Order Date: 13 July 2022

Facts-

• The Applicant, State Industrial Development Corporation submitted that work of electrification and construction of electric sub-station are being undertaken through Uttarakhand Power Corporation Ltd. (UPCL) and Power Transmission Corporation of Uttarakhand Limited (PITCUL).
• UPCL & PITCUL are not eligible to avail the Input Tax Credit of the GST paid by them, on the Goods and Services supplied by different vendors.
• For the Works Contract given by them to UPCL and PITCUL, these two entities issue draft estimates to applicant wherein while arriving at the final price i.e. the transaction value for the purpose of payment of applicable GST, they charge applicable GST twice, firstly on the value charged by different vendors and then again on the value arrived at after adding other components namely Contingency Charges, O/H & Supervision Charges, Labor Cess on Centralized Mat, consequently paying GST on the transaction value which also includes GST, hence against the spirit of statue.

Issue-

• Whether double charging of GST as mentioned in the draft estimate (s) submitted by PITCUL/UPCL in respect of contracts involving supply of equipment/ machinery & erection, installation & commissioning services with civil work is correct as per the present GST regime?

Order-

• The Authorities observed that from the wording of the statute it is clear that the value of supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services and in the instant case as admitted by the applicant, supply by UPCL & PITCUL includes the component of GST paid by them on the Goods and Services received by them from different vendors, while arriving at the transaction value of the Services supplied by them to the applicant.
• The Authorities further observed that UPCL & PITCUL are correctly including all the components of the cost incurred by them for arriving at the pricing of goods. Furthermore, inclusion of other components namely Contingency Charges, O/H & Supervision Charges, Labour Cess on Centralized Mat., etc. by UPCL & PITCUL, appears to be in terms of the agreement entered between the applicant and the said two entities. And in view of the provisions of Section 15 of the CGST Act, 2017, UPCL & PITCUL are correctly adding up all the other agreed upon components, to arrive at the transaction value for the purpose of payment of GST.
• The Authorities held that the component of GST as mentioned in the draft estimate (s) submitted by PITCUL and UPCL in respect of contract involving supply of equipment/ machinery & erection, installation & commissioning services with civil work, is the cost for them and is one of the many components which constitutes the transaction value for the supply in question and is the price actually payable (transaction value) for the said supply of goods & services to the applicant and hence is in consonance to the provisions of the GST Act, 2017.