According to a ruling by the West Bengal Authority for Advance Ruling ( AAR ), the applicant is required to produce a tax invoice on the contract value as established by the department while acting as a “Project Implementing Agency” and supplying the State Government Department/Directorate.
The applicant, West Bengal Agro Industries Corporation Limited is a government undertaking that is managed by the government of West Bengal’s Water Resources Investigation & Development Department. Three operating divisions, namely (i) Project Division, (ii) Agronomy Division, and (iii) Agri Engineering Division, are primarily in charge of the applicant’s commercial operations.
The applicant alleged that, other than the value of the work completed by the contractor who issues the applicant a tax invoice, no monetary value was added by him when submitting a utilization certificate to the relevant Administrative Department up to the amount of the contractor’s bill. As a result, the applicant claimed that no additional Goods and Services Tax liability had arisen on him.
Furthermore, for the purpose of implementing any work assigned to him as an “executing agency”, he enters into two separate contracts with the Department concerned and the contractor respectively. The contractor, being the L1 bidder, procures materials, engages labour as and when required on which the applicant has no control.
The decision-making body noted that the applicant has acknowledged that, as a project executor hired by the administrative department of the Government of West Bengal, he just serves as the “agent” of the said administrative department to carry out the work. We observe that in this context, an agent must also be regarded as the recipient of the supply of products, services, or both as per section 2(93) of GST Act.
Further the bench of members Brajesh Kumar Singh and Jyojit Banik observed that in the instant case two separate supplies took place. The first one is made by the contractor to the applicant and thereafter another supply is made by the applicant to the department concerned in spite of the fact as stated by the applicant that there is no value addition in respect of the second supply. Thus, the executive agency is bound to issue the tax invoice in contract value.
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