In Re: M\/s. NHPC Limited
GST
2018 (11) TMI 1265 – AUTHORITY FOR ADVANCE RULINGS, UTTARAKHAND – 2018 (19) G. S. T. L. 349 (A. A. R. – GST)
AUTHORITY FOR ADVANCE RULINGS, UTTARAKHAND – AAR
Dated:- 22-10-2018
AAR Ruling No. 10\/2018-19 in Application No. 11\/2018-19
GST
SHRI VIPIN CHANDRA AND SHRI AMIT GUPTA MEMBER
\nPresent for the Applicant: Shri N.K. Gupta, Senior Manager Shri J.C. Pant, Manager (Law)
\nPresent for the Concerned Officer: None
\nRULING
\n1. This is an application under Sub-Section (1) of Section 97 of the CGST\/SGST Act, 2017 (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:
\n(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;
\n(b) What is the time of supply when advance payment is releas<\/p>\n
= = = = = = = =<\/p>\n
Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n services or both. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n as filed for our consideration in the application. Now we proceed by taking the issue one by one: = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n efore us whether the said grants received from Central Government come under the purview of GST. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ATNA HIGH COURT. The relevant portion of the said judgment is extracted below: = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n finition of 'governmental entity' merely contemplates that an entity is required to be 'established' by the Government by way of 90% or more equity or control. The definition does not contemplate continuous fulfillment of such requirement post 'establishment' of the 'entity. Therefore the intention of the above amended notification is to enlarge the scope of the definition to cover Government Companies incorporated under the Companies Act also within the ambit of the definition of Government entity”. Thus, if the criterion is fulfilled, at the time of 'establishment' by way of 90% or more Government participation in the 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 <\/p>\n = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n \n(a) Service provider shall be Government entity = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n authority, a. Governmental Authority or a Government Entity, which attract GST of 12%. Likewise, WCS attracting 5% GST, their sub-contractor would also be liable @ 5% = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ect is assigned by the main contractor to the various sub contractors. In such cases, if the sub-contractors are providing works contract service to the main contractor for completion of the main contract, then service tax is obviously not leviable on the works contract service provided by such sub-contractor. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n","protected":false},"excerpt":{"rendered":" In Re: M\/s. NHPC LimitedGST2018 (11) TMI 1265 – AUTHORITY FOR ADVANCE RULINGS, UTTARAKHAND – 2018 (19) G. S. T. L. 349 (A. A. R. – GST)AUTHORITY FOR ADVANCE RULINGS, UTTARAKHAND – AARDated:- 22-10-2018AAR Ruling No. 10\/2018-19 in Application No. 11\/2018-19 GSTSHRI VIPIN CHANDRA AND SHRI AMIT GUPTA MEMBER Present for the Applicant: Shri N.K. … Continue reading “In Re: M\/s. NHPC Limited”<\/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-15181","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/15181","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=15181"}],"version-history":[{"count":0,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/15181\/revisions"}],"wp:attachment":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=15181"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=15181"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=15181"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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\n(f) Whether the applicant is required to be registered.
\n(g) Whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both within the meaning of that term.
\n4. In the present case applicant has sought advance ruling on applicability of Notification no. 13\/2017 dated 28.06.2017 on their activity and time & value of supply of services. Therefore, in terms of said Section 97(2)(b) & (c) of CGST\/ GST Act, 2017, the present application is hereby admitted.
\n5. 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.
\n6. From the documents submitted by the applicant we find that applic<\/p>\n
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\n(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, Uttarakhand for construction of road.
\nIn the instant case the work allotted to the applicant is related to “construction pf road” which involves both supply of goods as well as supply of services. As per Schedule II of the Act ibid the following activity shall be treated as supply of service-
\ni. 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,
\nii. works contract including transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract.
\nThus the activity; of the applicant comes under the purview of supply of services.
\nBefore initiating proceedings, we have gone through the official web-si<\/p>\n
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\nTo appreciate the Jaw position in this regard we find that Notification No. 12\/2017-Central Tax (Rate) dated 28th June, 2017 deals with exempted services. The said notification was further amended vide Notification No. 32\/2017-Cnetral Tax (Rate) dated 13th October, 2017 vide which entry no. 9C was inserted and the same is extracted as under:
\nS.No.
\nChapter, Section, Heading, Group or Service Code (Tariff)
\nDescription of Services
\nRate (per cent.)
\nCondition
\n(1)
\n(2)
\n(3)
\n(4)
\n(5)
\n“9C
\nChapter 99
\nSupply 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.
\nNil
\nNil”;
\nWe also find that that “Governme<\/p>\n
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\n6.-ln the said notification, in the paragraph 2, for clause(s), the following shall be substituted, namely:-
\n(s) “governmental authority” means an authority or a board or any other body;
\n(i) set up by an Act of Parliament or a State Legislature; or
\n(ii) established by Government, with 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;”
\n11. The provisions contained in sub-clause (i) and sub-clause (ii) of Clause 2(s) are independent 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% <\/p>\n
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\n(b) Service receiver shall be Central Government, State Government, Union territory, local authority or any person specified by Central Government, State Government, Union territory or local authority
\n(c) Consideration is in the form of grants
\n(d) Work has been entrusted by Central Government, State Government, Union Territory or a local authority
\nAs per record & aforesaid requirement we find that.
\niii. M\/s. NHPC Ltd is covered under the definition of “Government Entity” in as much as the promoter of M\/s. NHPC Ltd is Hon'ble President of India which confirm the fact that it is established by the Central Government and it is under. the administrative control of Ministry of Power, Government of India.
\niv. In present case the service receiver is Central Government i.e Ministry of External Affairs, Govt. of India
\nv. 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 c<\/p>\n
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\nWe are of the view that the above recommendations makes it clear that if GST rate on the work contract is 12% or 5% then sub-contractor is also liable to discharge his GST liability @ 12% or 5% as the case may be. Similarly if GST rate on the said work contract is exempted or 0%, then supply of service in the form of work contract by the sub-contractor will also come in the purview of exempted or 0%. Thus we are of the firm view that if the principal contractor is providing an 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:
\n(i) serial No. 29 sub-c<\/p>\n
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\nIn the instant case, M\/s. NHPC is providing services to Central Government i.e. Ministry of External Affairs and will attract GST @ 12% but by virtue off Notification No. 12\/2017 -Central Tax (Rate) dated 28th June, 2017 (as amended time to time), the supply of service in question, as discussed above, is exempted, thus sub-contracting of the said work contract to PWD Govt. of Uttarakhand is also exempted.
\nIn 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.
\n(B) Si<\/p>\n
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