In re Reach Dredging Limited (GST AAR West Bengal)
Whether Government of Andhra Pradesh- Water Resources Department comes under the purview of State Government and whether the supply being undertaken by the applicant to the said department for desilting of the foreshore of Prakasam Barrage would be taxable vide entry No. 3 (vii) of the Notification No. 39/2017- Integrated Tax (Rate) dated 13.10.2017, as amended.
AAR held that instant supply being undertaken by the applicant to the Water Resource Department, Government of Andhra Pradesh for desilting of the foreshore of Prakasam Barrage is a composite supply of works contract involving predominantly earth work and would be taxable vide entry No. 3 (vii) of the Notification No. 39/2017- Integrated Tax (Rate) dated 13.10.2017, as amended.
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, WEST BENGAL
1.1 At the outset, we would like to make it clear that the provisions of the Central Goods and Services Tax Act, 2017 (the CGST Act, for short) and the West Bengal Goods and Services Tax Act, 2017 (the WBGST Act, for short) have the same provisions in like matter except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the WBGST Act. Further to the earlier, henceforth for the purposes of these proceedings, the expression „GST Act‟ would mean the CGST Act and the WBGST Act both.
1.2 The applicant submits that he has been rewarded work order by the Water Resources Department, Government of Andhra Pradesh for desilting of the foreshore of Prakasam Barrage from KM 7.500 to KM 8.400 in Krishna River and the applicant has entered into a contract with the concerned department of Government of Andhra Pradesh for the execution of above-mentioned Works Contract.
1.3 The applicant submits that the said work includes dredging in the foreshore of Prakasam Barrage with dredger and depositing materials in the area of Govt. lands/Path lands available adjacent to the river bunds including mobilization and demobilization of the dredger and laying the pipeline, POL‟s spares, repair and manpower and all other items required for operation and maintenance of dredger pipeline reclamation of banks and formation and maintenance of slurry bunds and including all the leads and lifts specified by the department.
1.4 The applicant has made this application under sub section (1) of section 97 of the GST Act and the rules made there under raising following questions vide serial number 14 of the application in FORM GST ARA-01:
(a) Whether Government of Andhra Pradesh- Water Resources Department comes under the purview of State Government?
(b) Whether amendment made vide Notification No. 39/2017- Integrated Tax (Rate) dated 13.10.2017 in the table against Serial No. 3 for the item (vii) will be applicable in this case?
1.5 The aforesaid questions on which the advance ruling is sought for is found to be covered under clause (b) of sub-section (2) of section 97 of the GST Act.
1.6 The applicant states that the questions raised in the application have neither been decided by nor is pending before any authority under any provision of the GST Act.
1.7 The officer concerned from the revenue has raised no objection to the admission of the application.
1.8 The application is, therefore, admitted.
2. Submission of the Applicant
2.1 The applicant submits that the work being undertaken by him pursuant to the contract made with the Water Resource Department, Government of Andhra Pradesh falls under the category of works contract as defined in clause (119) of section 2 of the GST Act. Further, the definition of Government under clause (53) of section 2 of the CGST Act reads as “Government means the Central Government”. As per clause (23) of section 3 of the General Clauses Act, 1897, the Government includes both the Central Government and any State Government. As per clause (8) of section 3 of the said Act, the „Central Government‟ in relation to anything done or to be done after the commencement of the Constitution, means the president. As per Article 53 of the Constitution, the executive power of the Union shall be vested in the President and shall be exercised by him either directly or indirectly through officers subordinate to him in accordance with the Constitution. Further, in terms of Article 77 of the constitution, all executive actions of the Government of India shall be expressed to be taken in the name of the President. Therefore, the Central Government means the President and the officers subordinate to him while exercising the executive powers of the Union vested in the President and in the name of the President. Similarly, as per clause (60) of the section 3 of the General Clauses Act, 1897, the „State Government‟ in respect of anything done after commencement of the Constitution, shall be the Governor in a state and in a Union Territory, the Central Government. As per article 154 of the Constitution, the executive power of the state shall be vested in the Governor and shall be exercised by him either directly or indirectly through officers subordinate to him in accordance with the Constitution. Further, as per article 166 of the Constitution, all executive actions of the Government of State shall be expressed to be taken in the name of the Governor. Therefore, State Government means the Governor or the officers subordinate to him who exercise the executive powers of the State vested in the Governor and in the name of the Governor.
2.2 The applicant submits further that the powers and functions of the Water Resources Department, Andhra Pradesh are as follows:
(a) Drought Proofing of the state and providing water security to all stakeholders (drinking, irrigation and industry)
(b) Providing sufficient water to all available cultivable land of Andra Pradesh.
(c) Improve economic status and happiness index of the farmer by improving water efficient and crop yields, by providing the right amount of water to the right farm at the right time.
(d) Interlinking of rivers to ensure adequate and reliable water is available to all regions across the state.
(e) Completion of all irrigation projects on a priority basis in a time bound manner.
(f) Cascade development to optimize run-off capture within the basins.
(g) Long term sustainable double-digit growth.
(h) Operations and maintenance of reservoirs and canal system.
(i) Adopting leading edge technologies and world class practices to achieve the above-mentioned goals.
(j) Presentation of data & analysis on water availability, utilization of Inter-state river basins to the respective tribunals.
2.3 According to the applicant, he is providing dredging service which predominantly involves earth work. As per the work order, the total value of the dredging/excavation, loading, unloading, transportation and leveling of earthwork is more than the 75% of the total contract value. Apart from the GST rate mentioned in Schedule-A of Part II of the agreement, a certificate vide letter no. EE/KC/VIJ/346 dated 29th March, 2022 has been provided in which the executive engineer of Krishna Central Division, Vijayawada, Government of Andra Pradesh has certified that the “ Desilting of silt from the foreshore of Prakasam Barrage from KM 7.500 to KM 8.400” vide Original Agreement No.21/SE/2021-22 dated 10th of August, 2021 is a works contract service and the applicable GST rate is 5(Five) percent in terms of Notification No. 39/2017- Integrated Tax (Rate) dated 13.10.2017 against serial no 3 for the item (vii) as the total value of the works contract constitutes mainly of dredging and earthwork excavation which is pure service work and cost of material transferred and consumed for execution and completion of the work contract is less than 25(Twenty Five) percent of the total agreement value”.
2.4 The applicant thus contends that that the applicant is providing services to the Government of Andhra Pradesh and the supply would attract tax @ 5% vide serial number 3 for the item (vii) mentioned in Notification No. 39/2017- Integrated Tax (Rate) dated 13.10.2017 up to 17th July, 2022 and thereafter the supply would be taxable @ 12% vide Notification no. 03/2022 Integrated Tax (Rate) dated 13th July, 2022.
2.5 The applicant, in support of his contention that the supply being undertaken by him would be taxable @ 5%, has placed reliance on the following Advance Rulings pronounced by the West Bengal Authority for Advance Ruling:
