Page 170 - GSTL_13th August 2020_Vol 39_Part 2

256 GST LAW TIMES [ Vol. 39
and APEPDCL are for business purpose and the benefit of concessional Rate of
12% (6% under Central tax and 6% State tax) as per notification is NOT available
to the applicant.
As per Section 2 of CGST Act, 2017 and APGST Act, 2017 defines “works
contract” as a contract for building, construction, fabrication, completion, erec-
tion, 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 in-
volved in the execution of such contract.
The composite supply of works contract as defined in Section 2 of CGST
Act, 2017 and APGST Act, 2017 is treated as supply of service in terms of Serial
No. 6, Schedule-II of CGST Act, 2017 and APGST Act, 2017.
In the instant case, the contract entered by the applicant falls under the
works contract and falls under Entry No. (ii) of S. No. 3 of the table of Notifica-
tion No. 11/2017-Central Tax (Rate), dated 28th June, 2017 as amended from time
to time and corresponding notifications under APGST Act, 2017, and the appli-
cable rate of tax is 18% (9% under Central Tax and 9% State Tax).
The applicant stated that they are receiving materials such as Power
Transformers, 100 Sqmm Conductor & Station Transformer from the Contractee
and the value of such materials is recovered from their RA bills issued on cost
recovery basis by the Contractee. The applicant posed a question whether RCM
as per Notification No. 13/2017-Central Tax (Rate), dated 28-6-2017 is applicable
or not on these cost recoveries. As seen from the said Notification, reverse charge
is not applicable to the goods issued by a Contractee. However, the provisions of
Section 15(2)(b) of CGST Act, 2017 which as follows, attract in such situations.
“Section 15(2)(b) : any amount that the supplier is liable to pay in rela-
tion to such supply but which has been incurred by the recipient of the
supply and not included in the price actually paid or payable for the goods
or services or both;”
Since APSPDCL and APEPDCL being the Contractees are recovering the cost of
the materials that are used/consumed in the services provided to them by the
applicant from the R.A. Bills issued, such cost recovered is to be included in the
taxable value of the supply.
RULING
The Applicant is not entitled for the benefit of concessional rate of GST @
12% (6% under Central Tax and 6% State Tax) in terms of Notification No.
24/2017-Central Tax (Rate), dated 21-9-2017 read with Notification No. 31/2017-
Central Tax (Rate), dated 13-10-2017.
The applicable rate of tax is 18% (9% under Central Tax and 9% State
Tax) for the services referred by the Applicant as per Entry No. (ii) of S. No. 3 of
the table of Notification No. 11/2017-Central Tax (Rate), dated 28th June, 2017.
The value of materials recovered on cost recovery basis by the Contract-
ees from the R.A. bills issued by the applicant is includible in the taxable value of
supply in terms of Section 15(2)(b) of the CGST Act, 2017.

_______

GST LAW TIMES  13th August 2020  170