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2018 (6) TMI 463 - AAR - GSTClassification of services - Rate of tax - works contract - contract for for Rejuvenation of Amanishah Nallah (Dravyavati River), Jaipur (Rajasthan) Including Area Development on Turnkey Basis, and its Operation & Maintenance (O&M) for a period of 10 Years - correction and strengthening the channel for better performance - sub-contract - Government authority or not? Whether the nature of Services covered under Sl.no.3(vi)(a) of N/N. 11/2017 - Central Tax (Rate) dt. 28th June 2017 amended with N/N. 24/2017- Central Tax (Rate) dated 21.09.2017 and further amended with N/N. 31/2017-Central Tax (Rate) dated 13.10.2017? - What is the Rate of GST applicable for the Project? - If applicable rate of GST @12%, what is the rate of GST applicable on subcontractor leg? Held that - The Jaipur Development Authority is found to be covered under the Government Authority and Services provided by M/s TPL -SUCG Consortium found to be covered under services mentioned at SI. no.3 (vi) (a) of the N/N. 11/2017 - Central Tax (Rate) dt.28th June 2017 amended with N/N. 24/2017-Central Tax (Rate) dated 21.09.2017 and further amended vide N/N. 31/2017- Central Tax (Rate) dated 13.10.2017. As per serial number 3, for item (vi) in column (3) and the entries relating thereto, Central tax at the rate of 6% is applicable on the Services provided to the Central Government, State Government, Union Territory, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession - The GST leviable is GST @12% (i.e. CGST 6% SGST 6%). Liability of GST on sub-contractor - Held that - As per Decisions taken in the 25lhmeeting of GST Council held at New Delhi on 18.01.2018 Works Contract Services (WCS) provided by the sub-contractor to the main contractor; providing WCS to Central Government, State Government, Union territory, a local authority, a Governmental Authority or a Government Entity; will also attract GST at the rate as applicable to the main contractor - The GST leviable is GST @12% (i.e. CGST 6% SGST 6%). The Services provided by M/s TPL - SUCG Consortium to Jaipur Development Authority under Contract awarded to them are covered under N/N. 11/2017 - Central Tax (Rate) dt.28th June 2017 (N/N. F.12(56)FD/Tax/2017-PM-49(S.T.) dt. 29th June 2017), amended with N/N. 24/2017-Central Tax (Rate) dt. 21st Sept. 2017 (N/N. F.12(56)FD/Tax/2017-90(S.T.) dt. 21st Sept. 2017) and further amended vide N/N. 31/2017 - Central Tax (Rate) dt. 13th Oct. 2017 (N/N. F.12(56)FD/Tax/2017-Pt-III-106(S.T.) dt. 13,h Oct. 2017 ) and GST @12% (i.e. CGST 6% SGST 6%) is applicable on the services provided under the said contract - This rate is also applicable to the sub-contractor leg under the said contract as inserted in the N/N. 01/2018 dt. 25th January 2018 (N/N. F.12(56)FD/Tax/2017-Pt-ll-166(S.T.) dt. 25th January 2018).
Issues Involved:
1. Whether Jaipur Development Authority is covered under the status of Government Authority/Entity. 2. Whether the nature of services provided under the contract are covered under Sl.no.3(vi)(a) of notification no. 11/2017 - Central Tax (Rate) dated 28th June 2017, as amended. 3. What is the GST rate applicable on the project. 4. What is the GST rate applicable on the subcontractor leg. Issue-wise Detailed Analysis: 1. Status of Jaipur Development Authority: The applicant contended that the Jaipur Development Authority (JDA) is a Government Entity as per the notification no. 32/2017-Central Tax (Rate) dated 13.10.2017. JDA was established under the Jaipur Development Authority Act, 1982, to implement urban development in Jaipur. The definition of a Government Entity includes any authority set up by an Act of Parliament or State Legislature, with 90% or more participation by way of equity or control, to carry out functions entrusted by the government. The JDA meets these criteria as it was constituted under an act of the state legislature and functions under the guidelines laid down by the Government of Rajasthan. 2. Nature of Services Provided: The services provided by the applicant under the contract with JDA include course correction/strengthening of Amanishah Nallah, sewerage interception, treatment and disposal, and preparation of a Master Plan for reclaimed lands. These services are aimed at enhancing the utility of the Dravyavati River (Amanishah Nallah) and include construction of civil structures, sewage treatment plants (STPs), and other development works. The applicant argued that these services fall under the category of "original works" as defined in notification no. 12/2017-Central Excise (Rate) dated 28.06.2017, which includes new constructions, additions and alterations to abandoned or damaged structures, and erection, commissioning, or installation of plant, machinery, or equipment. 3. Applicable GST Rate on the Project: The applicant contended that the GST rate applicable for the services provided under the contract is 12% (CGST 6% + SGST 6%), as per notification no. 11/2017 - Central Tax (Rate) dated 28th June 2017, amended with notification no. 24/2017-Central Tax (Rate) dated 21.09.2017 and notification no. 31/2017 - Central Tax (Rate) dated 13.10.2017. The services provided to the Central Government, State Government, Union Territory, local authority, or a Governmental Authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession are subject to this GST rate. 4. GST Rate Applicable on Subcontractor Leg: The ruling clarified that the GST rate applicable to the subcontractor leg is the same as that applicable to the main contractor. As per the decisions taken in the 25th meeting of the GST Council held on 18.01.2018, Works Contract Services (WCS) provided by the subcontractor to the main contractor, who is providing WCS to the Central Government, State Government, Union Territory, local authority, Governmental Authority, or Government Entity, will attract GST at the rate applicable to the main contractor. Ruling: The services provided by M/s TPL - SUCG Consortium to Jaipur Development Authority under the contract are covered under notification no. 11/2017 - Central Tax (Rate) dated 28th June 2017, as amended, and the applicable GST rate is 12% (CGST 6% + SGST 6%). This rate is also applicable to the subcontractor leg under the said contract.
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