2022 (7) TMI 561 - AAR - GST

Applicability of CGST and SGST Tax Rate - composite supply of works contract - listed works executed for Andhra Pradesh Industrial Infrastructure Corporation (APIIC) - construction of 20MT cold storage building for Primary Processing Centre (PPC) under Mega park scheme at peddapuram, East Godavari district - HELD THAT - The composite supply of works contract under Section 2 (119) of CGST Act, 2017 / APGST Act, 2017 is treated as supply of service in terms of Serial No.6 (a) of Schedule II of CGST Act, 2017 / APGST Act, 2017 - The Government of India, vide notification No. 11/2017 - Central Tax (Rate), dated - 28th June 2017 notified the rate of GST applicable on supply of services. Under this notification for heading 9954, the applicable rate of GST is 9%. Whether API1C, which awarded construction work to the applicant would qualify for a Governmental Authority/entity or not? - HELD THAT - Looking to the genesis of Andhra Pradesh Industrial Infrastructure Corporation Ltd. (APIIC), it was formed in 1973 by GO No. 831 dated 10-SEP-1973 issued by the Government of Andhra Pradesh. As seen from the shareholding ratios of the 41st Annual Reports for the years 2013-14 as made available by APIIC website https //www.apiic.in, the Government of Andhra Pradesh including its nominees is having 100% of shareholding and thus it is covered under the definition of 'Government Entity' under the above said provisions. Therefore, we conclude that M/s APIIC is a Government Entity for the purpose of GST matters. Whether the construction works taken up by the applicant are meant for use other than for commerce, industry, or any other business or profession? - HELD THAT - On looking into the listed construction projects sl.no from 1 to 6, prima facie, it is evident that all of them are meant for business purpose only. Moreover, the applicant did not provide any information or documentary proof clarifying that the constructions are for use other than for commerce, industry, or any other business or profession, to be eligible for concessional rate of 12% (6% CGST 6% SGST) available under Notification No.24/2017 - CT (Rate) dated 21.09.2017 - In this case, the works executed by the applicant are classifiable under SAC Heading No. 9954 under construction services, entry no (ii) of serial No.3 of notification no. 11/2017 Central Tax (Rate) dated 28.06.2017 i.e., Composite Supply of Works Contract as defined in clause 119 of Section 2 of Central Goods and Services Act, 2017 and the applicable rate of tax is 18% Whether the construction project listed in sl.no 7 i.e., Construction of 20 MT Cold Storage Building for Primary Processing Centre can be classified under sl.no. 3 of constructions services clause V (e) of notification no 11/2017 Central Tax (Rate) dated 28lh June 2017, with the applicable rate of tax as 12% (CGST and SGST each) or not? - HELD THAT - Classified under V (e) ofsl.no 3 under heading 9954 Construction Services of notification no 11/2017 Central Tax (Rate) dated 28th June 2017 with applicable rate of tax at 12%.

Summary

Issues:
1. Applicability of CGST and SGST Tax Rate on listed works executed for Andhra Pradesh Industrial Infrastructure Corporation.
2. Applicability of CGST and SGST Tax Rate on construction of 20MT cold storage building for Primary Processing Centre under Mega park scheme.

Analysis:
1. Applicability of Tax Rate on Listed Works:
The applicant sought a ruling on the tax rates for various construction works awarded by Andhra Pradesh Industrial Infrastructure Corporation Limited (APIIC). The works included construction projects like compound walls, stormwater drains, and administrative buildings. The Authority determined that the works contract falls under SAC Heading No. 9954, with a tax rate of 18% (9% CGST + 9% SGST) as per Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017. The applicant failed to prove that the constructions were for purposes other than business, making them ineligible for the concessional rate of 12%.

2. Applicability of Tax Rate on Cold Storage Building:
Regarding the construction of a 20MT cold storage building for the Primary Processing Centre, the Authority examined if it qualified for the concessional rate. Based on the provisions of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017, the construction was classified under V (e) of sl.no 3 under heading 9954, making it eligible for the concessional rate of 12% (CGST and SGST each). The Authority concurred with the applicant's claim on the applicable tax rate for this specific project.

In conclusion, the Authority ruled that the listed works, except for the cold storage building, are subject to a tax rate of 18%, while the construction of the cold storage building falls under the concessional rate of 12% as per the relevant notifications. The judgment clarified the classification of works, the eligibility for concessional rates, and the specific tax rates applicable to each type of construction project based on the provisions of the GST Acts and notifications.