Composite Supply of Works Contract not Covered under the Term ‘Earth Work’: AAR [Read Order]

Composite Supply of Works Contract - Earth Work - AAR - Taxscan

The Maharashtra Authority for Advance Ruling ( AAR ) has held that the composite supply of works contract not covered under the term “Earth Work”.

The M/s Mahalaxmi BT Patil Honai Constructions Joint Venture (JV) engaged in construction of infrastructure projects, was formed to undertake construction of Jeur Tunnel under Krishna Marathwada Irrigation Project. The said JV consisting of three members M/s Mahalaxmi Infraprojects Pvt. Ltd, M/s BT Patil and sons Constructions Pvt. Ltd and Honai Constructions. The work order consists of Earth Work such as excavation for Tunnel, removal of excavated stuff, fabrication, transporting, providing steel support, rock bolting, reinforcement, fixing of chain link, cement concerting, providing drainage arrangement etc. wherein total earthwork is approximately 91% and construction work is around 9% wherein transfer of property is involved.

The M/s Mahalaxmi BT Patil Honai Constructions Joint Venture approached the advance ruling authority seeking advance ruling to clarify whether the contract is covered under the term “Earth Work” and therefore covered under Sr. No.3A Notification No. 12/2017-CT.

The applicant submitted that the impugned activity is a Composite supply of works contract as defined in clause (119) of section 2 of the CGST Act 2017, where such supply is to a Governmental authority or Government entity. Further submitted by the applicant that the supply is eligible for the benefit of exemption under Sr. No. 3A of the Notification No. 12/2017-CTR.

The Tribunal has observed that to fall under the Sr. No. 3A, the primary requirement is that the supply should be in the form of a composite supply of goods and service. But the impugned activity is a composite supply of works contract as defined in clause (119) of section 2of the CGST Act. Being a composite supply of works contract the impugned activity cannot be covered under Sr. No. 3A.

The Coram of by relying the decision of Appellate Authority in Soma Mohite Joint Venture case has held that the impugned is not covered under Sr. No. 3A of Notification No. 12/2017-CT as amended and hence the contract not covered under the term “Earth Work”.

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In Re: M/s Mahalaxmi BT Patil Honai Constructions (JV)

CITATION:   2022 TAXSCAN (AAR) 165

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