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2019 (1) TMI 1369 - AAR - GSTGovernment Entity - rate of GST - works contract for raising of western site tailing dam at Turamdih - N/N. 39/2017 - time and value of supply of goods or services or both - Held that - Government entity means- (i) set up by an Act of Parliament or State Legislature, or. (ii) established by any government, with 90% or more participation by way of equity or control, to carry out a function entrusted by the Central Government, State Government or a local authority - In the instant case, the 100% equity of M/S Uranium Corporation of India Ltd is held by the President of India. Accordingly, M/s. Uranium Corporation of India Ltd. is a government entity. What will be the rate of GST on the said work order? - Held that - The works contract has been defined in Section 2(119) of the CGST Act, 2017 as works contract means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract. - In the instant case the applicant applicant has been awarded works contract for raising a Dam as per the requirement/specifications provided by the recipient. Whether the benefit of the N/N. 39/2017 will be available in the present case? - Held that - It is evident that the work order is for supply of services with material. It is also seen from the work order that the first four part of the work order is related with clearing of earth, excavation, supplying & laying of earth and impervious clay. The major part of the contract involves earth work i.e., more than 75% of the work involves earth work - Since the major part of the work order, i.e., about 96%, is Earth Work , the said work order qualifies for the benefit of Serial No 3 of notification 39/2017 dated 13.10.2017 issued under the GST Act, being Composite supply of works contract as defined in clause 119 of sec-2 of the CGST Act, 2017, involving pre dominantly earth work i.e. constituting more than 75% of the value of work in contract) provided to Central Government, State government, Union Territory, Local authority, a government authority or a Government Entity - GST will be applicable at the rate of 5%. Ruling - M/s Uranium Corporation of India Ltd has 100% of equity held by the President of India, hence, M/s Uranium Corporation of India Ltd is a government entity. The work order no. T-964 dt. 20.06.2017 awarded by M/s Uranium corporation of India Ltd, to applicant M/s P. K. AGARWALA constitute of more than 75% of earth Work , the rate of GST would be 5%.
Issues Involved:
1. Whether M/s. Uranium Corporation of India Ltd. comes under the purview of a Government Entity. 2. What will be the rate of GST on the specified work order. Issue-wise Detailed Analysis: Issue 1: Whether M/s. Uranium Corporation of India Ltd. comes under the purview of a Government Entity. The applicant sought clarification on whether M/s. Uranium Corporation of India Ltd. (UCIL) qualifies as a Government Entity. According to the definition provided in the notification, a "Government Entity" is defined as an authority or a board or any other body including a society, trust, or corporation which is either (i) set up by an act of Parliament or State Legislature, or (ii) established by any government, with 90% or more participation by way of equity or control, to carry out a function entrusted by the Central Government, State Government, or Local Authority. In this case, it was established that 100% of the equity share of UCIL is held by the President of India. Therefore, the ruling concluded that UCIL is indeed a Government Entity. Issue 2: What will be the rate of GST on the specified work order. The applicant also sought an advance ruling on the applicable GST rate for the work order awarded for raising the western side tailing dam at Turamdih. The work order involved predominantly earthwork, constituting more than 75% of the total value. The relevant notification (No. 39/2017) under the GST Act specifies that composite supply of works contract involving predominantly earthwork (i.e., more than 75% of the value) provided to the Central Government, State Government, Union territory, local authority, a Governmental Authority, or a Government Entity is subject to a GST rate of 5%. The ruling examined the nature of the work order, which included tasks such as clearing of the site, excavation, and supplying and laying of earth and impervious clay. The major part of the contract, approximately 96%, involved earthwork. Therefore, the work order qualified for the benefit of Serial No. 3 of notification 39/2017, and the applicable GST rate was determined to be 5%. Ruling: 1. M/s. Uranium Corporation of India Ltd. is a Government Entity as 100% of its equity is held by the President of India. 2. The work order No. T-964 dated 20.06.2017 awarded to M/s. P.K. Agarwala, which involves more than 75% earthwork, is subject to a GST rate of 5%.
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