GST Payable On Composite Supply of Work Contract Involving Earth Work
Fact and Issue of the Case
The work order consists of Earth Work such as Excavation for Tunnel, removing of excavated stuff, fabrication, transporting, providing steel support, rock bolting, reinforcement, fixing of chain link, cement concerting, providing drainage arrangement etc. wherein total earth work is approximately 91% and construction Subject Contract/Transaction is a Composite supply of works contract as defined in the Act. Services are provided to the Central Government, State Government, Union territory, local authority, a Governmental Authority or a Government Entity. Work is around 9% wherein transfer of property is involved.
Transaction is a Composite supply of works contract as defined in the Act .Services are provided to the Central Government, State Government, Union territory, local authority, a Governmental Authority or a Government Entity. GMIDC is entrusted with planning, designing of projects, maintenance of completed project, construction of projects and irrigation management of the Major, Medium and Minor Projects. The impugned construction work included Earth Work such as excavation for tunnel, removing of excavated stuff, providing steel support, rock bolting, reinforcement-, fixing of chain link, cement concreting etc.
The term “composite supply” as defined in Section 2(30) of the CGST Act. What needs to be looked at is the definition of the term “Works contract” under Section 2(119) of the CGST Act. Going by the said definition, it is ex-facie clear that what is required is a transfer of property in goods involved in execution of construction and the said condition stands satisfied as the Applicants have been awarded a contract for construction of a tunnel and that in execution of this construction contract, transfer of property in goods supplied by the Applicants has taken place. In addition, services of excavation have also been provided.
Observation of the Court
The court has perused the documents on record and submission made by both, the applicant as well as the jurisdictional officer in the said matter.
The applicant has submitted that, the impugned contract/work order consists of Earth Work, such as Excavation for Tunnel, removing of excavated stuff, fabrication, transporting, providing steel support, rock bolting, reinforcement, fixing of chain link, cement concerting, providing drainage arrangement etc. wherein total earth work is around 91% and remaining 9% is construction work wherein, transfer of property is involved.
The Composite supply of goods and services in which the value of supply of goods constitutes not more than 25 per cent. of the value of the said composite supply provided to the Central Government, State Government or Union territory or local authority or a Governmental authority or a Government Entity by way of any activity in relation to any function entrusted to a Panchayat under the Constitution or in relation to any function entrusted to a Municipality under of the Constitution
The applicant is rendering composite supply of works contract and such rendering of composite supply of works contract involves predominantly earth work that is, constituting more than 75per cent. of the value of the works contract.
Conclusion
Thus, under GST taxation of works contract will be simpler and easier to administer.
GST-Payable-On-Composite-Supply-of-Work-Contract-Involving-Earth-Work
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