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2022 (3) TMI 1302 - AAAR - GSTClassification of services - works contract services to TANGEDCO - carrying out retrofitting work for strengthening the NPKRR Maaligai against seismic and wind effect and modification of elevation in TNEB headquarters building at Chennai - applicability of Sl.No.3 item (vi) of the Notification no. 11/2017-Central Tax (Rate) dated 28.06.2017 - HELD THAT - It is evident that the entry is available when the Composite supply of Works contract are made to Government entity by way of fitting out, 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 and when such supply is made to a Government entity , they should have been procured in relation to a work entrusted to it by the Central/State Government or the Local Authority as the case maybe . In the case at hand, the works are undertaken by the appellant to the Headquarters of TANGEDCO Ltd, a commercial company in as much as TANGEDCO is involved in Generation and Distribution of Electricity against fixed Tariff. The words of the entry is clear and excludes the works supplied to Government entity, in respect of a Civil Structure or any other original works meant predominantly for commerce, industry or any other business or profession - there are no reason to disagree with the findings of the LA that the supply cannot be considered as that meant predominantly for use other than commerce, industry, or any other business or professional purposes. In the case at hand, it has been held by the LA that TANGEDCO is a Government Entity and therefore there is no difference in the clarification issued by the State Government and the stand held by the LA and the claim that the State Government cannot speak in two voice is void. Based on the clarification received from the Government to the status that TANGEDCO is a Government Entity, the Finance Director has addressed, the Chief Engineers others to take action to absorb the benefits of GST concessions to Government entity , which is their own interpretations and not clarification of the State Government and therefore, this contention fails. In the case at hand, the condition imposed for availing the concessional rate at the said entry is unambiguous in as much as it says that the services should have been procured by the Government entity, in relation to a work entrusted to it and the strengthening of the Headquarters building of TANGEDCO is definitely not an activity in relation to Generation and Distribution of Electricity , the work entrusted to it. Therefore, the contentions of the appellant in this regard are rejected. The appeal is disposed off.
Issues Involved:
1. Determination of the applicable GST rate for works contract services provided to TANGEDCO. 2. Applicability of entry in Sl.No.3 item (vi) of Notification No. 11/2017-Central Tax (Rate). 3. Compliance with the conditions specified in Notification No. 11/2017 for concessional GST rate. 4. Timeliness of the appeal filing in light of the Supreme Court's order on extension of limitation. Detailed Analysis: Issue 1: Determination of the applicable GST rate for works contract services provided to TANGEDCO The appellant, engaged in construction activities including retrofitting and restoration for government entities, sought clarification on the GST rate for services provided to TANGEDCO. The Original Authority ruled that the GST rate applicable is 18% as per Sl.No.3(xii) of Notification 11/2017-CT (Rate) dated 28.06.2017. Issue 2: Applicability of entry in Sl.No.3 item (vi) of Notification No. 11/2017-Central Tax (Rate) The appellant argued that the concessional GST rate of 12% under Sl.No.3 item (vi) should apply. The Original Authority, however, determined that this entry was not applicable to the appellant’s case because the conditions laid out in the notification were not fully met. Issue 3: Compliance with the conditions specified in Notification No. 11/2017 for concessional GST rate The notification requires four conditions to be met: 1. The supply must be a composite supply of works contract. 2. The supply must be provided to a government entity. 3. The supply must be for use other than commerce, industry, or any other business or profession. 4. For supplies to a government entity, the work must be entrusted by the government. The Original Authority accepted that the first two conditions were met but found that the third and fourth conditions were not satisfied. The appellant contended that TANGEDCO, being a public utility company, operates without a commercial basis and thus should qualify for the concessional rate. They also argued that the work was related to the generation and distribution of electricity, which is TANGEDCO’s primary function. The Appellate Authority found that TANGEDCO’s activities are commercial in nature, as it involves the sale of electricity for a fixed tariff, and thus, the supply was for commercial purposes. The Authority also noted that the explanation in the notification excludes activities undertaken by public authorities, which does not apply to TANGEDCO as it is a government entity, not a state government or local authority. Regarding the fourth condition, the Authority concluded that the retrofitting work on TANGEDCO’s headquarters could not be considered as work entrusted to TANGEDCO by the government in relation to its primary function of electricity generation and distribution. Issue 4: Timeliness of the appeal filing in light of the Supreme Court's order on extension of limitation The appeal was filed beyond the statutory period. However, the appellant cited the CBIC Circular and the Supreme Court’s order on the extension of limitation due to the pandemic. The Appellate Authority acknowledged the Supreme Court’s modification of its order, which excluded the period from 15th March 2020 to 28th February 2022 for the purpose of limitation, thus considering the appeal as filed within the timeline. Conclusion: The Appellate Authority upheld the Original Authority’s decision, ruling that the concessional GST rate of 12% under Sl.No.3 item (vi) of Notification No. 11/2017-Central Tax (Rate) does not apply to the appellant’s case. The applicable GST rate remains 18%. The appeal was disposed of accordingly, with no interference in the Original Authority's ruling.
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