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2022 (7) TMI 563 - AAR - GSTBenefit of concessional rate of GST - Works Contract - services provided by the applicant to APIIC - appropriate rate and classification of GST - applicability of S.No.3(vi) of the Notification No.11/2017- Central Tax (Rate) dt 28.06.2017 - whether APIIC which awarded construction work to the applicant would qualify for a Governmental Authority/entity or not? - 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 taken up by the applicant is meant for 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, AMC is basically engaged in business activities and even a 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% available under Notification No.24/2017 - CT (Rate) dated 21.09.2017. Hence, 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%.
Issues Involved:
1. Eligibility for concessional GST rate of 12% under Notification No. 11/2017-Central Tax (Rate). 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. Siddartha Constructions, sought an advance ruling on whether they are eligible for a concessional GST rate of 12% for services provided to Andhra Pradesh Industrial Infrastructure Corporation Limited (APIIC). The applicant argued that APIIC qualifies as a "Governmental Authority" or "Governmental Entity" and that the services provided are not for commercial purposes but for the office of the Hon'ble Minister for Industries. The notification in question, No. 11/2017-Central Tax (Rate), prescribes a concessional GST rate of 6% for services provided to the Central Government, State Government, Union Territory, local authority, or a Governmental Authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, 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. The applicant contended that APIIC is wholly owned by the Government of Andhra Pradesh and functions as a Governmental Authority or Entity. They also argued that the work involved is not for commercial purposes but for governmental functions. 2. Appropriate Rate and Classification of GST: The Authority for Advance Ruling (AAR) examined whether APIIC qualifies as a Governmental Authority or Entity and whether the services provided are for non-commercial purposes. APIIC was determined to be a Governmental Entity as it is wholly owned by the Government of Andhra Pradesh. However, the AAR concluded that the services provided by the applicant are for the promotion of business and industry, which are commercial activities. Therefore, the concessional GST rate of 12% is not applicable. The appropriate classification for the services provided by the applicant falls under SAC heading No. 9954 (construction services), and the applicable GST rate is 18% (9% Central Tax and 9% State Tax). Judgment Summary: The AAR ruled that the applicant, M/s. Siddartha Constructions, is not eligible for the concessional GST rate of 12% under Notification No. 11/2017-Central Tax (Rate). The services provided are classified under SAC heading No. 9954, and the applicable GST rate is 18% (9% Central Tax and 9% State Tax). Ruling: 1. Question: Is the applicant eligible for the concessional GST rate of 12%? Answer: Negative. 2. Question: What is the appropriate rate and classification of GST to be charged by the applicant? Answer: SAC heading No. 9954 under construction services, with an applicable GST rate of 18% (9% Central Tax and 9% State Tax).
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