In Re: M/s. Yogiraj Powertech Private Limited
GST
2019 (2) TMI 185 – AUTHORITY FOR ADVANCE RULING, MAHARASHTRA – 2019 (21) G. S. T. L. 189 (A. A. R. – GST)
AUTHORITY FOR ADVANCE RULING, MAHARASHTRA – AAR
Dated:- 25-9-2018
GST-ARA-47/2018-19/B-120
GST
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 YOGIRAJ POWERTECH PRIVATE LIMITED, the applicant, seeking an advance ruling in respect of the following ISSUE.
1. Whether EPC Contract for electrical cable supply and laying work can be classified as contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification,
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NTENTION – AS PER THE APPLICANT
The submissions, as reproduced verbatim, could be seen thus-
Statement of relevant facts having a bearing on the question(s) raised
We have received order from Nagpur Metro Rail Corporation hereafter called as NMRCL for “Shifting LT,HT O/H lines crossing and providing LT,HT U/G cables from Hingna Depot CH. 19500 to Ambazari Lake CH.12500 for Nagpur Metro Rail Project for E-W corridor”. NMRCL Is a Special Purpose Vehicle (SPV) created for the smooth implementation and operations of the Nagpur Metro Rail Project & is a joint venture of Govt. of India & Government of Maharashtra, with 50:50 equity. NMRCL is incorporated by Govt. of India- Ministry of Corporate affairs. This work is awarded to us through tendering process and scope of work is described in work schedule attached to the tender. The work involves Supply, erection, testing and commissioning including transport, loading, unloading, insurance etc of transformer substation, HT & LT Overhead Li
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ain supply would get affected.
d. Many components viz. cement concrete foundation, dismantling, joints, earthing, stone, metal etc. are clearly incidental and ancillary to an identifiable main supply i.e supply of cable.
In the above said case identifiable main supply particularly underground “LT/HT cable” and it can be moved/ shifted by excavation of earth and can be re-installed at other place. The cable is embedded in earth for safety of human and cable itself. The name of the work itself says Shifting & providing 315 KVA transformer substation HT & LT Overhead Line & Cable Through Underground, ….”
The said NMRCL department is insisting us to charge 12% GST as per the notification number 11/2017-Central Tax (Rate) dated 28th June 2017 as amended by notification no. 01/2018-Central Tax (Rate) dated 25th Jan 2018, treating above work as 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
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red as works contract but as per our interpretation of work schedule attached to the tender the work can not be classified as immovable property therefore it cannot be classified as works contract and hence it cannot be classified as service, thus the above said notification will not be applicable in this case. But it should be classified as Composite supply, as different goods and services vis. Testing, cable, wires, cement pipes, laying, joints, Insurance, commissioning, transport etc. which are naturally bundled and supplied in conjunction with each other, with principal supply being LT/HT Cable.
Once it is classified as composite supply, rate of GST applicable to principal Supply will be applicable to whole composite contract, here the principle supply is L T/HT cable (item no. 1, 7, 10 Of work schedule) and rate of the same should be applicable to whole contract.
NAGPUR METRO
Name of Work:- Estimate No. NMRCL/U/S (ELE)/01-2015,
CH 11040 to CH 16280 Shifting & providing 315 K
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outgoing circuits with HIRC Fuse base and Cartridge of 100A consists of aluminium, bus bar 500 V 200 A. complete erected in 14 gauge CRCA sheet box with supporting angles, self locks, gasket and slanting top to be erected on provided foundation as per per specification No. SW-SWR/MFP
2
Each
34752.00
69504.00
4.
16.3.4
Providing Cement concrete foundation for pump in with required size and length of foundation bolts and nuts (cost with required size and lengthf foundation bolts and nuts (cost with wooden box is included).
110
Cu.Mtrs
5673.00
624030.00
5.
18.1.41
Dismantling of KVA Distribution Transformer safely without any damages and storing it in safe place.
200
KVA
80.00
16000.00
6.
8.8.3
Dismantling the existing overhead line including G.I. wires of all sizes without damaging & making the coils in suitable sizes.
11.5
Km
816.00
9384.00
7.
7.5.16
Providing and erecting Heat shrinkable outdoor termination kit for 11kV (E) XLPE HT cable 3×240 to 300 sq. mm.
