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2022 (7) TMI 562 - AAR - GSTConcessional rate of GST - Works Contract - Composite supply or not - services provided by the applicant to APIIC - Government entity or not - applicability of S.No.3 (vi) of the Notification No.11/2017- Central Tax (Rate) dt 28.06.2017, as amended - appropriate rate and classification of GST to be charged by the applicant - whether M/s. APIIC is a Government Authority/Entity or otherwise? - HELD THAT - Andhra Pradesh Industrial Infrastructure Corporation Ltd. (APIIC) was formed in 1973 by GO No 831 dated 10.09.1973 issued by Government of Andhra Pradesh. As seen from the share holding ratios of the 41 st Annual Report for the years 2013-2014 as made available by APIIC website https //www.apiic.in, the Government of Andhra Pradesh including its nominees have 100% of share holding 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 work in which the applicant is engaged in is meant for any business or otherwise? - HELD THAT - The applicant rather emphatically claimed that the work is meant for the use of Minister for Industries, which is essentially meant for promotion of Business and Industry. Moreover, the recipient of the services, APIIC is basically engaged in business activities and even a close observation of the modus operandi of the organisation prove the same. This would be sufficient enough to come to a conclusion that the said construction is for conducting promotional activities, which are essentially business oriented and hence not eligible for concessional rate of 12% (6% CGST 4- 6% SGST) available under Notification No.24/2017 CT (Rate) dated 21.09.2017 - the contract entered by the applicant is classifiable under SAC heading No. 9954 under construction services, with 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 dose observation of the modus operandi of the organisation prove the same. This would be sufficient enough to come to a conclusion that the said construction is for conducting promotional activities, which are essentially business oriented and hence not eligible for concessional rate of 12% (6% CGST 6% SGST) available under Notification No. 24/2017 - CT (Rate) dated 21.09.2017. The contract entered by the applicant is classifiable under SAC heading No. 9954 under construction services, with 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% (9% under Central Tax and 9% State Tax).
Issues Involved:
1. Eligibility of the applicant to avail the concessional rate of GST at 12% as prescribed in S.No.3(vi) of Notification No.11/2017-Central Tax (Rate) dated 28.06.2017. 2. Appropriate rate and classification of GST to be charged by the applicant if the concessional rate is not applicable. Issue-Wise Detailed Analysis: 1. Eligibility for Concessional Rate of GST at 12%: The applicant, M/s. Siddartha Constructions, engaged in construction services, entered into a contract with Andhra Pradesh Industrial Infrastructure Corporation Limited (APIIC) for providing power infrastructure, fire fighting & alarm system, and street lighting to proposed RBF sheds. The applicant sought an advance ruling on whether they are eligible for a concessional GST rate of 12% under S.No.3(vi) of Notification No.11/2017-Central Tax (Rate). The applicant argued that their services qualify as "works contract services" under Section 2(119) of the CGST Act, 2017, and that APIIC qualifies as a "Governmental Authority" or "Government Entity." They claimed that the works were for non-commercial purposes, thus eligible for the concessional rate. The authority examined whether APIIC qualifies as a Governmental Authority or Entity and concluded that APIIC is a "Government Entity" as it is wholly owned by the Government of Andhra Pradesh. However, the authority also examined the nature of the construction work and determined that the services provided were meant for business activities, primarily to promote industry and trade, thus falling under commercial use. Consequently, the services did not qualify for the concessional rate of 12%. 2. Appropriate Rate and Classification of GST: Given that the concessional rate was deemed inapplicable, the authority classified the services provided by the applicant under SAC heading No. 9954, which pertains to construction services. The applicable rate of GST was determined to be 18% (9% CGST and 9% SGST) under entry no (ii) of serial No.3 of Notification No.11/2017-Central Tax (Rate) dated 28.06.2017. Ruling: Question: In view of the services provided by the applicant to APIIC, is the applicant eligible to avail the concessional rate of GST at 12% as prescribed in S.No.3(vi) of the Notification No.11/2017- Central Tax (Rate) dt: 28.06.2017, as amended by? Answer: Negative Question: If not, what is the appropriate rate and classification of GST to be charged by the applicant? Answer: SAC heading No. 9954 under construction services, with 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% (9% under Central Tax and 9% State Tax).
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