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2022 (9) TMI 783 - AAR - GSTExemption from GST - services provided by the applicant to TSTDC - Eligibility of 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 - appropriate rate and classification of GST to be charged by the applicant - Government Authority and Government entity or not - HELD THAT - Telangana State Tourism development corporation limited is a Government entity - The contracts executed by the applicant to this organizations therefore fall under at S.No. 3(vi) of Notification No. 11/2017 taxable @6% under CGST SGST respectively. As per S.No. 3(vi) of Notification No. 11/2017, this service is taxable @6% CGST SGST each - However this entry was amended in Nov 2021 vide Notification No. 15/2021 dt. 18.11.2021 and the phrases Government Entity Governmental Authority were deleted from the Entry at S.No. 3(vi) of Notification No. 11/2017 with effect from 01.01.2022. Thus the works executed for Governmental Entity or Government Authority from 01.01.2022 are taxable @9% CGST SGST each.
Issues:
1. Eligibility for concessional GST rate on services provided to a government entity. 2. Appropriate rate and classification of GST to be charged. Issue 1: Eligibility for Concessional GST Rate The applicant, M/s. KPC Projects Limited, sought an advance ruling to determine the rate of tax under CGST & SGST on their supplies to Telangana State Tourism Development Corporation Limited (TSTDC). The key query was whether the applicant is eligible for the concessional GST rate of 12% as per Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. The ruling authority examined the definitions of 'Government Authority' and 'Government Entity' as per Notification No. 31/2017 and concluded that TSTDC qualifies as a Government entity. Consequently, the contracts executed by the applicant for TSTDC fall under S.No. 3(vi) of the notification, making them taxable at 6% under CGST & SGST. However, an amendment effective from 01.01.2022 increased the tax rate to 9% for works executed for Governmental Entities or Authorities. Therefore, the ruling clarified that the applicable tax rate changed to 9% of CGST & SGST from 01.01.2022 onwards. Issue 2: Appropriate Rate and Classification of GST Regarding the appropriate rate and classification of GST to be charged by the applicant, the ruling authority reiterated the change in tax rate discussed in the previous issue. As per the ruling, for works contracts, including material and services, the tax rate was 6% of both CGST & SGST until 31.12.2021. However, effective from 01.01.2022, the rate increased to 9% of both CGST & SGST due to the deletion of 'Government Entity' and 'Governmental Authority' from the relevant notification. Therefore, the ruling confirmed that the appropriate rate and classification of GST to be charged by the applicant remained the same, i.e., 9% of CGST & SGST from 01.01.2022 onwards. In conclusion, the advance ruling provided clarity on the eligibility for concessional GST rates and the revised tax rates applicable to works contracts executed for Government Entities or Authorities, emphasizing the changes effective from 01.01.2022.
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