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2022 (5) TMI 287 - 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:
1. Eligibility for concessional GST rate of 12% for construction services provided by the applicant to UPRNN. 2. Appropriate rate and classification of GST if not eligible for the concessional rate. Analysis: Issue 1: The applicant, M/s. KPC Projects Ltd., sought an advance ruling on whether they are eligible for the concessional rate of GST at 12% for providing construction services to UPRNN. The applicant argued that the works contract services provided to UPRNN for constructing staff quarters for ESIC fall under the definition of a composite supply of works contract meant predominantly for non-commercial use. They relied on Notification No. 11/2017-Central Tax (Rate) and claimed eligibility for the concessional rate of 12% as per SI. No. 3 (vi) of the notification. The applicant contended that the construction was for a governmental authority and not for commercial purposes, hence qualifying for the lower rate. Issue 2: The concerned officer, on the other hand, pointed out that the GST rate applicable had changed over time. While the applicant was liable to pay GST at 12% until December 31, 2021, the rate increased to 18% from January 1, 2022, as per subsequent notifications. The Authority observed that the impugned services provided by the applicant would not be covered under SI. No. 3 (vi) of the Notification No. 11/2017 post the amendment effective from January 1, 2022. Therefore, the applicant was deemed ineligible for the concessional rate of 12% as claimed. The Authority determined that the appropriate classification and rate of GST for the future activity of the applicant would be 18% under the residuary clause (xii) of the notification. In conclusion, the Authority ruled that the applicant was not eligible for the concessional rate of 12% for the construction services provided to UPRNN. The appropriate rate and classification of GST for the applicant's future activity were determined to be 18% under the residuary clause of the notification. The decision was based on the amendments in the notification effective from January 1, 2022, altering the eligibility criteria for the concessional rate.
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