Megha Engineering & Infrastructures Ltd ., In re

1. M/s. Megha Engineering & Infrastructures Limited, S-2, Technocrats Industrial Estate, Andhra Bank Road, Balanagar, Hyderabad Telangana, 500 037. (GSTIN No. 36AAECM7627A1ZO) have filed an application in FORM GST ARA-01 under Section 97(1) of TGST Act, 2017 read with Rule 104 of CGST/TGST Rules,

2. At the outset, it is made clear that the provisions of both the CGST Act and the TGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the TGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression ‘GST Act’ would be a common reference to both CGST Act and TGST Act.

3. It is observed that the query raised by the applicant falls within the ambit of Section 97(2)(e) of the GST ACT read with 20(xviii) of the IGST Act, 2017. The Applicant enclosed copies of challans as proof of payment of Rs. 5,000/- for SGST and Rs. 5,000/- for CGST towards the fee for Advance Ruling. The Applicant has declared that the questions raised in the application have neither been decided by nor are pending before any authority under any provisions of the GST Act. The application is therefore, admitted.

4. Facts of the Case:

M/s. Megha Engineering & Infrastructures Limited, are works contract executing civil works for the Government of Telangana and have applied for advance ruling in order to obtain clarification regarding rate of tax on works executed for the Government and also to ascertain whether the relationship between the partners of a Joint Ventures constituents a relationship of contractor and sub-contractor. Hence, this application.

1. Whether the reduced GST rate vide Notification No. 20/2017, dated: 22-08-2017 as well Notification No. 1/2018-CT(Rate), dated: 25-01-­2018 is applicable from 01-07-2017?

2. Whether works rendered by the constituents of the Joint Venture are treated as sub-contract to Joint Venture, which is not having physical existence other than the constituents?

6. Personal Hearing:

The Authorized representatives of the unit namely Sri M. Ponnuswamy, I.R.S. (Retired) & Sri K. Nageshwara Rao, Sri. Vice President, authorized representatives of the firm attended the personal hearing held on 05-10­2021. The authorized representatives reiterated their averments in the application submitted and contended as follows:

1. That as a constituent of a joint venture executing works for State Government of Telangana, they are desirous of clarification regarding the applicability of the amendment to notification no. 11/2017 dated: 22.08.2017 wherein the rate of tax has been reduced from 9% CGST to 6% CGST on Government works executed by them.

2. That they are desirous of clarification as to whether they as a constituent of joint venture fall under serial no. 3(ix) of the notification no. 11/2017 dated: 22.08.2017 as amended vide Notification No. 1/2018-CT(Rate), dated: 25-01-­2018 wherein the supply made by a sub-contractor to a main contractor in the course of execution of Government works has been reduced to 6%.

It is observed by the members of the authority that DGGI, Hyderabad Zonal Division has initiated an enquiry into the business activities of the applicant and therefore their case falls under the first proviso to Sec 98(2) of the CGST Act, 2017 wherein their application is liable to be rejected as the question raised by them in the application is already pending or decided in such proceedings before the DGGI.

The authorized representatives responded to the query and requested the authority not to reject the application because though the DGGI has initiated an enquiry under the CGST Act, 2017, no notice has been issued regarding the above issues. Therefore issues raised in the application do not fall under the ambit of enquiry of DGGI and hence the authority is competent to issue its findings in this case.

7. Discussion & Findings:

The first proviso under Section 98(2) reads as follows:

“Provided that the authority shall not admit the application where the question raised in the application is already pending or decided in any proceedings in the case of an applicant under any provisions of this Act”.

Thus if the question raised is pending or decided in any proceedings pertaining to the applicant the authority shall refuse to admit such application.

The latest amendment to the sub-Section 1 of Section 83 of CGST Act’ 2017 vide Act-13 of Finance Act 2021 has expanded the meaning of proceeding to Chapter-XIV of the CGST Act, 2017 which includes “Inspection, Search & Seizure”.

It is well settled law of interpretation that where the legislature uses the same expression in the same statute at two or more places, then the same interpretation should be given to that expression. Thus, generally the same words are used with the same meaning throughout the same statute; otherwise it would cause injustice. This principle of interpretation was upheld by the Hon’ble Supreme Court of India in a catena of case law starting from Raghubansh Narain Vs Govt. of UP AIR 1967 SC 465 and the latest being Sher Singh Vs State of Haryana (2015) 3 SCC 724. Therefore in view of the amendment to Section 83(1) the expression ‘proceedings’ will have the same meaning for Chapter XIV as the other chapters mentioned in the CGST Act, 2017.

In the present case as the DGGI, Hyderabad has conducted search of the premises of the applicant under Chapter-XIV of the CGST Act, 2017. It was addressed by the authority to ascertain whether any proceeding is pending before them regarding the questions raised by the applicant.

The DGGI vide letter Folio No: INV/DGGI/HZU/GST/29/2018-19(PF.2)/3757, dated: 21-10-2021 have replied that,

“In this connection, it is inform that the said tax payer is under investigation with reference to short payment of GST on services supplied by them to their Joint Ventures as a sub-contractor, under notification no. 11/2017 dated: 22.08.2017 as amended by Notification No: 20/2017-CT(R) and Notification No. 1/2018-CT(Rate), dated: 25-01-­2018.

Further this is to inform that the investigation is still not concluded and no demand cum show cause notice has been issued to the said tax payer. Accordingly no adjudication proceedings have taken place with respect to the aforesaid issue”.

As seen from the information provided by the DGGI the investigation proceedings are still pending under Chapter XIV of the CGST Act, 2017 with respect to the questions raised by the applicant. When seen in light of the amendment to Section 83(1), the pending investigation after inspection or search have to be interpreted as pending proceedings in light of rules of interpretation and law declared by the Hon’ble Supreme Court of India discussed above.

Thus as the proceedings are pending under Chapter-XIV of the CGST Act, 2017 regarding the question raised by the applicant, the application filed by M/s. Megha Engineering & Infrastructures Limited stands rejected.