In re Triveni Engicons pvt ltd (GST AAR Chhattisgarh)
What is the rate of tax for the workers like contract of goods and services?
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% [ CGST @6% + CGGST @6%) as stipulated under entry No.3 (v)(a) of Notification No. 11/2017 amended vide Notification No.1/2018- Central Tax(rate) dated 25th January 2018, effective from 25.01.2018, provided the works undertaken by the applicant satisfies the definition of ‘Works Contract’ as defined in clause(1 19) of section 2 of the Central Goods and Service Tax Act, 2017.
Whether the works can be awarded under the definition of work?
ii. The aforesaid work awarded to the applicant gets covered under the definition of Works Contract as defined u/s 2(119) of the CGST Act, 2017, provided the conditions stipulated under the definition of “Works contract”, as defined in clause(I19) of section 2 of the Central Goods and Service Tax Act, 2017 and as discussed herein above, gets established.
Whether the rate of GST for the construction of rail infrastructure facilities?
iii. The rate of GST for the construction of rail infrastructure facilities under SI. no. 3(v)(a) of Notification No. 11/2017 amended vide Notification No.1/2018- Central Tax(rate) dated 25th January 2018, effective from 25.01.2018, would be 12% [ CGST @6% + CGGST @6%], provided the works undertaken by the applicant satisfies the definition of ‘Works Contract’ as defined in clause(119) of section 2 of the Central Goods and Service Tax Act, 2017. Except for the above, n other cases for the said work the rate of tax would be 18% [CGST @9% + CGGST @9%j as stipulated under SI. No.3 (xii) of Notification No 11/2017-CT (Rate) dated 28.06.2017 as amended by various notifications as applicable.
Whether the said work can be considered as works contract pertaining to railways including monorail and metro?
iv. Yes, the aforesaid work as is forthcoming from the said letter of acceptance dated 25.10.2021 furnished by the applicant issued by RITES can be considered as pertaining to railways. As regards, it being “Works contract”, as already held, the conditions stipulated therein under the definition of “Works contract”, as defined in clause(119) of section 2 of the Central Goods and Service Tax Act, 2017 of the property must get established.
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, CHHATTISGARH
1. M/s Triveni Engicons Private Limited Raigarh, Chhattisgarh, 496001 GSTIN-22AABCT4589R1ZN [hereinafter also referred to as the applicant] has filed an application U/s 97 of the Chhattisgarh Goods & Services Tax Act, 2017 dated 02/02/2022 enclosing duly filled in Form ARA-01 (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 2(119) of the CGST Act, 2017; Whether the rate of GST for the construction of rail infrastructure facilities will be under SI. No. 3(v)(a) OR SI. 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 Undertaking owned by the Ministry of Railways, Government of India. Further, the same is covered under Section 2(31) of the Railways Act, 1989.
2.3 That RITES LIMITED for and on behalf of South Eastern Coalfields Limited, (SECL), Gevrahas awarded the following work to the applicant vide letter of acceptance issued on 25.10.2021;
“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”
2.4 That the scope of work of the applicant includes:
a. Schedule A- Construction of Railway formation work.
b. Schedule B-Construction of Minor bridges, Drain, Road & FOB.
c. Schedule C-Supply of Cement & Reinforcement
d. Schedule D-Supply of P-Way Fittings
e. Schedule E-P-Way work
f. Schedule F-Supply of PTS & Crossings
g. Schedule G-Supply of Sleepers
h. Schedule H-Geotechnical Investigation
i. Schedule I-Unforeseen any other work require to be operated but not covered in the above Schedule (A to H)
2.5 That in support of their contentions they have provided a copy of the Letter of Acceptance issued by RITES LIMITED dated 25/10/2021, for and behalf of SECL vide e-Tender No. 31/0T/SECL-Gevra Cast/Civil/ &P.Way/PKG-I1/21 dated 1.3.2021.
2.6 That the offer for work by the applicant has been accepted by RITES LIMITED for a contract price of Rs 150,31,61,099/-(Rupees One Fifty Crore Thirty one lakh Sixty one Thousand and Ninety nine only).
3. Contentions of the applicant: –
3.1 That they are providing works contract service as a contractor for original contract work pertaining to railways.
3.2 That according to Serial No. 3(v) (a) of Notification No. 11/2017 – CT (Rate) dated 28/06/2017, as amended from time to time, the composite supply of works contract as defined under section 2(119) of the GST Act, supplied by way of construction, erection, commissioning, or installation of original works pertaining to railways, including monorail and metro is taxable @ 12%.
Serial No. 3(xii) of Notification No. 11/2017 – CT (Rate) dated 28/06/2017, as amended from time to time, the composite supply of Construction services other than (i), (ii), (iii), (iv), (v), (vi), (vii), (viii),(ix), (x) and (xi) above is taxable @18%
3.3 That original work, as defined under para 2(zs) of Notification No. 12/2017-CT (Rate) dated 28/06/2017, states:
(zs) “original works” means- all new constructions; (i) all types of additions and alterations to abandoned or damage° structures on land that are required to make them workable; (ii) 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 all 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 clause (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 work as outlined by the applicant is that of works contract, as defined under Section 2(119) of the GST Act, fit to be called an “original work” and hence is taxable @12%.
3.4 Applicant further opined that in order to avail the reduced rate of GST levy @ 12% in terms of clause 3(v)(a) of the Notification No.11/2017-Central Tax (Rates), following conditions are required to be fulfilled: –
(a) the work should be works contract
(b) it should be an original work
(c) the work should pertain to railways, including monorail and metro.
3.5 The said work has been awarded by M/s Rites Limited, which is a Public Sector Undertaking owned by the Ministry of Railways, Government of India. The work comprises of laying of track, Box Culverts, Major Bridges, Supply of P-Way Materials work as per layout plan, Construction side drain cutting area works.
3.6 That the term “railways” is not defined in the GST Act. However, Section 2(31) of the Railways Act, 1989 defines “railways” as-
(31) “railway” means 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 purposes of, or in connection with, a railway;
(c) all electric traction equipments, power supply and distribution installations used for the purposes 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, water works and water supply installations staff dwellings and any other works constructed for the purpose of, or in connection with, railway;
(e) all vehicles which are used on any road for the purposes of traffic of a railway and owned, hired or worked by a railway; and
(f) all ferries, ships, boats and rafts which are used on any canal, river, lake or other navigable inland waters for the purposes of the traffic of a railway and owned, hired or worked by a railway administration, but does not include—
(i) a tramway wholly within a municipal area; and
(ii) lines of rails built in any exhibition ground, fair, park or any other place solely for the purpose of recreation;
The Railways Act, 1989, distinguishes between, but covers, Government Railway under Section 2(20) and Non-Government Railway under Section 2(25) of the Act.
Section 2(20)of the Railways Act, ‘989:-
“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 Section 2(31)(ii) of the Railways Act, 1989, being rails built solely for the purpose of recreation.
Therefore, it is concluded that the construction of rail infrastructure facilities for the proposed feeder line of East West Rail Corridor at Gevra Open cast of Gevera Area of SECL that the applicant refers to, doesn’t fall under the exemptions stated under Article 366(20) of the Indian Constitution and pertains to “railways”.
3.8 That we hereby quote following rulings by AAR :
