPC Ltd administrative control of power ministry.
From the record we find that NHPC Ltd & PWD, Govt, of Uttarakhand has been entrusted the work of construction of road by Ministry of External Affairs, Govt, of India ( in short “MEA”) wherein the funds will be provided by MEA from its head “Aid to Nepal” to M/s NHPC Ltd. It means that the funds provided by MEA to M/s NHPC Ltd is in the form of grants. The function of M/s NHPC Ltd in the said work has been define as “implementing agency”. Now question arises before us whether the said grants received from Central Government come under the purview of GST.
To appreciate the law position in this regard we find that Notification No. 12/2017-Central Tax (Rate) dated 28th June, 2017 deals with exempted services. The said notification was further amended vide Notification No. 32/2017-Central Tax (Rate) dated 13th October, 2017 vide which entry no, 9C was inserted and the same is extracted as under:
