9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (8) TMI 681 - AAR - GSTSupply or not - Liability of GST - Funds received from Govt. of Kerala for paying the cost of the water metro project - requirement of GST invoice to be raised on Govt. of Kerala for transferring the value of assets on a back to back basis after completion of the works - input tax credit - Governmental Authority or not - exemption under N/N. 12/2017 dated 28-06-2017 - KMRL is a body established by the Government with ninety percent or more participation by way of equity to carry out function entrusted to a municipality under Article 243W of the Constitution - services rendered by KMRL as an executing agency to Govt. of Kerala - pure service as per Entry 3 of the Notification no. 12/2017 dtd.28-06-2017 or not. Whether there is any supply by the applicant to the Government of Kerala? - HELD THAT - Even though, consideration is an essential element of supply, as per Section 7 (1) (c) of the CGST Act, 2017, the activities specified in Schedule I, made or agreed to be made without a consideration is also supply. As per Sl.No. 2 of Schedule I; supply of goods or services or both between related persons or between distinct persons as specified in section 25, when made in the course or furtherance of business is an activity to be treated as supply even if made without consideration - Since the applicant is a joint venture with equal equity participation of the Government of Kerala and the Government of India, the applicant falls within item (iv) of explanation to sub section (5) of Section 15 and hence the applicant and Government of Kerala are related persons and consequently the services rendered by the applicant to the Government of Kerala without consideration will also fall under the definition of supply. Thus, the services rendered by the applicant to the Government of Kerala as executing and operating agency of the Kochi Water Metro Project with or without consideration falls under the definition of supply under CGST Act, 2017. Whether the services rendered by the applicant to the Government of Kerala can be considered as pure services falling under Service Classification Code 998339 Project management services for construction projects? - HELD THAT - It is evident from the G.O (Ms) No.44/2016/Trans Dt.13.06.2016 that the State of Kerala is the dejure owner of the water ways, the boat jetties, the boats and all other infrastructure created for the project. The status of the applicant is that of an agency that is executing the integrated water transport project on behalf of Government of Kerala - The services rendered by the applicant to the Government of Kerala as executing and operating agency of the integrated water transport project is rightly classifiable under the Service Classification Code 998339 Project management services for construction projects. The services rendered by the applicant are squarely covered by the above explanatory notes and hence are pure services falling under Service Classification Code 998339. Therefore, the applicant as the agency for executing the integrated water transport project in Kochi is rendering pure services to the Government of Kerala. Thus, the services rendered by the applicant to the Government of Kerala as executing and operating agency of the integrated water transport project is classifiable as pure services falling under service classification code 998339; the services are exempted from payment of goods and services tax by virtue of the entry at Sl No. 3 of Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017. Whether the applicant can be considered as governmental authority as per Para 2 (zf) of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017? - HELD THAT - The applicant is established by government with 90 percent or more equity participation and is entrusted with the functions which are entrusted to Municipality under Article 243W of the Constitution or to a Panchayath under Article 243G of the Constitution. Hence, the applicant squarely falls under the definition of Governmental Authority under Para 2 (zf) of Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017.
Issues Involved:
1. Liability of KMRL to pay GST on funds received from the Government of Kerala. 2. Requirement for KMRL to raise a GST invoice on the Government of Kerala for transferring the value of assets. 3. Eligibility to claim Input Tax Credit (ITC) against the transactions. 4. Classification of KMRL as a Governmental Authority under the IGST Act for exemption purposes. 5. Classification of services rendered by KMRL as pure services under Notification No. 12/2017. Detailed Analysis: Issue 1: Liability of KMRL to Pay GST on Funds Received from Government of Kerala The judgment clarifies that KMRL is executing and operating the integrated water transport project on behalf of the Government of Kerala. The services provided by KMRL are classified under Service Classification Code 998339, which covers "Project management services for construction projects." These services are considered pure services and are exempt from GST under entry at Sl No. 3 of Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017. Hence, KMRL has no liability to pay GST on the funds received from the Government of Kerala. Issue 2: Requirement for KMRL to Raise a GST Invoice on Government of Kerala Given that the services provided by KMRL to the Government of Kerala are exempt from GST, there is no requirement for KMRL to raise a GST invoice for transferring the value of assets on a back-to-back basis after completion of the works. Issue 3: Eligibility to Claim Input Tax Credit (ITC) Since the services provided by KMRL are exempt from GST, the question of availing ITC does not arise. The judgment explicitly states that in view of the exemption status, ITC cannot be claimed against the transactions. Issue 4: Classification of KMRL as a Governmental Authority The judgment confirms that KMRL qualifies as a "Governmental Authority" under Para 2 (zf) of Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017. KMRL is established with 90% or more government equity participation and is entrusted with functions listed under Article 243W of the Constitution, which include urban planning and public amenities. Therefore, KMRL is eligible for exemptions available to Governmental Authorities. Issue 5: Classification of Services Rendered by KMRL as Pure Services The services rendered by KMRL to the Government of Kerala are classified as pure services under Service Classification Code 998339. These services are exempt from GST as per entry at Sl No. 3 of Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017. The judgment emphasizes that these services are in the nature of urban planning and public amenities, functions entrusted to a Municipality under Article 243W of the Constitution. Conclusion: 1. GST Liability: KMRL is exempt from paying GST on funds received from the Government of Kerala for the water metro project. 2. GST Invoice: KMRL is not required to raise a GST invoice on the Government of Kerala for asset transfers. 3. ITC: The question of claiming ITC does not arise due to the exemption status. 4. Governmental Authority: KMRL is classified as a Governmental Authority under the relevant GST notification. 5. Pure Services: The services rendered by KMRL are classified as pure services and are exempt from GST. This comprehensive analysis preserves the legal terminology and significant phrases from the original judgment while ensuring clarity and thoroughness.
|
