Contract completed during Pre-GST period cannot be brought to assessment under GST: AAR

The Telangana state Authority for Advance Ruling (Telangana AAR) in the matter of M/s. TPSC (India) Private Limited has ruled out that Contract completed during Pre-GST period cannot be brought to assessment under GST.

The applicant M/s. TPSC (India) Private Limited is engaged in taking up Thermal Projects in various cities in India and during the financial year 2013-2014, the applicant company was allotted an Erection and Pre-Commissioning works related to Steam Turbine Generator and Auxiliaries, project of NTPC, Kudgi, Karnataka and duration of completion of the project was for (4) years upto 2017.

The Question and Ruling are as follows:

1. Whether the contract completed during the Pre-GST period and the consequential demand based on the completed contract can be brought to assessment under GST Act, 2017?

No. In view of the clarification issued vide CBIC circular No.178/10/2022, dated: 03-08-2022 and in terms of the transitional provisions under CGST ACT, 2017 discussed supra.

2. Whether the liquidated damages, without any supply of materials and labor be assessed to GST under GST Act, 2017?

No. In view of the clarification issued vide CBIC circular No.178/10/2022, dated: 03-08-2022 and in terms of the transitional provisions under CGST ACT, 2017 discussed supra.

3. The mutually agreed and settled amount, based on arbitral award, in the nature of compensation, payable for delay in completion of the contract and agreed to be payable by the Applicant to DGAL without any supply of goods or services, is liable to be taxed under GST?

No. Please see the discussion above.

4. Whether DGAL is eligible to claim ITC on the GST amount if any levied on the mutually agreed arbitral award amount received from the Applicant?

Does not arise.

For Official Ruling Download PDF Given Below: