Case Law Details
In re Rajshyama Construction (P) Ltd (GST AAR Uttarakhand)
Section 2(119) of the Act: works contract means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract;
On perusal of said notification, we find that the work contract services in respect of construction/ widening of road provided by the applicant to his main contractor is covered under entry at Serial No. 3(iv) of the said notification. We also find that before amendment vide notification dated 25.01.2018 (supra), specific entry on rate of services provided by the sub-contractor to main contractor were introduced, the activity of the applicant was remain covered under the scope of Serial No. 3(iv) of the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 (as amended), which provided the rate of GST @ 12%) [6% CGST + 6% SGST] on the services supplied by way of construction of road. Thus, the services provided by the applicant as sub-contractor to principal contractors continues to be covered under the Serial No. 3(iv) of the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 (as amended from time to time).
Further Appellate Authority for Advance Ruling, Maharashtra in the case of M/S Shree Construction and Authority for Advance Rulings, Punjab in the case of M/S S.P. Singla Constructions (P.) Ltd reported in [20191 taxmann.com 448 (AAAR-MAHARASHTRA) and [20191 111 taxmann.com 356 (AARTUNJAB) respectively on the same issue has passed the ruling that services provided by the sub-contractor to main contractor is covered tinder Serial No. 3(iv) of the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 (as amended from time to time) and attracts GST @ 12% CGST + 6% SGST].
The services pertaining to construction/ widening of road provided by the applicant as a sub-contractor in respect of work contract falls under the scope of Serial No. 3(iv) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 (as amended from time to time) and attracts GST @ 12% [6% CGST + 6% SGST] as on date.
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, UTTARAKHAND
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. Rajshyama Construction (P) Ltd, 22-Abhisek Nagar, Kankhal, Hardwar, Uttarakhand (here in after referred to as ‘the applicant’) is registered with the GSTN having Registration No. 05AACCR4982R1ZN and seeking advance ruling on what will be the rate of tax to be levied by the sub-contractor to main contractor for original work contract pertaining to Government entity .
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 Act 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. Since applicant has sought advance ruling on classification & determination of tax liability, therefore, in terms of said Section 97(2) (e) of the Act, the application filed by the applicant was admitted. Accordingly hearing was fixed on 15.06.2020 which was attended by the Shri Amit Tyagi, Advocate on behalf of the applicant. During the course of personal hearing, Shri Amit Tyagi has submitted that Maharashtra Advance Ruling in the case of M/S Shri Construction has given that need to be charged. He also added that serial no. 12 & 31 of the GST council meeting dated 18.01.2018 may be taken on record and as per his interpretation rate is 12%. Ms Preeti Manral, DC, SGST-Uttarakhand also present in the hearing and submitted that advance ruling of M/S NHPC to be taken on record and should be decided on the same lines.
5. On perusal of record, we find that the applicant is engaged in providing work contract service as sub-contractor to main contractor for original contract work in respect of construction/widening of road. The applicant has sought ruling in respect of rate of GST to be charged & collected by them from his main contractor in relation to said work .
6. In this context relevant legal provisions are reproduced as under:
A. Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017
G.S.R……(E).- In exercise of the powers conferred by sub-section (1) of section 9, subsection (1) of section 1 1, sub-section (5) of section 15 and sub-section (1) of section 16 of the Central Goods and Services Tax Act, 2017 (12 of 201 7). the Central Government, on the recommendations of the Council, and on being satisfied that it is necessary in the public interest so to do, hereby notifies that the central tax, on the intra-State supply of services of description as specified in column (3) of the Table below, falling under Chapter, Section or Heading of scheme of classification of services as specified in column (2), shall be levied at the rate as specified in the corresponding entry in column (4), subject to the conditions as specified in the corresponding entry in column (5) of the said Table:
| Sl No. | Chapter, Section or Heading | Description of Service | Rate (per cent.) | Condition |
| 1 | 2 | 3 | 4 | 5 |
| 3 | Heading 9954 (Construction services) | (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, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier. (Provisions of paragraph 2 of this notification shall apply for valuation of this service) | 9 | |
| (ii) composite supply of works contract as defined in clause 119 of section 2 of Central Goods and Services Tax Act, 2017. | 9 | |||
| “(iii) Composite supply of works contract as defined in clause (119) Of section 2 of the Central Goods and Services Tax Act, 2017, supplied to the Government, a local authority or a Governmental authority by way Of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of,-
(a) a historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under the Ancient Monuments and Archaeological Sites and Remains Act, 1958 (24 of 1958); (b) canal, dam or other irrigation works; (c) pipeline, conduit or plant for (i) water supply (ii) water treatment, or (iii) sewerage treatment or disposal. |
6 | |||
| (iv) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of,
(a) a road, bridge, tunnel, or terminal for road transportation for use by general public; (b) a civil structure or any other original works pertaining to a scheme under Jawaharlal Nehru National Urban Renewal Mission or Rajiv Awaas Yojana; (c) a civil structure or an other original works pertaining to the “lnSitu rehabilitation of existing slum dwellers using land as a resource through private participation” under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana, only for existing slum dwellers; (d) a civil structure or any other original works pertaining to the “Beneficiary led individual house construction / enhancement” under the Housing for All (Urban) Mission/pradhan Mantri Awas Yojana; (e) a pollution control or effluent treatment plant, except located as a part of a factory; or (f) a structure meant for funeral, burial or cremation of deceased. |
