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2021 (7) TMI 546 - AAR - GSTClassification of services - rate of GST - construction of AAI residential colony at De venhalli, near Kempegowda International Airport, Bengaluru by the applicant for Airport Authority of India - applicability of Sl.No. 3 (vi)(c) of the N/N. 11/2017 - Central Tax dated 28.06.2017 as amended by N/N. 24/2017-CT(R) dated 21.09.2017 - HELD THAT - As per the letters of Airport authority of India submitted by the applicant, it is clear that the applicant is engaged in construction of residential colony for the staff and employees of Airport authority of India at Devanahalli, Near Kempegowda International Airport, Bengaluru vide awarded contract - Airport authority of India being recipient of service fulfils the parameters as mentioned in the Notification No.31/2017-CT(R) dated 13.10.2017 vide paragraph (iii) item number (ix) as Governmental Authority . The said authority is a statutory body set up by an Act of Parliament vide Airport Authority of India Act, 1994. Section 12 of the said Act provides for functions of the authority. The said activity of the construction of residential colony for the staff and employees of Airport authority of India at Devanahalli, Near Kempegowda International Airport is covered under article 243 W of the Constitution. An explanation has been inserted to the above entry by Notification No.17/2018 - Central Tax (Rate) dated 26-07-2018, after which the activities or transactions undertaken by the Central Government, State Government and a Local Authority, in which they are engaged as public authorities alone are to be excluded from the scope of business for the purposes of this entry. This Explanation does not exclude a Government Entity and hence the situation remains unchanged even by the aforesaid insertion of explanation so far as the activity of the applicant is concerned. Whether these works are meant predominantly for use other than for commerce, industry, or any other business or profession? - HELD THAT - The said proposed construction of residential colony or residential complex service given by the applicant to Airport Authority of India as a government authority and predominantly meant for self-use or the use of their employees or other persons specified in paragraph 3 of the Schedule III of the Central Goods and Services Tax Act, 2017 as covered under Serial No. 3 (vi) (c) of the Notification No.11/2017-Central Tax dated 28.06.2017 as amended by Notification No. 24/2017-Central Tax (Rate) dated 21.09.2017 liable to tax at 6% each under CGST as well as 6% under KGST Act. The construction of Airport Authority of India residential colony for self use or their staff/ employees at Devenhalli, near Kempegowda International Airport, Bengaluru by the applicant for Airport Authority of India attracts tax at the rate of 12% as per N/N. 11/2017 - Central Tax (Rate) dated 28-06-2017 as amended by N/N. 24/ 2017 - Central Tax (Rate) dated the 21.09.2017.
Issues Involved:
1. Determination of the applicable GST rate on the construction of a residential colony for the Airport Authority of India (AAI) by the applicant. Issue-wise Detailed Analysis: Admissibility of the Application: The application is admissible under Section 97(2)(e) of the CGST Act 2017 as it pertains to the "determination of the liability to pay tax on any goods or services or both." Facts Relevant to the Issue: - The applicant, a registered person under the CGST and KGST Acts, is engaged in the construction of residential and commercial complexes. - The applicant has been awarded a contract by the Airport Authority of India (AAI) for constructing a residential colony for AAI employees near Kempegowda International Airport, Bengaluru. - AAI is a statutory body established under the Airports Authority of India Act, 1994, and functions under the Ministry of Civil Aviation, Government of India. Contentions by the Applicant: - The applicant argued that AAI qualifies as a "governmental authority" as defined under Notification No. 31/2017-CT(R) dated 13.10.2017. - The construction services provided to AAI should be taxed at a concessional rate of 6% CGST and 6% SGST as per Notification No. 11/2017-CT(R) dated 28.06.2017, as amended by Notification No. 24/2017-CT(R) dated 21.09.2017. Findings & Discussion: - The provisions of the CGST Act and the KGST Act are in pari-materia, meaning they have the same provisions except for a few specific differences. - The applicant’s contract with AAI for constructing a residential colony for AAI employees is examined under Notification No. 11/2017-CT(R) dated 28.06.2017, as amended. - Serial No. 3(vi)(c) of the Notification covers composite supply of works contract to governmental authorities for residential complexes predominantly meant for self-use or use by their employees. - The AAI, being a statutory body set up by an Act of Parliament, qualifies as a "governmental authority." The construction of the residential colony for AAI employees is considered a function entrusted under Article 243W of the Constitution. - An explanation inserted by Notification No. 17/2018-CT(R) dated 26.07.2018 clarifies that the term 'business' does not include activities undertaken by the Central Government, State Government, or local authorities as public authorities. This does not exclude a Government Entity like AAI. - The construction services provided by the applicant to AAI are predominantly for use other than commerce, industry, or any other business or profession, thereby qualifying for the concessional tax rate. Ruling: The construction of the residential colony for AAI employees by the applicant attracts a tax rate of 12% (6% CGST + 6% KGST) as per Notification No. 11/2017-CT(R) dated 28.06.2017, as amended by Notification No. 24/2017-CT(R) dated 21.09.2017.
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