AUTHORITY FOR ADVANCE RULING
GOODS AND SERVICES TAX
UTTAR PRADESH
4, Vibhuti Khand, Gomti Nagar, Lucknow
PRESENT:
Hari Enclave,Chandpur Road,
Bulandshahr Uttar Pradesh - 203001
Division-Division Bulandshahar,
Commissionerate-Gautam Buddha Nagar
ORDER UNDER SECTION 98(4) OF THE CGST ACT, 2017 &
UNDER SECTION 98(4) OF THE UPGST ACT, 2017
M/s PPS Builders Private Limited, having registered office 122, Hari Enclave, Chandpur Road, Bulandshahar Uttar Pradesh - 203001 (hereinafter referred as "the applicant") having GSTIN-09AAGCP7968P1Z9, have filed an application for Advance Ruling under Section 97 of the CGST Act, 2017 read with Rule 104 of the CGST Rules, 2017 and Section 97 of UPGST Act, 2017 read with Rule 104 of the UPGST Rules, 2017 in Form GST ARA-01 (the application form for Advance Ruling), discharging the fee of Rs. 5,000/- each under the CGST Act and the UPGST Act.
2. The applicant is a registered firm/assessee under the GST regime having GSTIN: 09AAGCP7968P1Z9. The Company carries on the business of the civil constructions mainly with the Govt. Departments against the Contracts awarded by them. The company Aligarh Smart City Limited (ASCL) is a Public company and was incorporated on 30 August 2017. It is classified as State Govt company and is registered at Registrar of Companies, Kanpur. The Company has awarded the contract of "Redevelopment of Carriageway, foothpath, vending zone covering ROW within ABD area of Aligarh Smart City(CW-23) on EPC mode (Pakage-1) at Aligarh" by the Aligarh Smart City Limited (ASCL), Manasi Ganga Building, Baraula Bye Pass, Near Shanti Lodge, Aligarh, Uttar Predesh PIN 202001. Which was executed on 27th day December, 2021. Contract Agreement has been provided by the applicant.
3. The applicant has sought advance ruling in respect of the following questions:-
1) Whether the company will charge the GST @ 12% or @18% in the case of the contracts executed before the said notification? (No. 03/2022-Central Tax (Rate) dated. 13.03.2022 w.e.f 18.07.2022.
4. The question is about applicable GST rate under the provisions of CGST Act and liability to pay GST, hence is admissible under Section 97(2) (a) of the CGST Act 2017. Further, as per declaration given by the applicant in Form ARA-01, the issue raised by the applicant is neither pending nor decided in any proceedings under any of the provisions of the Act, against the applicant.
5. . Statement of relevant facts having a bearing on the question(s) raised
The applicant is a registered firm/assessee under the GST regime having GSTIN: 09AAGCP7968P1Z9. The Company carries on the business of the civil constructions mainly with the Govt. Departments against the Contracts awarded by them. The company Aligarh Smart City Limited (ASCL) is a Public company and was incorporated on 30 August 2017. It is classified as State Govt company and is registered at Registrar of Companies, Kanpur. The Company has awarded the contract of "Redevelopment of Carriageway, foothpath, vending zone covering ROW within ABD area of Aligarh Smart City(CW-23) on EPC mode (Pakage-1) at Aligarh" by the Aligarh Smart City Limited (ASCL), Manasi Ganga Building, Baraula Bye Pass, Near Shanti Lodge, Aligarh, Uttar Predesh PIN 202001. Which was executed on 27th day December, 2021. Contract Agreement has been provided by the applicant.
The rate of tax (GST) on Work contract for Roads, Bridges, Railways, Metros etc and work contract supply to Central Govt. State Govt, and Local Authorities for historical monuments, canal, Dams, Pipelines, Plant for water supply etc. was enhanced from 12% to 18% vide notification No.03/2022-Central Tax(Rate) dated 13.07.2022 w.e.f. 18.07.2022.
Applicant has sought ruling with respect to the applicable rate of GST on work contract.
6. The applicant has submitted their interpretation of law as under-
6.1 The Aligarh Smart City Limited (ASCL) has awarded contract of Redevelopment of Carriageway, foothpath, vending zone covering ROW within ABD area of Aligarh Smart City(CW-23) on EPC mode (Pakage-1) at Aligarh to the Applicant and contract was executed on 27th December 2021.
