In re SKG-JK-NMC Associates(JV) (GST AAAR Gujarat)
‘Work Contract’ allotted to the appellant by M/s. RITES ltd. undoubtedly pertains to Railways only. We therefore find and conclude that the ‘Work Contract’ allotted to the appellant by M/s. RITES ltd. is covered under Clause 3(v)(a) of Notification No.11/2017-Central Tax(Rate) dated 28.06.2017 as amended from time to time as it fulfills all the conditions therein i.e. it is ‘Work Contract’ involving ‘Original work’ pertaining to ‘Railways’.
In view of the foregoing, we, allow the appeal filed by the appellant M/s.SKG-JK-NMC Associates(JV), Gandhinagar and modify the Advance Ruling No. GUJ/GAAR/R/36/2020 dated 03.07.2020 issued by the GAAR, by holding that the Work Contract of the appellant is covered under Clause3(v)(a) of the Notification No.11/2017-Central Tax(Rate) dated 28.06.2017 as amended from time to time for the reasons discussed hereinabove
FULL TEXT OF ORDER OF APPELLATE AUTHORITY OF ADVANCE RULING, GUJARAT
The appellant M/s. SKG-JK-NMC Associates(JV), G-303, Kanam Resi., Kudasan, Gandhinagar, Gujarat-382421(Earlier located at Shaligram, C-201, Lake View, Near Vaishno Devi Circle, S.P.Road, Khoraj, Gandhinagar, Gujarat-382735)(hereinafter referred to as the appellant) is a Joint Venture engaged in ‘Construction of pavement, Track work, Warehouses, Admin Building, E&M Works and other miscellaneous works’ at Khodiyar, Gandhinagar, Gujarat and is registered under the CGST Act, 2017.
2. The appellant has submitted that India is going to have its first high speed rail line i.e. bullet train in times to come and for this Mumbai-Ahmedabad High Speed Rail Corridor is under construction connecting the cities of Ahmedabad and Mumbai; that the corridor is 508.09 km. long and traverses the states of Maharashtra and Gujarat and the union territory of Dadra and Nagar Haveli; that in the 2014 budget, Railway Minister Shri D.V.Sadananda Gowda announced the first bullet train and 9 High-Speed Rail routes’; that in 2016, the Ministry of Railways fast tracked the project and set up a Special Purpose Vehicle(SPV), named the National High Speed Rail Corporation limited(hereinafter referred to as NHSRCL) to build and operate the corridor; that the company was registered in January, 2016 in the name of Indian Railways and was registered under the Companies Act, 2013 on February 12, 2016 ; that a copy of the Memorandum, Articles of Association and Certificate of Incorporation has been enclosed as Annexure-1(Colly.); that NHSRCL, which is a special purpose vehicle responsible only for the implementation of the Mumbai-Ahmedabad high-speed rail project has divided the total construction work for the project into 27 packages for which it has to award contracts separately; that NHSCRL issued a ‘Letter of Acceptance’(LOA) in favour of RITES limited, RITES Bhawan No.1, Sector-29, Gurgaon-122001(hereinafter referred to as ‘main contractor’ or ‘RITES’, as the case may be) for ‘shifting of existing railway infrastructure and other utilities in connection with construction of High Speed Rail Projects’, the copy of which is attached as Annexure-2.
3. The appellant submitted that on 09.03.2018, the main contractor further sub-contracted the work and invited tenders from eligible sub-contractors for ‘Construction of pavement, Track work, Warehouses, Admin Building, E&M works and other miscellaneous works’ at Khodiyar, Gandhinagar, Gujarat and copy of relevant part of tender is attached as Annexure-3; that on 13.06.2018, main contractor issued LOA in favour of the appellant for ‘Construction of pavement, Track work, Warehouses, Admin Building, E&M works and other miscellaneous works’ at Khodiyar, Gandhinagar, Gujarat in connection with the work related to ‘shifting of existing railway infrastructure and other utilities in connection with construction of High Speed Rail Projects’ and copy of LOA is attached as Annexure-4. The appellant has further submitted that the scope of work as envisaged under the tender includes:
Brief scope of work:
The brief scope of works as per clause 1.4 of the Tender Document (copy enclosed
as Annexure-VII) reads as under:
Phase-I works
a. Track work complete as per Layout Plan.
b. Pavement along the track as per layout plan (Approx. 30500 sqm).
c. High mast lighting in the pavement along the track.
d. Admin Building (G+1, Approx. 475 sqm per floor) including all civil, electrical, water supply, sanitary and fire-fighting works.
e. Electrical sub-station(ESS).
f. Main entry gate and security cabin.
g. Electrical installations in admin building, ESS, entry gate, security gate etc.
Phase-II works
a. Warehouse – 3 nos. of 140×30 m each (3×4200 sqm = 12600 sqm).
b. Balance Pavement area like area around warehouse and connecting road between pavement near track and pavement around warehouse.
c. EIMWB and EIMWB room.
d. Electrical and fire-fighting works.
e. Other miscellaneous works as per requirement.
The appellant has submitted that they asked the following question seeking Advance Ruling on the same:
‘Whether the said work can be covered under clause 3(v)(a) of Notification No.11/2017-Central Tax (Rate) dated 28.06.2017 i.e. works contract by way of construction, erection, commissioning or installation of original works pertaining to railways so as to entitle it for charging of reduced rate of GST@12% instead of 18%.”
5. The appellant has submitted that during the course of personal hearing, it was desired by GAAR that any documentary evidence from the main contractor or any other Railways agency to the effect that the said work pertains to Railways may be produced for further consideration of the application and accordingly, the appellant had submitted relevant documents for the same vide letter dated 24.06.2020, a copy of which is attached as Annexure-5; that GAAR disposed off the application vide order No.GUJ/GAAR/R/36/2020 dated 03.07.2020(copy attached as Annexure-6) (hereinafter referred to as the ‘impugned order’) wherein it was ruled that the aforementioned contract work is not covered under clause 3(v)(a) of Notification No.11/2017-Central Tax(Rate) dated 28.06.2017 as amended by Notification No.20/2017-Central Tax(Rate) dated 22.08.2017; that while deciding the application, GAAR segregated the discussion in three parts as mentioned in column(2) of the table below and answered as mentioned in column(3) below:
