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EPC contract for electrical cable supply and laying work, fall under works contract service and taxable at 18% GST

February 4, 2019[2019] 102 taxmann.com 45 (AAR - MAHARASHTRA)
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GST : Activity of applicant company for electrical cable supply and laying work of new underground cable for metro rail project was in nature of composite supply of works contract and same would be covered under Sr. No. 3, item no. (ii) of Notification No. 11/2017 dated 28-6-2017 as amended by Notification No. 1/2018 dated 25-1-2018 and attract 18 per cent GST (9 per cent each of CGST and SGST)

• The applicant had received order from Nagpur Metro Rail Corporation for 'shifting of LT, HT O/H lines crossing and providing LT,HT U/G cables from for Nagpur Metro Rail Project. The work involved supply, erection, testing and commissioning including transport, loading, unloading, insurance etc. of transformer substation, HT & LT Overhead Line & Cable through underground, for Metro Rail Project.

• The applicant sought an advance ruling in respect of the question that whether EPC contract for electrical cable supply laying work could be classified as contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of immovable property wherein transfer of property in goods (whether as goods or in some other form) was involved in the execution of such contract. And whether these contracts could be classified as works contracts as per GST Law and whether notification no. 11/2017-Central Tax (Rate) dated 28-6-2017 as amended by notification no. 01/2018-Central Tax (Rate) dated 25-1-2018 was applicable to the present case?

• In the subject case it is seen that the applicant is providing composite supply of works contract in respect of Metro but the reduced rate of tax is available only if the work is of the type of Original works.

• Original Works would mean; all new constructions; all types of additions and alterations to abandoned or damaged structures on land that are required to make them workable; erection, commissioning or installation of plant, machinery or equipment or structures, whether pre-fabricated or otherwise, etc. In the present case the work done by the applicant does not appear to be original works. The work is not construction of metro rail project but this is shifting of existing utilities obstructing metro railway path and providing supplying and installation of new underground along with its accessories.

• Hence, the contract is not related to any original work and is in the nature of composite supply of works contract. The activity of the applicant in the present case is nothing but a composite supply of Works Contract, not being original works and they will be covered under Sr. No. 3, item No. (ii) of Notification No. 11/2017 dated 28-6-2017 as amended by Notification No. 1/2018 dated 25-1-2018 and attract 18 per cent GST (9 per cent each of CGST and SGST).

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