In re TPSC (India) Private Limited (GST AAR Telangana)
Whether the contract completed during the Pre-GST period and the consequential demand based on the completed contract can be brought to assessment under GST Act, 2017?
Ruling: No. In view of the clarification issued vide CBIC circular No.178/10/2022, dated: 03-08-2022 and in terms of the transitional provisions under CGST ACT, 2017 discussed supra.
Whether the liquidated damages, without any supply of materials and labor be assessed to GST under GST Act, 2017?
Ruling: No. In view of the clarification issued vide CBIC circular No.178/10/2022, dated: 03-08-2022 and in terms of the transitional provisions under CGST ACT, 2017 discussed supra.
The mutually agreed and settled amount, based on arbitral award, in the nature of compensation, payable for delay in completion of the contract and agreed to be payable by the Applicant to DGAL without any supply of goods or services, is liable to be taxed under GST?
Ruling: No. Please see the discussion above. No GST on liquidated damages, without supply of materials & on mutually agreed and settled amount, based on arbitral award.
Whether DGAL is eligible to claim ITC on the GST amount if any levied on the mutually agreed arbitral award amount received from the Applicant?
Ruling: Does not arise.
Whether there is any taxability under GST on Interest payable on the liquidated damages?
Ruling: No. There is no GST on the interest of 13% p.a., awarded by Hon’ble Tribunal for Arbitration Award as the principal supply itself is not taxable for the reasons discussed supra.
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, TELANGANA
[ORDER UNDER SECTION 98(4) OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 AND UNDER SECTION 98(4) OF THE TEALANGANA GOODS AND SERVICES TAX ACT, 2017.]
1. M/s. TPSC (India) Private Limited, A-1 Module, D-Quadrant, 2nd Floor, Cyber Towers, HITEC City, Madhapur, Hyderabad, Telangana -505081 (36AABCT1309H1ZN) has filed an application in FORM GST ARA-01 under Section 97(1) of TGST Act, 2017 read with Rule 104 of CGST/TGST Rules
2. At the outset, it is made clear that the provisions of both the CGST Act and the TGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the TGST Act. Further, for the purposes of this Advance Ruling, the expression ‘GST Act’ would be a common reference to both CGST Act and TGST Act.
3. It is observed that the queries raised by the applicant fall within the ambit of Section 97 of the GST ACT. The Applicant enclosed copies of challans as proof of payment of Rs. 5,000/- under SGST and Rs. 5,000/- under CGST towards the fee for Advance Ruling. The Applicant has declared that the questions raised in the application have neither been decided nor are pending before any authority under any provisions of the CGST/TGST Act’2017. The application is, therefore, admitted after examining it and the records called for and after hearing the applicant as per section 98(2) of TGST Act’2017.
4. BRIEF FACTS OF THE CASE:
4.1 Statement of relevant facts as per the applicant having a bearing on the question(s) on which Advance Ruling is required is reproduced below-
The applicant M/s. TPSC (India) Private Limited is engaged in taking up Thermal Projects in various cities in India and during the financial year 2013-2014, the applicant company was allotted an Erection and Pre-Commissioning works related to Steam Turbine Generator and Auxiliaries, project of NTPC, Kudgi, Karnataka and duration of completion of the project was for (4) years upto 2017.
The execution of the project was in Kudgi, Karnataka State, and was completed (taking over) on 06-Dec-2018. The entire contract was awarded by NTPC to TJPS (Toshiba JSW Power Systems Pvt Ltd.,) and in turn, TJPS awarded the erection works to TPSC India Private Limited (Applicant).
On the entire contract value, VAT and Service Tax were remitted by the Applicant Company. During the execution of the contract, the applicant Company gave sub-contract to various companies, who were also registered dealers in their respective states.
The Applicant Company received a quotation for Sub-contract from M/S. Delta Global Allied Limited (formerly known as Delta Mechons India Limited; Hereafter referred to as DGAL) (Quotation Ref No. DGAL/TPSC/032/P.Fab.Erec/2012/REV 00) for piping and PreFabrication of Non- IBR Piping of all 3 units w.r.t 3 x 800 MW NTPC Kudgi Thermal Power Project, Bijapur- Karnataka. Based on the quotation, TPSC (India) Private Ltd (Hereafter referred to as TPSC, Applicant herein) issued a purchase order PO-1 dated 27/09/2013 amounting to Rs. 11,82,85,000 and PO-2 dated 10th June 2014) for Rs. 10,25,00,000. After receiving PO, DGAL commenced work and raised several invoices till January 2017 amounting to Rs. 30,05,01,903/- and service tax of Rs. 2,94,21,453/- and TPSC (Applicant) made all payments except for the retention amount Rs.91,53,199/-. (For retention also Tax Paid by TPSCI)
