In Re: RITES Limited
GST
2018 (12) TMI 1226 – AUTHORITY FOR ADVANCE RULING, WEST BENGAL – 2019 (20) G. S. T. L. 657 (A. A. R. – GST)
AUTHORITY FOR ADVANCE RULING, WEST BENGAL – AAR
Dated:- 21-12-2018
27/WBAAR/2018-19 Case No. 28 of 2018
GST
SYDNEY D'SILVA AND PARTHASARATHI DEY MEMBER
Applicant's representative heard: Shri Anmol Gupta, CA
1. The Applicant, stated to be a Consulting Engineer rendering services related to engineering consultancy and monitoring agency to a large number of projects, both of the Government and of the Private Sector, seeks a ruling on whether the rate of GST for the construction of railway siding will be under Sl. No 3(v)(a) or Sl No 3(xiii) of Notification no 11/2017-CT(Rate) dated 28.06.2017 (and analogous notification issued under the WBGST Act), as amended, as applicable (hereinafter referred to as “the Rate Notification”) under the CGST/WBGST Acts, 2017 (hereinafter referred to, collectively, as “the GST Act”).
Advance Ruli
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for passing the bills of the vendors and contractors after necessary scrutiny, and making the payments from a specially designated escrow account in which DVC deposits the requisite amount, and deduction of statutory taxes and deposit of the same, issuance of tax deduction certificates etc.
3. In support of his submissions, the Applicant has provided a copy of the agreement with DVC. It is an agreement to undertake Engineering and Construction Management Service for construction of Railway Infrastructure including commissioning of the railway system and advance procurement of railway section and P. way materials. The Construction Management includes procurement of Rails and PSC sleepers with fittings, points and crossings, track fitting etc, construction of railway formation and bridges and procurement of stone ballast as per specifications of the Indian Railways, laying of new P. way with Points and Crossings, procurement and installation of electrical equipment etc. Apart from track
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of original works pertaining to railways, including monorail and metro, is taxable @ 12%. Original work, as defined under para 2(zs) of Notification No. 12/2017-CT (Rate) dated 28/06/2017, means all new construction involving (i) all types of additions and alterations to abandoned or damaged structures on land that are required to make them workable, and (ii) erection, commissioning or installation of plant, machinery or equipment or structures, whether pre-fabricated or otherwise.
The term “railways” is not defined in the GST Act. It, however, is defined under section 2(31) of the Railways Act, 1989, meaning “a railway, or any portion of a railway, for the public carriage of passengers or goods, and includes
(a) All lands within the fences or other boundary marks indicating the limits of the land appurtenant to a railway;
(b) All lines of rails, sidings, or yards, or branches used for the purpose of, or in connection with, a railway;
(c) All electric traction equipment, power supp
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en, but covers, Government Railway under section 2(20) and Non-Government Railway under section 2(25) of the Act. It, therefore, includes scope for railways under both Government and private administrations.
5. It is evident from the above discussion that the scope of work, as outlined in the Applicant's agreement with DVC, is that of works contract, as defined under section 2(119) of the GST Act, fit to be called an 'original work' within the meaning ascribed to the term in para 2(zs) of Notification No. 12/2017-CT (Rate) dated 28/06/2017, and pertains to 'railways', provided it is meant for public carriage of passengers or goods.
6. Whether the phrase “public carriage of passenger or goods” prevents a private siding from being included in the definition of 'railways' has repeatedly come up for judicial scrutiny. The courts generally held that the phrase 'public carriage of passengers or goods' cannot be construed in such manner as to exclude from the ambit of 'railways' the sidings
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y meaning that may add more exclusion than specifically provided under section 2(31)(ii) of the Railways Act, 1989.
DVC – a public sector undertaking – is the owner of the railway siding being built. It is meant for carriage of coal and oil fuel to RTPS. The purpose of the carriage of goods is, therefore, not recreation, but producing public goods like electricity. It is, therefore, not excluded under section 2(31)(ii) of the Railways Act, 1989.
The construction of the private siding that the Applicant refers to, therefore, pertains to 'railways'.
In view of the foregoing, we rule as under
RULING
Construction of a private railway siding for carriage of coal and oil fuel to Raghunathpur TPS, as described in the agreement between the Applicant and DVC, is a composite supply of works contract taxable @ 12% under Serial No 3(v)(a) of Notification no 11/2017-CT(Rate) dated 28.06.2017.
This Ruling is valid subject to the provisions under Section 103(2) until and unless declared void un
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