6.2 The Govt, proposed to enhance the rate of tax from 12% to 18% on certain construction services relating to Roads, Bridges, Railways, Metros, Effluent Treatment Plant, crematorium, Historical monuments, Canals, Pipe lines, plant for water supply, Educational institutions, Hospital etc. and sub-contractor thereof and involving predominantly earthwork and sub contract thereof under GST w.e.f. 18.07.2022. This contract was awarded in the year of 2020-2021.The rates were provided inclusive of all taxes. When the bid/tender was applied the Rate of the GST was @12% while subsequently vide No.03/2022-Central Tax(Rate) dated 13.07.2022 w.e.f. 18.07.2022 the tax rate was changed to 18%.
Section 2(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,
Government Contracts means "A contract to which the Central Govt or a State Govt, is party can be called Government Contractor and the party who is required to execute the contract for or on behalf of the Government is referred to as a Govt. Contract.
6.3 That this contract was awarded in the year of 2020-2021.The rates were provided included the GST. When the bid/tender was applied the Rate of the GST was @12% while after the notification No.03/2022-Central Tax (Rate) dated 13.07.2022 w.e.f. 18.07.2022 the change was made in the rate of tax which as follows-
After this notification No.03/2022-Central Tax (Rate) dated 13.07.2022 w.e.f. 18.07.2022 the ASCL had paid GST @18% (from 12 March 2022 to 14.01.2023) after the notification but latter on from 15 January 2023 they paid GST @12% . The applicant charged GST @ 18%.
They submitted that the time of Supply is continued and place of supply (POS) is Aligarh and that the ASCL had not considered the provisions contained in Section 13 and Section 14 of CGST Act, 2017, pertaining to Time of Supply of Services and Change in rate of tax in respect of Supply of goods or services.
They also added that after introduction of GST Act in India, "Works Contact Services" would generally classify as contracts for continuous supply of services, the issuance of invoices in case of continuous supply of services prescribed in section 35(1) of the CGST Act 2017. So as per section 35(1) of the CGST Act 2017 in case of continuous supply of services the due date for issue of invoice is as under-
(a) Due date of payment is ascertainable on or before the payment due date.
(b) Due date of payment is not ascertainable: before or at the time when payment is received.
(c) Payment is linked to completion of an event: on or before the completion of event.
An application for advance ruling is being presented for obtaining the clarification about the rate of tax in the present case after the Notification No. 03/2022 dated 13.07.2022 and with effected from 18.07.2022.
7. The application for advance ruling was forwarded to the Central Jurisdictional GST Officer vide letter dated 23.06.2023 to offer their comments/views/verification report on the matter.
The Additional Commissioner, SGST- Ghaziabad Zone -II has submitted his comments vide his letter dated 18.07.2023 wherein it has been submitted that M/s P.P. Builders Pvt. Ltd. 122, Hari enclave, Chandpur Road, Bulandshahr GSTIN 09AAGCP7968P1Z9 is registered in his office and civil construction work is done by the firm.
They reiterated the facts of the case and submitted that consequent to the change in rate of tax, the tax rate can be determined according to provisions contained in Section 14 of CGST/SGST Act 2017 accordingly they have submitted that the tax rate for invoices issued by the applicant will be as follows :
8. The applicant was granted opportunity for personal hearings on 19.07.2023, 04.08.2023 and 08.09.2023. But they neither appeared for personal hearing on any of these dates, nor sought any adjournment/extension. Applicant was given sufficient time/opportunities. Now the case is being taken up for decision on merits.
DISCUSSION AND FINDING
9. At the outset, we would like to make it clear that the provisions of both the CGST Act and the UPGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the UPGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / UPGST Act would be mentioned as being under the 'CGST Act'.
10. We have gone through the Form GST ARA-01 filed by the applicant and observed that the applicant has ticked following issues on which advance ruling required-
(1) Applicability of a notification issued under the provisions of this Act..
(2) Determination of the liability to pay tax on any goods or services or both.
At the outset, we find that the issue raised in the application is squarely covered under Section 97(2) of the CGST Act 2017, We therefore, admit the application for consideration on merits.
