The Maharashtra Authority of Advance Ruling in an application filed by Soma-Mohite Joint Venture held that construction of the tunnel under joint venture shall be the composite supply of works contract and not earthwork. The supply is hence not leviable to a concessional rate under the below-stated notification.
The applicant is engaged in the business of construction of infrastructure projects and was entitled to undertake the construction of the tunnel under the joint venture. The work order is consisting of Earth Work such as Excavation for Tunnel, removing of excavated stuff, providing steel support, rock bolting, reinforcement, fixing of chain link, cement concerting, etc wherein total earthwork is approximately 93%.
The issue is the determination of whether the said contract is covered under Sl. No. 3A, Chapter No. 99 as per Notification No. 2/2018 – Central Tax (Rate) dated 25.01.2018 w.e.f. 25.01.2018
The Hon’ble Bench constituting of Shri B. Timothy and Shri B.V. Borhade held the concessional rate of tax as per this entry is available to those composite supply of works contract where the earthwork constitute more than 75% of the value of the works contract. On the issue of whether the contract involves earthwork, various dictionaries were referred to. It was observed that the term earthwork means the structure made from earth especially an embankment or construction made of earth. It hence held that the construction of the tunnel and its allied work cannot be considered as earthwork contemplated by Entry 3(vii) and Entry 3(iii) descripted as “Composite supply of works contract… supplied to the Central Government, Government Authority, … by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of …(b) pipeline, conduit or plant.
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