2018 (11) TMI 1265 – AUTHORITY FOR ADVANCE RULINGS, UTTARAKHAND – 2018 (19) G. S. T. L. 349 (A. A. R. – GST) – Levy of GST – reverse charge mechanism – payment to PWD, Uttrakhand for construction of road – time of supply when advance payment is released to PWD, Uttrakhand – levy of GST on amount deposited with Central Fund i.e Uttranchal CAMPA and reimbursed by MEA considering as part cost of the road – time & value of supply of services – applicability of Notification no. 13/2017 dated 28.06.2017.
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Held that:- M/s. NHPC is providing services to Central Government i.e. Ministry of External Affairs and will attract GST @ 12% but by virtue of Notification No. 12/2017 -Central Tax (Rate) dated 28th June, 2017 (as amended time to time), the supply of service in question, is exempted, thus sub-contracting of the said work contract to PWD Govt. of Uttarakhand is also exempted – the said activity comes under the purview of exempted category, therefore, question of payment of GST under r
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17 (herein after referred to as Act) and the rules made thereunder filed by M/s. NHPC, Admin Building, Tanakpur Power Station, Banbasa, Uttrakhand seeking an advance ruling on following issues: (a) Whether they are required to pay GST under reverse charge in terms of Notification No. 13/2017 dated 28.06.2017 while making payment to PWD, Uttrakhand for construction of road; (b) What is the time of supply when advance payment is released to PWD, Uttrakhand; (c) Whether the amount deposited with Central Fund i.e Uttranchal CAMPA and reimbursed by MEA considering as part cost of the road is liable for GST. 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 sub-section (2) of Section 97 of t
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tted. 5. Accordingly opportunity of personal hearing was granted to the applicant on 27.09.2018. Shri. N.K. Gupta (Senior Manager) and Shri J.C. Pant (Manager Law) of the applicant appeared for personal hearing on said date and submitted documents describing therein exact nature of work being undertaken. Nobody appeared from the side of Revenue for the hearing. 6. From the documents submitted by the applicant we find that applicant is registered in Uttarakhand with GSTIN bearing no. 05AAACN 0149C4Z2. We further find that MOU to be signed between TPS, NHPC and PWD Govt. of Uttarakhand for construction of road from Tanakpur Barrage to Brahmdev (Nepal) on deposit work basis under Mahakali Treaty signed between India & Nepal. M/s. NHPC (implementing agency) in consultation with State Government of Uttarakhand will submit the road aligment and prepare project report. The said work has been entrusted by MEA to NHPC and PWD, Uttarakhand and the funding for the said project will be done by
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uilding, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, ii. works contract including transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract. Thus the activity; of the applicant comes under the purview of supply of services. Before initiating proceedings, we have gone through the official web-site of NHPC Ltd & Ministry of Power, Govt. of India and we find that the promoter of M/s. NHPC Limited is Hon ble President of India through Ministry of Power Govt. of India. M/s. NHPC Limited is a Govt. of India Enterprise, incorporated in the year 1975 with an objective to plan, promote and organize an integrated and efficient development of hydroelectric power in all aspects. At present, NHPC Ltd is a Mini Ratna Category-I Enterprise of the Govt. of India. M/s. NHPC Ltd is under the administrative control of power ministry. From the record we find that NHPC Ltd &
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(5) 9C Chapter 99 Supply of service by a Government Entity to Central Government, State Government, Union territory, local authority or any person specified by Central Government, State Government, Union territory or local authority against consideration received from Central Government, State Government, Union territory or local authority, in the form of grants. Nil Nil ; We also find that that Government Entity has been defined in the said amended notification and the same read as under: Government Entity means an authority or a board or any other body including a society, trust, corporation, (i) set up by an Act of Parliament or State Legislature; or (ii) established by any Government, with 90 per cent or more participation by way of equity or carry out a function entrusted by the Central Government, State Government, Union Territory or a local authority. From the aforesaid definition we observe that condition of 90% or more participation by way of equity or control to carry out a f