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l with 250 micron Molecular Copper Bonded Earthing Rod of Length 3m along with 5 25 kg Carbon Based environment friendly back fill Ground Enhancing compound required to fill up the excavated earth with required quantity as per specification no EA-MOBI
5
Each
15764.00
78820.00
12.
9.1.3
Providing earthing with Galvanised cast iron earth plate size 60 x 60 x 0.6 cm with funnel with a wire mesh for watering and brick masonry block C.I. 76 cover complete with all materials, testing & recording the results as per specification No. EA-EP
76
Each
5495.70
417673.20
13.
5.9.6
Supplying & erecting 11 kV 630A, Indoor type Ring Main unit with 1 or 2 Incoming & 2 or 1 Outgoing with HRC fuses complete erected on provided cc foundation/ MS channels/trench, etc, in an approved manner as per specification no SW-HTS/RMU
7
Each
432050.00
3024350.00
14.
8.8.2
Dismantling the existing pole above 6 m height with brackets, clamps, insulators, stay from the cement concrete foundatio
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4
Each
16158.00
64632.00
18.
MSDCL
Bore Horizantal With HOPE Pipe upto 13018 MSDCL MM Dia.
955
Mtr
5602.00
5349910.00
19.
7.6.6
Supplying & laying (including excavation) 15 cms. dia RCC Hume pipe with coupling collar of standard thickness at required depth up to 90 cms. below road / ground surface, for enclosing provided cable & necessary back filling with light ramming to make the road [ground surface as it was (Except bitumen carpet)
350
Mtr
751.00
262850.00
20.
7.6.8
Supplying & laying (including excavation) 25 cm Dia half round RCC Hume pipe of standard thickness at required depth up to 90 cms. below road / ground surface, for enclosing provided cable & necessary back filling with light ramming to make the road/ ground surface as it was (Except bitumen carpet).
9480
Mtr
577.00
5469960.00
21.
16.2.4
Providing and spreading stone metal 25mm size for 100 mm depth above the 1000 ground level.
1000
Cu m
66.00
66000.00
22.
16.5.15
Supplying and erectin
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IS:2026) as per specification No SS- TR
1
Each
310776
310776.00
26.
10.2.25
Providing floor mounting stand for keeping 4 Nos. of FIRE buckets 1500mm in length, 900mm in height frame made out of 30x30x4 mm angle iron with cross 2 supports for legs, welded with 4 hooks and duly painted with one coat of red lead and two coats of silver paint.
2
Each
2972
5944.00
27.
10.2.24
Providing round bottom FIRE Bucket of 9 Litres capacity as per IS: 2546 made out of 24 gauge G.I. sheet with extra handle 18 at bottom duly painted white inside and red outside with FIRE Mark, on provided Stand/ wall hook.
8
Each
637
5096.00
28.
8.1.10
Supplying and erecting Rolled steel Joist (Girder) pole 100 x 116 mm (23 kg/ m) with provided base plate in provided foundation as per specification No. OHPL/RSJ
264
Each
1436
379104.00
29.
8.4.11
Supplying 100 x 50 mm with 4.7 mm thick web and 7.5 mm thick flange channel iron cross arm of suitable length for 2.4m wide DP structure and erectin
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arrester, on provided cross arm as per specification No. OH-INS/LA
2
Set
1373
2746.00
33.
10.2.5
Supplying and erecting approved make, 11 kV out door type drop out fuse with insulator complete with fuse holders, fuse barrel with metal fitting, fuse element mounted on M.S. channel with working current of 15 Amps capacity complete erected on provided cross arm.
2
Set
9821
19642.00
34.
8.4.23
Supplying & erecting inline cut point end pole D.P. Structure for 200 KVA Transforme with R.S.J. Pole 2 Nos. of size 100 x 116 mm x 11 Mtr. Long with suitable Distribution Box of C.R.C.A. Sheet 16 SWG (size 4 SqMtr.) with 4 Pole MCCB 300 Amps as incomer & 6 Nos. 63 Amps Kitkat for outing circuits. Transformer D.P. Structure includes the A. B. Switch 200 Amps, D.O. fuse Set & LA. Set. 2 Nos. Top channel of size 100 mmx 50 mm for erection of A. B. Switch & 2 Nos. Base channel of size 100 mm x 50 x mm for erecting Transformer. Channel Of size 75 x40 mm for erecting DO. Fuse Set, LA., A.B.
