Owing to the difference in opinion among the Authority for Advance Ruling ( AAR ), Uttarakhand, the matter, whether Sub-contractors involved in the construction of Indo-Nepal border road are entitled to GST exemption, was put forward for reference to the Appellate Authority for hearing and decision.
The Assessee M/s NBHPC Ltd. was subcontracted a road construction work by the PWD, Uttarakhand, which in turn was contracted to by the Ministry of External Affairs, as a part of ‘AID TO NEPAL’ Project. The question presented in the application was whether the notification No. 12/2017- Central Tax (rate) is applicable to the contractors/sub-contractors involved in the aforementioned project.
Authority Member Amit Gupta had the view,”On harmonious reading of Central Tax (rates) in the light of object behind the GST Council to pass the benefit of tax to the downstream of the chain, I observe that sub-contractors of supply in question are exempted from payment of GST in terms of the notification concerned.”
However, the other Authority Member Vipin Chandran was of a different view, “the activity of ‘construction of road’ is exempted vide serial no. 9C of the notification No. 12/2017 Central Tax (rate) whereas the entry no. (iv) of serial no. 3 of notification no. 11/2017 Central Tax (rate) prescribed GST rate of 12 % on the same work, i.e. ‘construction of road’. In the above view I observe that the supply in question , i.e. ‘ construction of road’ by sub-contractor is not exempted, therefore the sub-contractor are liable to pay GST”.
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