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ependent dis-conjunctive provisions and the expression 90% or more participation by way of equity or control to carry out any function entrusted to a municipality under Article 243W of the Constitution is related to sub-clause (ii) of Clause 2(s) alone. The clause (i) is followed by ; and the word or . Therefore, each of the sub-clauses is independent provision. The condition of 90% or more participation by way of equity or control to carry out any function entrusted to a municipality under Article 243W of the Constitution is relatable to only sub-clause (ii) of Clause 2(s). It means that an authority established by Government should have 90% or more participation by way of equity or control to carry out any function entrusted to a municipality under Article 243W of the Constitution to be eligible for exemption. The Authority set up by an Act of Parliament or State Legislature is not and cannot be made subject to the condition of 90% or more participation by way of equity or control to
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equity or by way of control, the entity would be considered as governmental entity , within the meaning assigned under the said amended notification. Accordingly we observe the M/s. NHPC Ltd falls under the definition of Government entity in as much as at the time of establishment of the company the Hon ble President of India and its nominees hold 100% equity shares of the company. There can be no government entity if the very essential ingredients for being recognized as a government entity gets lost over a period of time and the control or equity by way of 90% or more does not vest with the Government. We observe that a Company or a Society or a trust in addition to a authority or a board may continue to be in existence as they get incorporated and brought into existence under different Acts and law, for example a Company gets incorporated under the Companies Act, a society gets incorporated under Societies Registration Act etc, however such a incorporated legal entity/ person cannot
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blished by the Central Government and it is under. the administrative control of Ministry of Power, Government of India. iv. In present case the service receiver is Central Government i.e Ministry of External Affairs, Govt. of India v. The funds provided by MEA from its head Aid to Nepal to M/s. NHPC Ltd. This means that the funds provided by MEA or consideration received by NHPC Ltd from MEA is in the form of grants. vi. Work has been entrusted by Central Government i.e Ministry of External Affairs, Govt. of India Thus we observe that the applicant has fulfilled all the required criteria which leads their activity to exemption under Notification No. 12/2017 -Central Tax (Rate) dated 28th June, 2017 (as amended time to time) and accordingly we hold that the supply of service by M/s. NHPC to Ministry of External Affairs, Govt. of India is an exempted service. Since original supply of service i.e. work contract is exempted, therefore, sub-letting of the same is also exempted. On this mat
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exempt works contract service to Government and in such case if works contract is partially or wholly sub-contracted then the sub-contractor would also be exempt from payment of GST. In support of our view we place reliance upon the Government view on the issue in hand in pre-GST regime and the same are reproduce as under: (i) serial No. 29 sub-clause (h) of the mega exemption Notification 25/2012-ST dated 20.06.2012, which provides that service provided by following person in respective capacities are exempt from service tax: (h) sub-contractor providing services by way of works contract to another contractor providing works contract services which are exempt (ii) Circular No. 147/16/2011-Service Tax dated 21 10.2011 Clarification has, been requested as to whether the exemption available to the Works Contract Service providers in respect of projects involving construction of roads, airports, railways, transport terminals, bridges, tunnels, dams etc., is also available to the sub-contr
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d work contract to PWD Govt. of Uttarakhand is also exempted. In view of the above we observe that the said activity comes under the purview of exempted category as discussed supra, therefore, question of payment of GST under reverse charge in terms of Notification No. 13/2017 -Central Tax (Rate) dated 28.06.2017 does not arise. (B) Since their activity is a exempted service, issues of time of supply and applicability of GST on reimbursement lost its relevancy. Accordingly we hold that the no provisions of GST are applicable on said issues. ORDER In view of the above discussions & findings we order as under: (i) No GST is applicable on the activity of the applicant since the same falls under exempted services in terms of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 (as amended time to time) (ii) On the issues of time of supply and applicability of GST on reimbursement, no provisions of GST is applicable on said issues as supply of service in question falls under exe
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