In Re : M\/s. R.B. Construction Company
GST
2018 (6) TMI 559 – AUTHORITY FOR ADVANCE RULINGS, GUJARAT – 2018 (14) G. S. T. L. 116 (A. A. R. – GST), [2018] 2 GSTL (AAR) 91 (AAR)
AUTHORITY FOR ADVANCE RULINGS, GUJARAT – AAR
Dated:- 17-1-2018
Advance Ruling No. GUJ\/GAAR\/R\/2017-18\/3 (In Application No. Advance Ruling\/SGST&CGST\/2017-18\/AR\/5)
GST
Mr. R.B. Mankodi, Member And Mr. G. C. Jain, Member
\nFor The Applicant : Shri Soham Mashruwala, CA And Shri Rohit Bodiwala, Partner
\nRULING
\nThe applicant submitted that they had bid in a tender issued by the Rajkot Municipal Corporation (RMC) to supply pipes, lay the pipes in desired formation as planned by the Government and to test the pipes against the leakages and then commission the project. The work to be executed as per the tender was to construct a pipeline network as per the specifications and design of the RMC. The release of the payment of the applicant fixed by the RMC is as follows :-
\nSr. No.
\nEvent\/Milestone\n<\/p>\n
= = = = = = = =<\/p>\n
Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ig or small) and used in the work as specified in the tender. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n implementation of the Goods and Services Tax Act amount to supply, and specifically supply of works contract ? = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ST Act, 2017 and submitted that the nature of the work executed by them safely leads one to the conclusion that an immovable property is constructed, ipso facto. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n been given under Section 2(119) of the CGST Act, 2017 and GGST Act, 2017 as follows :- = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n s contract as defined in clause (119) of section 2 shall be treated as a supply of services. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n (11) of Section 142 of the CGST Act, 2017 and the GGST Act, 2017 to ensure that the tax is not levied under the existing laws (Chapter V of the Finance Act, 1994 and Gujarat Value Added Tax Act, 2005) as well as under the GST Laws. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n f sub-section (6) of Section 140 ibid is not fulfilled. Testing and Commissioning of network of pipeline being part of the contract, Goods and Service Tax is leviable, however, since no input \/ material is required for such Testing and Commissioning of network of pipeline, transitional Input Tax Credit is not allowable. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n","protected":false},"excerpt":{"rendered":" In Re : M\/s. R.B. Construction CompanyGST2018 (6) TMI 559 – AUTHORITY FOR ADVANCE RULINGS, GUJARAT – 2018 (14) G. S. T. L. 116 (A. A. R. – GST), [2018] 2 GSTL (AAR) 91 (AAR)AUTHORITY FOR ADVANCE RULINGS, GUJARAT – AARDated:- 17-1-2018Advance Ruling No. GUJ\/GAAR\/R\/2017-18\/3 (In Application No. Advance Ruling\/SGST&CGST\/2017-18\/AR\/5) GSTMr. R.B. Mankodi, Member And … Continue reading “In Re : M\/s. R.B. Construction Company”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-12150","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/12150","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=12150"}],"version-history":[{"count":0,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/12150\/revisions"}],"wp:attachment":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=12150"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=12150"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=12150"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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\n3. The applicant submitted that they had bought pipes for the project of RMC. At the time of purchase, the applicant had paid Central Excise and VAT. Thereafter the applicant had undertaken excavation work whereby trenches are dug in order to lay the pipes. Once the desired level of depth of soil is dug, the work of laying of pipes started. A network of pipes is made by joining the pipes (either by lamination or welding) so that a permanent structure of pipeline network is formed. The inter-connection of the pipes is designed in such a way that the sewage \/ liquid \/ water passes through the network without any leakages. Out of the said network of pipes, the pipes can never be dismantled\/ removed as such and in order to dismantle it, the entire pipe network has to be demolished and there is hardly any salvage. After the work of laying is over, the trenches are refilled (covered) and the pipeline network remains underground, <\/p>\n
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\n (B) Is the applicant entitled to enjoy proportionate credit worth 10% duty of excise and VAT paid on materials bought vide invoices showing Excise and VAT separately, under the transition provisions so that there is no double taxation i.e. levy of tax on tax is avoided ?
