2018 (9) TMI 854 – AUTHORITY FOR ADVANCE RULING, MAHARASHTRA – 2018 (17) G. S. T. L. 504 (A. A. R. – GST) – Rate of tax – sub-contractor – Works Contract Services (WCS) pertaining to railways original works contract – What Tax rate to be charged by the sub-contractor to main contractor on Works Contract Services (WCS) pertaining to railways original works contract? – Whether to charge tax rate of 12% GST or 18% GST?
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Held that:- The WCS provided by them is the same or a part of the main contract entered into between the main contractor and the Railways. It also appears that works contract service is civil works performed by the sub-contractor for the Railways and the property in goods (materials used in the supply of Works Contract Service) also gets transferred to the Railways directly – In such a case as per the abovementioned clause (v) of Notfn No. 20/ 2017-CentraI Tax (Rate) dated 22.10.2017, the works contract service provided by the sub-contractor to the main contractor wo
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rate to be charged would be 12% in the present case. – GST-ARA-09/2018-19/B-65 Dated:- 11-7-2018 – SHRI B.V. BORHADE AND SHRI PANKAJ KUMAR MEMBER PROCEEDINGS (under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) The present application has been filed under section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as the CGST Act and MGST Act ] by SHREE CONSTRUCTION, the applicant, seeking an advance ruling in respect of the following questions : 1. What Tax rate to be charged by the sub-contractor to main contractor on Works Contract Services (WCS) pertaining to railways original works contract? 2. Whether to charge tax rate of 12% GST or 18% GST? At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made
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able to main contractor should be levied by sub-contractor. 4. As per Notification No-01/2018- Central Tax (Rate) dated 25-01-2018 the service provided by sub-contractor to afore main contractor for railway original works contract services is not specified in the notification. Statement containing the applicant s interpretation of law and/or facts, as the case may be, in respect of the aforesaid question(s) (i.e. applicant s view point and submissions on issues on which the advance ruling is sought) 1. As per our view point even though we are sub-contractor providing service to main contractor for original contract work pertaining to railways, we should charge 12% GST only and not 18% as applicable in other cases. 2. The contract for original works pertaining to railways remains the same works contract, 3. As there is difference of opinion after reading of press release of 25th meeting of GST council dated 18-01-2018 and notification No 1/2018 dated 25-01-2018, we are not in position t
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of classification of services Section 5 Construction Services SAC Code Description of Services Rate in % 9954 (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 (including substituted from 25/01/ 2018)) 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 fo
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d 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. 12 (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 (vi) d above to the Central Government; State Government, Union territory, a local authority, a Governmental Authority or a Government Entity. 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. 12 f. Even though, we being subcontractor providing civil construction services to main contractor effecting original works contract for Railways which is not covered in 9954 (ix) and 9954 (x), we believe that the rate
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brication, 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; 2. As per Section 2 (5) of CGST Act, 2017 agent means a person, including a factor, broker, commission agent, arhatia, del credere agent, an auctioneer or any other mercantile agent; by whatever name called, who carries on the business of supply or receipt of goods or services or both on behalf of another; 3. Contractor and sub-contractor are not defined under the CGST Act, 2017 but as per the general definition. a. Contractor means a person or firm that undertakes a contract from the employer to provide materials or labour to perform a service or do a job at a specified price. b. A subcontractor means a person who is hired by a general contractor (or prime contractor, or main contractor) to
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subcontractor as an agent also who is undertaking the same supply of service for main contractor. 8. It can also be said that, the sub-contractor is only an agent of the contractor and the works job undertaken by him passes directly from the sub-contractor to the employer. 9. As the work get transferred directly to the employer by the subcontractor the works contract remains the same and therefore leads to the conclusion that there is only one contract which is undertaken by the contractor as well as subcontractor. 10. In our case, it is the transaction of a works contract, where the property in goods passes directly to the employer as and when we as a subcontractor have transferred and put our material and services for of execution of civil work carried for railways. The main contractor cannot take out our executed job and cannot treat it separately. Thus it cannot be said at any point of time, that the property in the works job passes to the contractor where the work is executed by u
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subcontractor also. 03. CONTENTION – AS PER THE CONCERNED OFFICER 2. As directed the application has been examined with reference to provisions of Chapter XVII of CGST Act, 2017 and it is submitted that- i) Prima facie it appears that the question on which the advance ruling is sought under CGST Act doesn't fall under any of the category mentioned in sub section (2) of Section 97 of the Act as the question, put forth by the applicant is only relating to charging of rate of tax on the Works Contract Services (WCS) by the sub contractor to main contractor in respect of railways original works contract. ii) On examination of the Notification No.20/2017-Central Tax (Rate) dated it appears that in terms of serial number (v) of Table, Composite supply of works contract as defined in clause (119) of Section 2 of CGST Act, 2017, supplied by way of construction, erection, commissioning or installation of original works pertaining to – (a) railways, excluding monorail and metro; fate of tax
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ct services are excluded from the main entry (ix) and (x) of the said notification. All other construction services other than specified services are therefore attract rate of 18% tax which includes services provided by sub contractor to main contractor for railway original works Contract, (v) The contention of the Applicant, that their services are covered by the original works contract specified in para (ix) and (x) of amended Notfn.No.01/2018-CT(Rate) dated is not correct in as much as the said Notification has classified all other Works Contracts relating to Construction services in head (xii) prescribing rate of 18%. The minutes of meeting dated 18.01.2018 para-12 quoted by the Applicant has mention Of Government Entity but doesn't specifically include WCS provided by sub contractor to main contractor in relation to Railways. In view of above, the question before the Advance Ruling Authority may be disposed off as per above provisions of law for the time being in force without
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they are supplying Works Contract Services (WCS), as a sub-contractor, to the main contractor who in turn are supplying WCS for original work pertaining to the Railways. They have made further submissions that when a contractor awards either wholly or partially, the work to a sub-contractor, then the work to be performed by both of them remains the same and identical to what is specified in the contract between the main contractor and the employer, in this case, the Railways and as per Notification No-20/2017- Central Tax (Rate) dated 22-08-2017 the rate of GST is 12% for composite supply of works contract supplied by way of construction, erection, commission or installation of original works pertaining to railways. They are claiming that since the tax rate is 12% for the main contractor, the same rate should be applicable to them too. They have also submitted that Notification No-01/2018- Central Tax( Rate) dated 25-01-2018 has made certain amendments to the earlier Notification No.
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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) ………………………………………………………….; (c) ………………………………………………………….; (d) ………………………………………………………….; (e) ………………………………………………………….;or (f) ……………&helli
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y. In such a case as per the abovementioned clause (v) of Notfn No. 20/ 2017-CentraI Tax (Rate) dated 22.10.2017, the works contract service provided by the sub-contractor to the main contractor would be supply of Works Contract pertaining to Railways and therefore chargeable to tax @ 12% (6% of CGST and SGST each). However, the benefit of 12% tax rate would be available to the applicant only if the Works Contract services provided by them are 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 railways. Thus, in respect of Sr. No. 3 of Notification No. 11/2017 dated 28.06.2017 as amended uptill today, even the sub-contractor providing services of composite supply of works Contract in respect of original works pertaining to railways would be covered for concessional rate of GST @ 12% as given under Sr. No. 3 of
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