Construction of Jetty for ICG as per MoU falls Under 'Work Contract' as per CGST Act: AAR [Read Order]

The Kerala Authority for Advance Ruling(KAAR) construction of a jetty for the Indian Coast Guard (ICG) as per MoU falls under a 'work contract' as per the Central Goods and Service Tax Act, 2017.

M/ s. Cochin Port Trust was formed under the Major Ports Act, of 1963 and is engaged in providing "Fort Services". The Indian Coast Guard has its office at District Head Quarters No.4, Indian Coast Guard,(ICG) and the Board of Trustees of Port of Cochin, a body corporate under the Major Port Trusts Act, 1963 have entered into an MoU for the construction of a Jetty for ICG by Com' at a cost approved by the competent authority for the purpose, on Deposit Work terms as per Moo dated 03.04.2017.

It was clarified that the provisions of the Central Goods and Services Tax Act, 2017 (CGST Act) and the Kerala State Goods and Services Tax Act, 2017 (KSGST Act) are the same except for certain provisions. Accordingly, a reference hereinafter to the provisions of the CGST Act, Rules and the notifications issued there under shall include a reference to the corresponding provisions of the GST Act, Rules and the notifications issued there under.

The applicant submits that the Indian Coast Guard (ICG) and the Board of Trustees of Port of Cochin, a body corporate under the Major Port Trusts Act, 1963 (COPT) have entered into an MOU for the construction of Jetty for ICG by CoPT at a cost approved by the competent authority for the purpose, on Deposit Work terms as per MoU dated 03.04.2017.

On perusal of the fourth question raised by the applicant, it is seen that the applicant has sought the liability of the services provided by the contractors to the applicant and hence the applicant is the recipient of the services. Therefore, the question does not pertain to a transaction that is being undertaken or proposed to be undertaken by the applicant and hence does not fall within the purview of the definition of advance ruling. Further, it is categorically stated in Section 103 of the CGST Act that the rifling pronounced is binding only on the applicant and the jurisdictional authority of the applicant.

Hence, if a recipient obtains a ruling on the taxability of his inward of goods or services or both the supplier of such goods or services and their jurisdictional is not bound by that ruling and the supplier and their jurisdictional authority is free to assess the supply and the ruling has no relevance or applicability.

As per Section 2 (119) of the CGST Act, 2017; "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.

From the terms and conditions of the MOU dated 03.04.2017; it was evident that the activity undertaken by the applicant for the Construction of the Jetty for ECG squarely falls within the ambit of "Works Contract" as defined in Section (119) of the CGST Act, 2017. As per Sl. No. 6 (a) of Schedule 11 of the CGST Act, 2017; the composite supply of works contract as defined in clause {119) of Section 2 shall be treated as a supply of services.

The Authority comprising of Dr.S.L. Sreeparvathy, IRS &Shri.Abraham Renn S, IRS held that the activity undertaken by the applicant for the Construction of a Jetty for ICG as per MoU dated 03.04.2017 squarely falls within the ambit of the "Works Contract" as defined in Section 2 (1 19) of the CC-ST Act, 2017.

The service provided by the applicant to the ICG as per MoU dated 03.04.2017 is not eligible for exemption under the entry at Sl. No. 9C of Notification No. 12/2017 CT (Rate) dated 28.06.2017 as inserted by Notification No. 32/2017 CT (Rate) dated 13.10.2017.

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