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fuse Set & L.A. Set. 2 Nos.Top channel of size 100 mmx 50 mm for erection of A.B. Switch & 2 Nos. Base channel of size 100 mm x 50 x mm for erecting Transformer. Channel of size 75 x40 mm for erecting D.O. Fuse Set, LA., A.B. Switch handle etc.Angle of size 50 x 50 x6 mm for erecting Distribution Box, Transformer Belt etc.as per drawing(App. 176 Kg. iron work) with neccessary clamps, Nut-bolts. Vee cross arm, top clip, insulators etc. complete with caution board & barbed wire. D.P. Structure shall be erected in provided c.c. foundation
1
Each
130443
130443.00
37.
8.4.17
Supplying & erecting single pole cut point channel set of for 11 kV HTOH. Line. Two channel of size 100 x 50 mm 1.6 m Long having stud angle of size 50 x 50 x 6 mm 1.5 m long with top piece of size 100 x 50 mm 0.45 m. Long with necessary clamps, nut bolts etc. complete as per drawing.
1
Each
6364
6364.00
38.
5.9.1
Supplying and erecting approved make extendable / non- extendable type 11 kV, 630A, load brea
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ation, 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.
Thus as per definition contract for building, construction……………of immovable property should only be considered as works contract
'Immovable property' is defined in section 3(26) of General Clauses Act, 1897 as follows:
“Immovable property' shall include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth;”
Meaning of 'immovable property' as per Section 3 of the Transfer of Property Act, 1882 does not include Standing timber, growing crops or grass. The Hon'ble Supreme Court in the case of Commissioner of Central Excise, Ahmedabad Vs. Solid & Correct Engineering Works 2010 (252) ELT 481 = 2010 (4) TMI 15 –
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.
(1) Turn key projects like Steel Plants, Cement plants, Power plants etc. involving supply of large number of components, machinery, equipment's, pipes and tubes etc. for their assembly/installation erection/integration/interconnectivity on foundation/ civil structure etc, at site, will not be considered as excisable goods for imposition of central excise duty, the components, however, would be dutiable in the normal course.
Here we would like to draw your attention to the fact that our scope of work does not include construction of entire project of Metro stations, railway line, power supply, civil structures etc. but scope include “Shifting LT,HT Overhead lines crossing which are obstructing metro railway path and providing LT,HT underground cables for Nagpur Metro Rail Project.
The work is not construction of metro rail project but this is shifting of existing utilities obstructing metro railway path and providing supplying and installation of new underground cable along with
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es as a whole. They come into existence only by assembly and connection of various components and parts. Though each component is dutiable, the refrigeration/air conditioning system as a whole cannot be considered to be excisable goods. Air conditioning units, however, would continue to remain dutiable as per the Central Excise Tariff.
(4) Lifts and escalators. (a)Though lifts and escalators are specifically mentioned in sub heading 8428.10, those which are installed in building and permanently fitted into the civil structure, cannot be considered to be excisable goods. Such lifts and escalators have also been held to be non-excisable by the Govt. of India in the case of Otis Elevators India Co. Ltd. reported in 1981 ELT 720 (GOI) = 1981 (7) TMI 70 – GOVERNMENT OF INDIA. Further, this aspect was also a subject matter of C&AG's Audit Para No 7.1(b)/98-99| DAP NO 1867 which has since been settled by the C&AG accepting the Board's view that such lifts and escalators are not excisable go
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g CIN ORBC18082700076845 under CGST Act.,
Also as required by you we here by submit Tender document (4 sets) of works allotted to us by Nagpur Metro Rail Corporation.
03. CONTENTION – AS PER THE CONCERNED OFFICER
The submission, as reproduced verbatim, could be seen thus-
I would like to submit regarding their questionnaires as a jurisdiction officer as under.
Applicant have raised following questions
1. Whether EPC Contract for electrical cable supply and laying work can be classified as contract for building, construction, fabrication, completion, erection, installation, fitting qut, improvement, modification, repair, maintenance, renovation, alteration or commissioning of immovable property wherein transfer of property in goods (whether as goods or in some Other form) is involved in the execution of such contract.
