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12% GST applicable on Composite Supply of Works Contract for Construction, Erection, Commissioning, or installation of original works pertaining to Metro, says AAR

12% GST,applicable,Composite Supply,Works Contract - Construction - Erection - Commissioning - installation original works pertaining Metro - AAR - Taxscan

The Tamil Nadu Authority of Advance Ruling (AAR) ruled that 12% GST applicable on Composite supply of works contract for construction, erection, commissioning, or installation of original works pertaining to Metro.

The applicant, M/s. ST Engineering Electronics Limited is a global technology, defense and engineering group specialising in the aerospace, electronics; land systems and marine sectors. The Company, incorporated in Singapore in 1969 is an electronic system provider that serves customers in the areas of transportation, intelligent building and defense. The Company is a wholly owned subsidiary of Singapore Technologies Engineering Limited.

The applicant has entered into a Sub-contract agreement with Siemens Ltd., India for providing services in the nature of Design, manufacture, supply installation, testing and commission including integrated testing and commissioning and operational maintenance of the Telecommunications Works as part of main Contract of Siemens Ltd pertaining to metro rail project in Chennai.

Siemens Ltd is the main contractor to Chennai Metro Rail Limited (CMRL) for executing metro rail projects in Chennai. A segment of the work awarded to Siemens under their contract with CMRL is back-to-back sub-contracted to the applicant in the aforesaid agreement.

The applicant sought the advance ruling on the issue whether rate of tax at 6% CGST, available to Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017 provided by way of construction, erection, commissioning, or installation of original works pertaining to Metro, vide- Notification No. 11/ 2017 amended vide Notification No.1/ 2018- Central Tax (rate) dated 25th January 2018 is applicable to a sub-contractor (Applicant) rendering the services.

The two-member bench of Manasa Gangotri Kata and Kulinjee Selvaan ruled that considering all the submissions and that the application is pending before this authority for long, we find it appropriate to hold that the benefit of the entry at SI.No. 3(v) will be applicable to the applicant subject to the works undertaken by them being ‘Works Contract’ as per Section 2 (119) of the Act and the applicable GST is at the rate of 12% effective from January 25, 2018.

The applicant, M/s. ST Engineering Electronics Limited is a global technology, defense and engineering group specialising in the aerospace, electronics; land systems and marine sectors. The Company, incorporated in Singapore in 1969 is an electronic system provider that serves customers in the areas of transportation, intelligent building and defense. The Company is a wholly owned subsidiary of Singapore Technologies Engineering Limited.

The applicant has entered into a Sub-contract agreement with Siemens Ltd., India for providing services in the nature of Design, manufacture, supply installation, testing and commission including integrated testing and commissioning and operational maintenance of the Telecommunications Works as part of main Contract of Siemens Ltd pertaining to metro rail project in Chennai.

Siemens Ltd is the main contractor to Chennai Metro Rail Limited (CMRL) for executing metro rail projects in Chennai. A segment of the work awarded to Siemens under their contract with CMRL is back-to-back sub-contracted to the applicant in the aforesaid agreement.

The applicant sought the advance ruling on the issue whether rate of tax at 6% CGST, available to Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017 provided by way of construction, erection, commissioning, or installation of original works pertaining to Metro, vide- Notification No. 11/ 2017 amended vide Notification No.1/ 2018- Central Tax (rate) dated 25th January 2018 is applicable to a sub-contractor (Applicant) rendering the services.

The two-member bench of Manasa Gangotri Kata and Kulinjee Selvaan ruled that considering all the submissions and that the application is pending before this authority for long, we find it appropriate to hold that the benefit of the entry at SI.No. 3(v) will be applicable to the applicant subject to the works undertaken by them being ‘Works Contract’ as per Section 2 (119) of the Act and the applicable GST is at the rate of 12% effective from January 25, 2018.

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