9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (8) TMI 1242 - AAR - GSTClassification of services - rate of GST - works contract services or not - Kochi Water Metro Project - scope of exclusion specified for the term 'business' as per the explanation to heading 9954 - applicability of N/N. 11/2017 dated 28th June 2017 - works contract awarded to Kool Home Builders qualifies to tax under CGST Act or not - applicability of N/N. 11/2017 - Central Tax (Rate) dated 28th June 2017 under clause (a) of item number (vi) of serial number 3, under Section 5 of Chapter 99 as amended by Notification No.24/2017 - Central Tax (Rate) dated 21st September 2017 - works contract qualifies to tax under SGST Act or not. HELD THAT - Section 2(119) of the CGST Act defines a works contract as a contract for building construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract. From this definition it reveals that the term works contract under GST has been restricted to any work undertaken for an Immovable Property wherein transfer of property in goods whether as goods or in some other form is involved - the service rendered by the applicant squarely falls under the definition of works contract in Section 2 (119) of the CGST Act. Whether the works contract services rendered by the applicant attract GST at the rate of 12% under SI No. 3 (vi) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017? - HELD THAT - As per the above entry, the composite supply of works contract as defined in Section 2 (119) of the CGST Act, 2017 provided to a Government by way of construction of a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession attract GST at the rate of 12%. In the instant case though the contract of construction of the terminals and other infrastructural facilities for the integrated water transport project is awarded to the applicant by Kochi Metro Rail Ltd as the executing and operating agency Project Management Consultants the contract is awarded on behalf of the Government of Kerala and the transfer of property in goods in the work contract services rendered by the applicant takes place to the Government of Kerala; the de jure owner of the assets of the integrated water transport project, and hence the recipient of the work contract services rendered by the applicant is the Government of Kerala. Whether this project comes under the exclusion from the definition of the term business as per explanation to SI.No.3 (vi) of the Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017? - HELD THAT - As per the explanation to entry at SI No.3(vi) of the Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 the term 'business' shall not include any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities. Undoubtedly, the integrated water transport project is an activity undertaken by the Government of Kerala as a public authority and hence squarely covered by the explanation to entry at SI No. 3 (vi) of the Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 and hence the activity is not a business for the purpose of the above-said entry. Thus, the works contract services performed by the applicant as per the above-mentioned contracts awarded by Kochi Metro Rail Ltd are liable to GST at the rate of 12% as per entry at SI No.3 (vi) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017.
Issues Involved:
1. Classification of the Kochi Water Metro Project under the term 'business' as per the explanation to heading 9954, item (vi) of Notification No. 11/2017 dated 28th June 2017. 2. Applicability of the CGST rate of 6% to the works contract awarded to Kool Home Builders as per Notification No. 11/2017 - Central Tax (Rate) dated 28th June 2017. 3. Applicability of the SGST rate of 6% to the works contract awarded to Kool Home Builders as per Notification SRO.No.370/2017 dated 30th June 2017. Issue-Wise Detailed Analysis: 1. Classification of the Kochi Water Metro Project: The applicant, Kool Home Builders, requested an advance ruling to determine whether the Kochi Water Metro Project falls under the exclusion specified for the term 'business' as per the explanation to heading 9954, item (vi) of Notification No. 11/2017 dated 28th June 2017. The project, managed by Kochi Metro Rail Limited (KMRL), involves constructing terminals and other infrastructure as part of urban planning to improve public amenities. The applicant argued that KMRL, a joint venture between the Government of India and the Government of Kerala, operates the project on behalf of the Government of Kerala, making it a governmental authority. The project is funded by the Government of Kerala and a loan from a German agency. The ruling referenced the Kerala Authority for Advance Ruling's earlier decision (KER/75/2019) that KMRL qualifies as a governmental authority under Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017. The project is intended for public use, not for commerce or business, and thus falls under the exclusion from the term 'business' as defined in the notification. 2. Applicability of CGST Rate: The applicant sought clarification on whether the works contract awarded to them qualifies for a 6% CGST rate under Notification No. 11/2017 - Central Tax (Rate) dated 28th June 2017. The ruling confirmed that the works contract services provided by the applicant, which include constructing terminal facilities, shore protection works, and access roads, fall under the definition of a works contract as per Section 2(119) of the CGST Act, 2017. The services provided are to the Government of Kerala through KMRL, a governmental authority, for a project intended predominantly for public use. Therefore, the works contract services are taxable at 12% GST (6% CGST + 6% SGST) as per entry at SI No. 3 (vi) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017. 3. Applicability of SGST Rate: Similarly, the applicant sought clarification on the applicability of the 6% SGST rate under Notification SRO.No.370/2017 dated 30th June 2017. The ruling reiterated that the works contract services provided by the applicant to the Government of Kerala through KMRL are taxable at 12% GST (6% CGST + 6% SGST) as per the corresponding state tax notification. The project is classified under functions entrusted to the government under Article 243W of the Constitution, making it a public authority activity and not a business. Ruling: 1. The Kochi Water Metro Project is an activity undertaken by the Government of Kerala as a public authority and is covered by the exclusion from the term 'business' as per the explanation to heading 9954 item (vi) of Notification No. 11/2017 dated 28th June 2017. 2. The works contract services performed by the applicant are taxable at 6% CGST as per entry at SI No. 3 (vi) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended. 3. The works contract services performed by the applicant are taxable at 6% SGST as per entry at Sl.No.3 (vi) of Notification No. 370/2017 State Tax (Rate) dated 30.06.2017 as amended.
|
