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2022 (5) TMI 286 - AAR - GSTConcessional rate of GST - Composite supply of works contract - construction services provided by the applicant to UPRNN - Applicability of S.No. 3 (vi) of the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended - classification and rate of GST - HELD THAT - In the instant case there is Composite supply of works contract provided to UPRNN, a Government Entity by way of construction of a clinical establishment i.e. a hospital. The Sr. No. 3 (vi) mentioned above will not be applicable to the activity to be undertaken by the applicant at a future date. The Authorised representative of the applicant also agreed that the provisions of Sr. No. 3 (vi) will not be applicable to applicant's activities in view of the amendment brought about in Notification No. 11/2017-CTR dated 28.06.2017 vide Notification No. 15/2021 - CTR dated 18.11.2021 (with effect from 01.01.2022) - the applicant is not of eligible to avail the concessional rate of GST at 12% as prescribed in of S. No. 3 (vi) of the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 for the impugned construction services provided by them to UPRNN. If the impugned service is not covered under Sr. No. 3 (vi) of the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, then what is the appropriate classification and rate of GST to be charged by the applicant? - HELD THAT - Since the impugned service is expected to commence only at a future date, in view of the amended Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, the impugned activity is not covered under Sr. No. 3 (vi) mentioned above and therefore the said activity will be covered under the residuary clause (xii) of Sr. No. 3 of Notification No. 11/2017- mentioned above and the rate of GST to be paid by the applicant will be 18% of the taxable value.
Issues Involved:
1. Eligibility for concessional GST rate of 12% for construction services provided to UPRNN. 2. Appropriate rate and classification of GST if concessional rate is not applicable. Issue-wise Detailed Analysis: 1. Eligibility for Concessional GST Rate of 12%: The applicant, M/s. KPC Projects Ltd., sought an advance ruling on whether the construction services provided to Uttar Pradesh Rajkiya Nirman Nigam Ltd. (UPRNN) for building a 200-bed ESI Hospital are eligible for a concessional GST rate of 12% under S.No. 3(vi) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended. The applicant argued that: - The services provided constitute a composite supply of works contract as defined under Section 2(119) of the CGST Act, 2017. - UPRNN, being a wholly owned entity of the Government of Uttar Pradesh, qualifies as a "Governmental Authority" or "Governmental Entity." - The construction of the hospital, a clinical establishment, falls under the purview of S.No. 3(vi)(b) of the said notification, which allows for a concessional rate of 12% GST. However, the authority observed that: - The relevant notification was amended by Notification No. 15/2021-CTR dated 18.11.2021, effective from 01.01.2022, which removed "Governmental Authority" and "Governmental Entity" from the scope of entities eligible for the concessional rate. - The applicant's services, being proposed for a future date, would not be covered under the amended provisions of S.No. 3(vi) post-01.01.2022. Therefore, it was concluded that the applicant is not eligible for the concessional GST rate of 12% for the construction services provided to UPRNN. 2. Appropriate Rate and Classification of GST: Given the ineligibility for the concessional rate, the applicant sought clarification on the appropriate GST rate and classification for their services. The authority determined that: - The services provided by the applicant, which are expected to commence in the future, would fall under the residuary clause (xii) of S.No. 3 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. - Consequently, the applicable GST rate for the construction services would be 18% (CGST @ 9% and SGST/UTGST @ 9% or IGST @ 18%). Order: 1. The applicant is not eligible to avail the concessional GST rate of 12% as per S.No. 3(vi) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended. 2. The construction services provided by the applicant are classifiable under Heading 9954 (Construction Services), S.No. 3(xii) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended, and the applicable GST rate is 18%.
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