Authority for Advance Ruling (West Bengal): In an application filed for seeking advance ruling on whether the work of shifting of electrical utilities can be regarded as services provided by way of construction of road or not and whether the said activities get covered under serial number 3(iv)(a) of the Notification No. 11/2017-Central Tax (Rate), the two-member bench of Brajesh Kumar Singh and Joyjit Banik has held that providing services of shifting of electrical utilities cannot be regarded as services by way of construction of road and the said activity is not covered under serial number 3(iv)(a) of the above- mentioned Notification.
In this case, the applicant has entered a sub-contract for shifting of electrical utilities in respect of the contract for construction of National Highway in West Bengal, in the agreement made between National Highway Authority of India and M/s KCC Buildcon Pvt. Ltd. (‘KCC Buildcon’)
The Authority relied on Section 2(93) of the Goods and Services Act (‘GST Act’) and said that the applicant has entered into the agreement with KCC Buildcon (main contractor) for shifting of electrical utilities and for this work, the main contractor is liable to pay the consideration to the applicant. So, in terms of Section 2(93)(a), there can be no dispute that the applicant is supplying the services to KCC Buildcon and not to NHAI. Thus, it rejected the applicant’s contention that he is a subcontractor for NHAI, providing services of a works contract.
The Authority said that the terms and condition of the agreement made between NHAI, and the contractor stipulates that the cost of such shifting shall be reimbursed by NHAI to the contractor, this indicates the independent nature of the work.
The Authority relied on Gaurish Sharma, In re1, wherein it was observed that the proposed activity carried out by the applicant is of shifting or erection of 11 kilo volts and low-tension lines only and the same cannot be categorised as construction of road as classified under entry number 3(iv)(a) of the Notification No. 11/2017-Central Tax (Rate). Further, it was observed that since such cost of the aforesaid activity will be borne by the authority or by the entity owning such utility, therefore such payment of above-mentioned activity is not the part of the main contract i.e., construction of road as awarded to main contractor by NHAI. Thus, there establish no nexus between the main contract awarded for construction of road by the NHAI and the work proposed to be undertaken by the applicant.
The Authority said that the activities carried out by the applicant in the instant case is identical with the case of Gaurish Sharma (supra) and that providing services of shifting of electrical utilities cannot be regarded as services by way of construction of road.
[Shree Powertech, In re, 2022 SCC OnLine WB AAR-GST 2, decided on 21-10-2022]
Advocates who appeared in this case :
Chartered Accountant Rishabh Mishra;
Chartered Accountant Arup Dasgupta.
*Apoorva Goel, Editorial Assistant has reported this brief.
1. Advance Ruling No. RAJ/AAR/2019-20/34