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2020 (8) TMI 105 - AAR - GSTClassification of services - Works Contract Services - rate of GST - EPC Contract in respect of power distribution and Transmission company - Government Entity or not - GST notification number 1/2018 Central Tax(Rate) - HELD THAT - It is evident from the website of OPTCL it is understood that with the enactment of the Electricity Act, 2003, the Government of Orissa through notification of a Transfer Scheme transferred the transmission business of GRIDCO and vested the same with OPTCL with effect from 01-04-2005. OPTCL, registered on 29th March, 2004 under the Companies Act, 1956, is a wholly owned Government Company. Under the Transfer Scheme, OPTCL has been notified as the State Transmission Utility (STU) and is also mandated to discharge the State Load Dispatch functions - Under the provisions of the Electricity Act, 2003, OPTCL is a deemed transmission licensee. It undertakes the activities of transmission of electricity in the State of Orissa under regulatory control of Orissa Electricity Regulatory Commission (OERC) and also in compliance of the provision of the Orissa Electricity Reform Act, 1995 and Electricity Act, 2003. Thus, M/s Odisha Power Transmission Corporation Limited falls under the domain of Government entity in terms of the provisions of Not. No. 11/2017-CT Dt. 28.06.2017 (as amended). Applicability of Tax rate prescribed under entry no. (vi) Sl. No. 3 of Not. No. 11/2017-CT Dt. 28.06.2017 - HELD THAT - The applicant is engaged in execution of works awarded by M/s Odisha Power Transmission Corporation Limited, Janapath, Bhubaneswar as detailed in Para above. The works under discussion have been undertaken to execute/implement for Erection, Testing and Commissioning of 51 nos 33/11 kv Substation and Associated Lines on EPC contract basis with complete facilities within the jurisdiction of DISCOM SOUTH CO in the districts of Ganjam, Gajapati, Kandhamal, Koraput, Malkangiri, Rayagada, Boudh and Nabarangput under Package-2 of Phase-III, ODDSSP - As seen from the nature of the work stated by applicant in Contract agreement with M/s Odisha Power Transmission Corporation Limited, Janapath, Bhubaneswar, the works are of Industrial nature as those works are to be done to industrial feeders too. The contractee is not rendering any non-commercial services as the structure arising out of works contract services will be used by M/s OPTCL for the purpose of commerce, and even in situations where it appears that the structure is pre-dominantly meant for non-commercial purposes, it turns out that they get reimbursed for their activity on behalf of their customers from the State Government, which by no stretch of imagination can be called as Non-commercial . Since the works are used for commercial / business purpose the benefit of Concessional Rate of 12% or any other concessional rate is NOT available to the applicant - the services rendered by the applicant squarely falls under the works contract and fall under entry no. (ii) of S.No. 3 of the of Not. No. 11/2017 CT (R), Dt. 28-06-2017 (as amended) and corresponding notifications under TGST Act, 2017, and the applicable rate of tax is 18% for the period from 01.07.2017 to 31.03.2019.
Issues Involved:
1. Classification of EPC Contract for power distribution and transmission company as a "Government Entity." 2. Applicable rate of GST for services provided under the EPC Contract. Detailed Analysis: 1. Classification of EPC Contract for Power Distribution and Transmission Company as a "Government Entity": The applicant, M/s. Vishwanath Projects Limited, sought an advance ruling on whether Odisha Power Transmission Corporation Limited (OPTCL) qualifies as a "Government Entity" under GST Notification No. 1/2018 – Central Tax (Rate). Facts and Submissions: - The applicant is engaged in providing services such as Supply, Erection, Testing & Commissioning of substations to OPTCL. - The applicant contends that power distribution and transmission companies are treated as Government Entities, attracting a GST rate of 12%. Discussion and Findings: - The ruling authority examined the definition of "Government Entity" as per Notification No. 31/2017 – Central Tax (Rate), which includes any authority or board established by the government with 90% or more participation by way of equity or control to carry out governmental functions. - OPTCL, established under the Companies Act, 1956, and wholly owned by the Government of Odisha, qualifies as a Government Entity. It undertakes electricity transmission activities under regulatory control and is a deemed transmission licensee. Conclusion: - OPTCL is classified as a "Government Entity" as per the relevant GST notifications. 2. Applicable Rate of GST for Services Provided Under the EPC Contract: The applicant also sought clarification on the applicable GST rate for the services provided to OPTCL. Facts and Submissions: - The applicant provides services for the erection, testing, and commissioning of substations, which they argue should attract a concessional GST rate of 12%. Discussion and Findings: - The ruling authority referred to various GST notifications and amendments, specifically Notification No. 11/2017 – Central Tax (Rate), which prescribes different GST rates for construction services based on their nature and usage. - The services rendered by the applicant fall under the composite supply of works contract, which is treated as a supply of service. - The authority noted that the works contract services provided by the applicant are used for commercial purposes by OPTCL, thus not qualifying for the concessional rate of 12%. - The applicable GST rate for such services is 18% (9% CGST + 9% SGST) for the period from 01.07.2017 to 31.03.2019. Post 01.04.2019, the services fall under a residual entry attracting the same rate of 18%. Conclusion: - The applicable rate of GST for the services provided by the applicant to OPTCL is 18% (9% CGST + 9% SGST). Advance Ruling: 1. Classification as Government Entity: - Services rendered to OPTCL fall under services provided to a Government Entity. 2. Applicable GST Rate: - The applicable rate of tax for the services referred to by the applicant is 18% (9% CGST + 9% SGST).
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