\n6. The applicant has submitted that the nature of the work is such that an immovable property is created by virtue of the work done by them and unless the specified milestones are completed, the work of the applicant would be incomplete and the property in the goods vests with the applicant. The milestones which are fixed ensure that the applicant never has an option to run away from the project midway. They submitted that in their opinion, the milestone which is yet to be achieved under the GST regime is an extension and inextricably linked with the other two milestones which have been completed. They ref<\/p>\n
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\n8. With respect to second query about the admissibility of the claim of input credit under transition provisions, they referred to Section 140(6) of the CGST Act, 2017 and GGST Act, 2017 and submitted that they are in possession of the duty paid document and the element of Central Excise and VAT can be identified clearly. The recitals of the contract of RMC ensure that a sizeable cost of materials is not released to the applicant lest the project is abandoned half-way. It is submitted that the project being in a semi-finished stage, though physically, pipes are not visible as they are underground, entitles them to make a valid claim of credit of excise duty as well as VAT on the invoices of purchases of materials bought within 1 year before 1st July 2017. They submitted that the semi-finished stage of the project being a cruc<\/p>\n
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\n “(119) “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;”
\n11.2 Thus, a contract for any immovable property wherein transfer of property in goods is involved in the execution of such contract fall within the definition of 'works contract'.
\n11.3 In the present case, the applicant had undertaken excavation work whereby trenches are dug and pipes are laid after desired level of depth of soil is dug and a network of pipes is made by joining the pipes either by lamination or welding so that a permanent structure of pipeline network is formed. After the work of laying of pipeline and joining th<\/p>\n
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\n12.2 The provisions related to determination of time of supply of services are contained in Section 13 of the CGST Act, 2017 and the GGST Act, 2017. As per sub-section 2 of Section 13 ibid, the time of supply of services shall be the earliest of the following dates namely :-
\n (a) the date of issue of invoice by the supplier, if the invoice is issued within the period prescribed under sub-section (2) of section 31 or the date of receipt of payment, whichever is earlier; or
\n (b) the date of provision of service, if the invoice is not issued within the period prescribed under sub-section (2) of section 31 or the date of receipt of payment, whichever is earlier; or
\n (c) the date on which the recipient shows the receipt of services in his books of account, in a case where the provisions of clause (a) or clause (b) do not apply :
\n Provided that where the supplier of taxable service receives an<\/p>\n
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\n13.1 As regards the admissibility of input tax credit on pipes used in pipeline network, the applicant has referred to sub-section (6) of Section 140 of the CGST Act, 2017 and the GGST Act, 2017, which reads as follows :-
\n “(6) A registered person, who was either paying tax at a fixed rate or paying a fixed amount in lieu of the tax payable under the existing law shall be entitled to take, in his electronic credit ledger, credit of eligible duties in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day subject to the following conditions, namely :-
\n (i) such inputs or goods are used or intended to be used for making taxable supplies under this Act;
\n (ii) the said registered person i<\/p>\n
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\n13.3 In view thereof, the applicant is not entitled to avail input tax credit under Section 140(6) of the CGST Act, 2017 and the GGST Act, 2017.
\n14. In view of above, we rule as under –
\nRULING
\n (A)The work of laying of underground pipeline network falls under the definition of “works contract” provided under Section 2(119) under the CGST Act, 2017 and the GGST Act, 2017. In respect of that part of supply wherein time of supply is on or after the appointed date, Goods and Services Tax is required to be paid.
\n (B) The applicant is not entitled under Section 140(6) of the CGST Act, 2017 and the GGST Act, 2017 to avail input tax credit.
Case laws, Decisions, Judgem<\/p>\n
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