As per information provided by applicant, The applicant received order from Nagpur Metro Rail Corporation hereafter called as NMRCL for “Shifting LT,HT O/H lines
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le provided by the applicant, I find that there are different components like installation of cable, cement, joints, transport, insurance which are naturally bundled and supplied in conjunction with each other and are integral to one main supply i.e. supply of cable and if one or more components are removed the nature of main supply would get affected.
Now as per Section 2(119) of the Central Goods and Services Tax (CGST) Act, 2017, unless the context otherwise requires, the term.
“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”
So as to qualify as works contracts work there should be of transfer of property in goods of immovable property is necessary.
The Hon'ble Supreme
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ed for the permanent beneficial enjoyment of that to which it is attached.”
19. It is evident from the above that the expression “attached to the earth” has three distinct dimensions, viz. (a) rooted in the earth as in the case of trees and shrubs (b) imbedded in the earth as in the case of walls or buildings or (c) attached to what is imbedded for the permanent beneficial enjoyment of that to which it is attached. Attachment of the plant in question with the help of nuts and bolts to a foundation not more than 11/2 feet deep intended to provide stability to the working of the plant and prevent vibration/wobble free operation does not qualify for being described as attached to the earth under any one of the three clauses extracted above. That is because attachment of the plant to the foundation is not comparable or synonymous to trees and shrubs rooted in earth. It is also not synonymous to imbedding in earth of the plant as in the case of walls and buildings, for the obvious reason t
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ty of human and cable itself. Cables can be moved/shifted by excavation of earth and can be re-installed at other place, Transformers are rested on channels which are fitted on cement concrete base for its smooth operation and can be easily shifted/ moved to other sites by lifting the same with the help of the crain without damaging the same. It is Very clear that material is not installed for beneficial enjoyment of land but it is installed for more beneficial use of that material itself.
Section 2(30) defines composite supply as
“supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply”
Thus going through the above facts it is crystal clear that above said supply (activity) constitutes composite Supply and not a works contract.
Thus in my humble opi
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ed by the way of construction, erection, commissioning or installation of original works pertaining to (a) Railways including monorail and metro. 6%
The Precondition in the said notification is composite supply of works contracts pertaining to metro, as discussed earlier only work relating to immovable property can be classified as works contracts and thus the above said work does not fall in ambit works contract but it is composite supply of various items mentioned in work schedule submitted. Thus the said work can not be classified as works contract and the said notification is not applicable to the applicants case.
Thus going through the above facts it is clear that the above said supply (activity the dealer does not amounts works contract but said supply constitutes composite supply only
Hon. Forum is humbly requested to admit the application for Advance ruling and consider the above submission while disposing the application of the dealer.
04. HEARING
The case was taken u
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for “Shifting of LT,HT O/H lines crossing and providing LT,HT U/G cables from Hingna Depot CH. 19500 to Ambazari Lake CH 12500 for the Nagpur Metro Rail Project. They have also submitted that the work involves Supply, erection, testing and commissioning including transport, loading, unloading, insurance etc of transformer substation, HT & LT Overhead Line & Cable through Underground, for the Metro Rail Project. In the tender/ work order, the work schedule separately describes each activity to be carried out to complete the work and also rate for each activity is separately mentioned, by adding amount of each activity total estimated tender cost is derived and they have quoted in percent % above or below of the estimated cost.
Thus they had no option to quote the individual prices for each activity and the tender had to be accepted as a whole and they could not accept part activities. They have further stated that NMRCL department is insisting them to charge 12% GST as per Notfn. No. 1
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erefore discuss all the provisions relating to Works Contract, which is a mixture of service and transfer of goods. GST Schedule Il clearly mentions that the following are supply of services:-
a. 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,
b. works contract including transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract
Hence Works contract will be treated as service and tax would be charged accordingly. As per Section 2(119) of the CGST Act, 2017, unless the context otherwise requires, the term 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 invo
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on and painted as per specification NO SS-AS/FSG.
4. Supplying and erecting 50 x 50 x 6 mm. angle iron as corner support 2m long fixed at the middle of the fencing frame and the other side inclined at 30 degree angle, in C.C. foundation of 15 x 15 x 40cm complete duly painted with one coat of red oxide and two coats aluminum paint.