6 | |||
| (v) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied by way of construction, erection, commissioning, or installation of original works pertaining to,-
(a) railways, excluding monorail and metro; (b) a single residential unit otherwise than as a part of a residential complex; (c) low-cost houses up to a carpet area of 60 square metres per house in a housing project approved by competent authority empowered under the ‘Scheme of Affordable Housing in Partnership’ framed by the Ministry of Housing and Urban Poverty Alleviation, Government of India; (d) low cost houses up to a carpet area of 60 square metres per house in a housing project approved by the competent authority under- (1) the “Affordable Housing in Partnership” component of the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana; (2) any housing scheme of a State Government; (e) post-harvest storage infrastructure for agricultural produce including a cold storage for such purposes; or (f) mechanised food grain handling system, machinery or equipment for units processing agricultural produce as food stuff excluding alcoholic beverages |
6 | |||
| “(vi)Services provided to the Central Government, State Government, Union Territory, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of,-
(a) a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession; (b) a structure meant predominantly for use as (i) an educational, (ii) a clinical, or(iii) an art or cultural establishment; or (c) a residential complex predominantly meant for self-use or the use of their employees or other persons specified in paragraph 3 of the Schedule Ill of the Central Goods and Services Tax Act, 2017. |
6 | |||
| (vii)Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, involving predominantly earth work (that is, constituting more than 75per cent. of the value of the works contract) provided to the Central Government, State Government, Union territory, local authority, a Governmental Authority or a Government Entity, | 2.5 | Provided that where the services are supplied to a Government Entity, they should have been procured by the said entity in relation to a work entrusted to it by the Central Government; |
B. The said Notification was further amended vide Notification No. 01/2018-Central Tax (Rate) dated 25.01.2018 and the same is reproduced as under:
| Sl No. | Chapter, Section or Heading | Description of Service | Rate (per cent.) | Condition |
| 1 | 2 | 3 | 4 | 5 |
| 3 | Heading 9954 (Construction services) | “(ix) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017 provided by a sub-contractor to the main contractor providing services specified in item (iii) or item (vi) above to the Central Government, State Government, Union territory, a local authority, a Governmental Authority or a Government Entity. | 6 | Provided that where the services are supplied to a Government Entity, they should have been procured by the said entity in relation to a work entrusted to it by the Central Government, State Government, Union territory or local authority, as the case may be |
| (x) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017 provided by a sub-contractor to the main contractor providing services specified in item (vii) above to the Central Government, State Government, Union territory, a local authority, a Governmental Authority or a Government Entity. | 2.5 | Provided that where the services are supplied to a Government Entity, they should have been procured by the said entity in relation to a work entrusted to it by the Central Government, State Government, Union territory or local authority, as the case may be. | ||
| (xi) Services by plumbing, person supplying electronic for registration section 22 of the of housekeeping, such as etc, where the such service through operator is not liable under subsection (1) of Central Goods and Services Tax Act, 2017. | 2.5 | Provided that credit of input tax charged on goods and services has not been taken | ||
| (xii) Construction services other than (i), (ii), (iii), (iv), (v), (vi), (vii), (viii),(ix), (x) and (xi) above. | 9 |
C. Section 2(119) of the Act: “works contract” means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract;
7. On perusal of said notification, we find that the work contract services in respect of construction/ widening of road provided by the applicant to his main contractor is covered under entry at Serial No. 3(iv) of the said notification. We also find that before amendment vide notification dated 25.01.2018 (supra), specific entry on rate of services provided by the sub-contractor to main contractor were introduced, the activity of the applicant was remain covered under the scope of Serial No. 3(iv) of the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 (as amended), which provided the rate of GST @ 12%) [6% CGST + 6% SGST] on the services supplied by way of construction of road. Thus, the services provided by the applicant as sub-contractor to principal contractors continues to be covered under the Serial No. 3(iv) of the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 (as amended from time to time).
8. Further Appellate Authority for Advance Ruling, Maharashtra in the case of M/S Shree Construction and Authority for Advance Rulings, Punjab in the case of M/S S.P. Singla Constructions (P.) Ltd reported in [20191 taxmann.com 448 (AAAR-MAHARASHTRA) and [20191 111 taxmann.com 356 (AARTUNJAB) respectively on the same issue has passed the ruling that services provided by the sub-contractor to main contractor is covered tinder Serial No. 3(iv) of the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 (as amended from time to time) and attracts GST @ 12% CGST + 6% SGST].
9. In view of the above, we pass the following order:
ORDER
The services pertaining to construction/ widening of road provided by the applicant as a sub-contractor in respect of work contract falls under the scope of Serial No. 3(iv) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 (as amended from time to time) and attracts GST @ 12% [6% CGST + 6% SGST] as on date.