11. The applicant is a registered firm/assessee under the GST regime having GSTIN: 09AAGCP7968P1Z9. The Company carries on the business of the civil constructions mainly with the Govt- Departments against the Contracts awarded by them. The company Aligarh Smart City Limited (ASCL) is a Public company and was incorporated on 30 August 2017. It is classified as State Govt company and is registered at Registrar of Companies, Kanpur. The Company has awarded the contract of "Redevelopment of Carriageway, foothpath, vending zone covering ROW within ABD area of Aligarh Smart City(CW-23) on EPC mode (Pakage-1) at Aligarh" by the Aligarh Smart City Limited (ASCL), Manasi Ganga Building, Baraula Bye Pass, Near Shanti Lodge, Aligarh, Uttar Predesh PIN 202001. Which was executed on 27th day December, 2021. Contract Agreement has been provided by the applicant.
12. We have gone through the submissions made by the applicant and have examined the same. The applicant in the present application has sought advance ruling on following question/clarification-
1) Whether the company will charge the GST @ 12% or @18% in the case of the contracts executed before the said notification? (No. 03/2022-Central Tax (Rate) dated. 13.03.2022 w.e.f 18.07.2022.)
13. The Applicant has been awarded the contract of "Redevelopment of Carriageway, foothpath, vending zone covering ROW within ABD area of Aligarh Smart City(CW-23) on EPC mode (Pakage-1) at Aligarh" by the Aligarh Smart City Limited (ASCL) vide contract agreement dated 23.12. 2021.
Work contract as per Section 2(119) of CGST Act 2017 is defined as under:
"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;".
The Works contract services provided by the applicant was chargeable to GST @ 12% vide Notification 11/2017 - CT (Rate) as amended dated 28.06.2017. However subsequently vide Notification No 03/2022 dated 13.07.2022, the same was amended and enhanced to 18% w.e.f 18.07.2022.
Consequent to the change in rate of tax during an ongoing continuous jerrice. applicable rate of tax is to be decided in terms of provisions contained in Section 14 of the CGST Act, 2017. The same is as follows :
"Section 14. Change in rate of tax in respect of supply of goods or services.- Notwithstanding anything contained in section 12 or section 13, the time of supply, where there is a change in the rate of tax in respect of goods or services or both, shall be determined in the following manner, namely:-
(a) in case the goods or services or both have been supplied before the change in rate of tax,-
(i) where the invoice for the same has been issued and the payment is also received after the change in rate of tax, the time of supply shall be the date of receipt of payment or the date of issue of invoice, whichever is earlier; or
(ii) where the invoice has been issued prior to the change in rate of tax but payment is received after the change in rate of tax, the time of supply shall be the date of issue of invoice; or
(iii) where the payment has been received before the change in rate of tax, but the invoice for the same is issued after the change in rate of tax, the time of supply shall be the date of receipt of payment;
(b) in case the goods or services or both have been supplied after the change in rate of tax,-
(i) where the payment is received after the change in rate of tax but the invoice has been issued prior to the change in rate of tax, the time of supply shall be the date of receipt of payment; or
(ii) where the invoice has been issued and payment is received before the change in rate
of tax, the time of supply shall be the date of receipt of payment or date of issue of invoice, whichever is earlier; or
(iii) where the invoice has been issued after the change in rate of tax but the payment is received before the change in rate of tax, the time of supply shall be the date of issue of invoice:
Provided that the date of receipt of payment shall be the date of credit in the bank account if such credit in the bank account is after four working days from the date of change in the rate of tax.
Explanation.- For the purposes of this section,- the date of receipt of payment shall be the date on which the payment is entered in the books of account of the supplier or the date on which the payment is credited to his bank account, whichever is earlier."
13.1 In view of the above provisions, the rate of GST tax applicable in the matter is as under:
14. In view of the above discussions, we, both the members, unanimously rule as under:
RULING
Answer : In cases where advance is received or invoices are raised before 18.07.2022, GST rate applicable is 12%.
In cases where advance is received and invoices are raised after 18.07.2022.
GST rate applicable is 18% .
As clarified in the table in para 13.1 above.
15. This ruling is valid only within the jurisdiction of Authority for Advance Ruling Uttar Pradesh and subject to the provisions under Section 103(2) of the CGST Act, 2017until and unless declared void under Section 104(1) of the Act.
Note: An Appeal against this advance ruling order lies before the Uttar Pradesh Appellate Authority for Advance Ruling for Goods and Service Tax, 4, Vibhuti Khand, Gomti Nagar, Lucknow - 226010, within 30 days from the date of service of this order.