5. Supplying & laying (including excavation) 15 cms. dia RCC Hume pipe with coupling collar of standard thickness at required depth up to 90 cms. below road/ ground surface, for enclosing provided cable & necessary back filling with light ramming to make the road/ ground surface as it was (Except bitumen carpet)
Section 3(26) of General Clauses Act, 1897 defines 'Immovable property' as follows:
“Immovable property' shall include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth;”
a. It is evident from (1) above that they are providing cement concrete (cc) foundation for pump
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as it was. Therefore the implication is that the cables are enclosed in such RCC pipes which are kept under the ground at a certain depth and then the entire pipes with the enclosed cables are covered back with filling to make the road as it is. If this is not attached to earth, then what is it? This clearly satisfies the condition of being attached to earth. The pipes are fixed underneath the ground level underground, covered with filling and in such case it is clear that the said pipes are meant to be affixed permanently underneath the ground and therefore cannot be considered as a movable property.
We further find from the work schedule submitted by the applicant that their work involves supply, erection, testing and commissioning including transport, loading, unloading, insurance etc of transformer substations, HT & LT Overhead Line & Cable Through Underground. Their EPC contract for electrical cable supply and laying work can be classified as contract for building, construction,
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visions of Notification no. 11/2017-Central Tax (Rate) dated 28th June 2017 which is applicable to the present case.
Sl.No.
Chapter, Section or Heading
Description of Service
Rate (per cent)
Condition
1
2
3
4
5
Chapter 99
All Services
Section 5
Construction Services
Heading 9954 (Construction service)
(i) ……………………………..)
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) construction services other the (i) and (ii) above.
6
–
Hence as per the said Notfn it is very clear that the composite supply of works contract as in the subject case falls under (ii) attracting 18% GST. The said Notification was amended on 22.08.2017 vide Notfn No. 20/2017 – Central Tax (Rate) and is reproduced as under:-
Sl.No.
Chapter, Section or Heading
Description of Service
Rate (per cent)
Condition
1
2
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9) of section 2 of the Central Goods and Services Tax Act, 2017, supplied by way of construction,……………of-
(a) a road, bridge, tunnel, or terminal…….;
(b) a civil structure…….. under Jawaharlal Nehru National Urban Renewal Mission or Rajiv Awaas Yojana;
(c) a civil structure ………… under the Housing for All (Urban) Mission/Pradhnn Mantri Awas Yojana,……….;
(d) a civil structure or any other original works pertaining to ………….. under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana;
(e) a pollution control or effluent treatment plant,………….
6
(v) Composite supply of works contract as 6 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……….
6
(vi) Construction services other tha
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upply of works contract as 6 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 ………
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(vi) Services provided to the Central 6 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 Schedu
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State Government, Union territory or local authority, as the case may be
(iv) Composite supply of works contract…………
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(v) Composite supply of works contract as 6 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 ………
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(vi) composite supply of works contract as defined in clause 119 of section 2 of Central Goods and Services Tax Act, 2017 provided to the Central 6 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 bus
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te) and vide this amendment clause (v) as above was changed to include '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, ……………… pertaining to, (a) railways, INCLUDING monorail and metro.
In the subject case it is seen that the applicant is providing composite supply of Works Contract in respect of Metro but the reduced rate of tax is available only if the work is of the type of ORIGINAL WORKS.
Original Works would mean ; all new constructions; all types of additions and alterations to abandoned or damaged structures on land that are required to make them workable; erection, commissioning or installation on of plant, machinery or equipment or structures, whether pre-fabricated or otherwise, etc. In the present case the work done by the applicant does not appear to be original works. The applicant themselves have stated that “Here we would like to draw your atte
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1/2018 dated 25.01.2018 and attract GST (9% each of CGST and SGST).
05. In view of the extensive deliberations as held hereinabove, we pass an order as follows :
ORDER
(Under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017)
NO.GST-ARA-47/2018-19/B-120
Mumbai, dt.25.9.2018
For reasons as discussed in the body of the order, the questions are answered thus –
Question 1:- Whether EPC Contract for electrical cable supply and laying work can be classified as contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of immovable property wherein transfer of property in goods (Whether as goods or in some other form) is involved in the execution of such contract.
Answer:- Answered in the affirmative.
Question 2:- Whether these contracts can be classified as works contracts as per GST Law and wh
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