The West Bengal Authority for Advance Ruling ( AAR ) has recently ruled that project implementing agencies making supplies to the state Government Department /Directorate are required to issue a Tax Invoice.
In the aforesaid case applicant West Bengal Agro Industries Corporation Limited is a Government Undertaking under the administrative control of Water Resources Investigation and Development Department, Government of West Bengal. The commercial operations carried out by the applicant are mainly entrusted with three operating divisions namely (i) Project Division, (ii) Agronomy Division and (iii) Agri Engineering Division.
Therefore applicant’s Agri Engineering Division undertakes civil works as „‟Executive Agency or Project Implementing Agency‟‟ entrusted by various Administrative Departments of Government of West Bengal in the development of rural infrastructure like road, bridge, building etc. under the scheme of MPLAD, BADP, BEUP, RKVY, BCW, RIDF etc and the applicant accordingly gets the work done by different suppliers/contractor.
The applicant sought the advance ruling through making application under sub section (1) of section 97 of the Goods and Service Tax Act 2017 Act on the issue,
“Whether the applicant is required to issue tax invoice to State Government Department/ Directorate on the contract value as determined by the department where the applicant is working as a “Project Implementing Agency”
Subhasish Chowdhury, and Somnath Biswas, Authorized Representative (AR) for applicant submits that upon selection by various departments of Government of West Bengal as an „executing agency‟,
After getting administrative and financial approval for the project from the concerned department, the applicant enters into a contract with the concerned department/ Ordering Authority and invites tender observing the existing rules and procedure of the State Government and selects the L1 bidder (contractor) to award the project.
Thereafter they enter into the agreement with selected contractors for work and they monitor all the works carried out under them.
Whereas applicant submits that the aforesaid work being undertaken by him as an „executing agency‟ is in line with the notification number 5400-F(Y) dated 25.06.2012 issued by the Audit Branch of Finance Department, Government of West Bengal.
Moreover AR submits that while submitting utilization certificate to the concerned Administrative Department to the extent of the value of the bill of contractor, no monetary value is being added by him and accordingly, no further GST liability accrued on him except the value of work executed by the contractor who issues tax invoice to the applicant.
Applicant further contented that he could not exercise any free choice in executing the work. Hence, the role of the applicant is similar to an „agent‟ where the concerned Administrative Department acts as a „principal‟. Further, details of contractors, who execute the work, are being uploaded in FORM GSTR-7 along with the details of GST-TDS, Tax Invoice Number and GSTIN etc.
Revenue did not express any view regarding the application of the applicant.
While considering the submissions of the applicant the authority of advance ruling observed that
“In the instant case two separate supplies take 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”
After considering these submissions the member of AAR consisting Brajesh Kumar Singh, (Joint Commissioner) and Joyjit Banik, Senior Joint Commissioner, ruled that “The applicant while working as a “Project Implementing Agency‟ is making supplies to State Government Department/ Directorate and therefore is required to issue tax invoice on the contract value as determined by the department”.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
