In re B P Sangle Constructions Pvt. Ltd. (GST AAR Maharashtra)
Escalated value received under service contract to be considered for the payment of GST
The AAR, Maharashtra in the matter of B P Sangle Constructions Pvt. Ltd. [Advance Ruling No. GST-ARA-44/2020-21/B-41 dated March 31, 2022] held that, escalated value received under a contract for service of construction of road during the Goods and Services Tax (GST) regime, shall be added to the original contract value and the actual transaction value should be considered for payment of tax.
Facts:
M/s. B P Sangle Constructions Pvt. Ltd. (“the Applicant”) was awarded a contract by National Highways Authority of India (“NHAI”) for construction of road for an agreed consideration of INR 65,90,98,099/- which included VAT. However, during the course of completion of service as per the contract, there was an escalation in the contract value against goods and services took place due to the introduction of the GST regime w.e.f. July 01, 2017.
As per the contract, in case of any change in the rates of labour, steel, cement, plant, machinery, spares, bitumen, spares, lubricants etc., the contract price shall increase or decrease as per the formula provided in the contract notice and in the event of such escalation of value, the same shall be recovered in addition to contract value from NHAI.
The Applicant went to the AAR to seek whether such escalated value shall be added to taxable value u/s 15 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”).
Issue:
Whether value escalated during construction of road is to be added to the transaction value for payment of GST as per the provision of Section 15 of the CGST Act?
Held:
The AAR, Maharashtra in Advance Ruling No. GST-ARA-44/2020-21/B-41 dated March 31, 2022 held as under:
