2022 (10) TMI 861 - AAR - GST

Classification of services - rate of GST - works contract service provided to Malabar Cancer Centre - Government Entity or not - to be billed at 12% GST or to be billed at 18% GST? - HELD THAT - The concessional rate of GST prescribed under the above entry is applicable to the supply of specified work contract services provided to Central Government or State Government or Local Authority or Governmental Authority or Government entity. The specified works contract services are supply by way of construction erection commissioning installation completion fitting out repair maintenance renovation or alteration of (i) a civil structure or any other original works meant predominantly for use other than for commerce industry or any other business or profession or (ii) a structure meant predominantly for use as an educational a clinical or an art or cultural establishment or (iii) a residential complex predominantly meant for self-use or the use of their employees or other persons specified in paragraph 3 of the Schedule III of the CGST Act - the conditions to be fulfilled for a supply to be eligible for the concessional rate under the above entry are; (i) the supply must be a composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act 2017; (ii) the supply must satisfy any of the specified descriptions and (iii) the supply must be provided to the Central Government or State Government or Local Authority or Governmental Authority or Government entity. Whether the service rendered by the applicant falls under the category of works contract service as per the CGST Act? - HELD THAT - The term works contract under GST is restricted to contract for construction fabrication etc of any immovable property. The facts submitted by the applicant reveals that the applicant had entered into an agreement with Malabar Cancer Centre for the construction and extension of site and building. Hence the service rendered by the applicant falls under the ambit of definition of works contract under the CGST Act. Whether the supply of works contract services fall under any of the specified descriptions mentioned in the above entry? - HELD THAT - The term clinical establishment is defined in Para 2 (s) of Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017 as clinical establishment means a hospital nursing home clinic sanatorium or any other institution by whatever name called that offers services or facilities requiring diagnosis or treatment or care for illness injury deformity abnormality or pregnancy in any recognized system of medicines in India or a place established as an independent entity or a part of an establishment to carry out diagnostic or investigative services of diseases. Whether Malabar Cancer Centre is a governmental authority or a government entity? - HELD THAT - Malabar Cancer Centre is a society established by the State Government with 100 per cent participation by way of equity or control to carry out the function of public health a function entrusted to a municipality as well as a panchayat under Article 243W and Article 243G respectively of the Constitution and accordingly falls within the definition of governmental authority under Para 4 (ix) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017. The services rendered by the applicant to Malabar Cancer Centre as detailed in the application are eligible for the concessional rate of tax of 12% prescribed in the entry at SI No. 3(vi) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as Malabar Cancer Centre is a governmental authority as per definition of governmental authority in Para 4 (ix) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017.

Summary

Issues Involved:
1. Determination of the applicable GST rate for works contract services provided to Malabar Cancer Centre.

Issue-Wise Detailed Analysis:

1. Determination of the applicable GST rate for works contract services provided to Malabar Cancer Centre:

The applicant, M/s. Uralungal Labour Contract Co-operative Society Ltd (ULCCS), sought an advance ruling on whether the works contract service provided to Malabar Cancer Centre (MCC) should be billed at 12% GST or 18% GST.

Contentions of the Applicant:
The applicant argued that MCC is an autonomous institution under the Health and Family Welfare Department, Government of Kerala, established as a charitable society. They have been billing MCC at 18% GST, but MCC contended that only 12% GST is applicable as they are a government entity.

Comments of the Jurisdictional Officer:
The jurisdictional officer confirmed that MCC qualifies as a 'Government Entity' under Notification No. 12/2017-C.T.(Rate) as it is established by the Government of Kerala with full control over its activities. The officer referenced SI. No. 3(vi) of Notification No. 11/2017 - Central Tax (Rate), which provides a concessional rate of 12% GST for works contract services provided to government entities under specified conditions.

Personal Hearing:
During the personal hearing, the applicant reiterated their submissions and requested a ruling based on the application.

Discussion and Findings:
The Authority examined whether the services provided by the applicant to MCC fall under the concessional rate of 12% GST as per SI No. 3(vi) of Notification No. 11/2017 - Central Tax (Rate). The conditions for the concessional rate include:
- The supply must be a composite supply of works contract as defined in clause (119) of section 2 of the CGST Act.
- The supply must be provided to a government entity.
- The supply must be for specified purposes such as construction of structures meant predominantly for use as clinical establishments.

The Authority confirmed that MCC is a 'Government Entity' and the services provided by the applicant qualify as a works contract for a clinical establishment. Therefore, the services are eligible for the concessional rate of 12% GST until 31.12.2021.

However, with the issuance of Notification No. 22/2021 Central Tax (Rate) dated 31.12.2021, the concessional rate is applicable only until 31.12.2021. From 01.01.2022 onwards, the applicable GST rate for the works contract services provided to MCC will be 18% as per entry at SI No. 3(xii) of the Notification No. 11/2021 Central Tax (Rate).

Ruling:
The works contract services provided by the applicant to Malabar Cancer Centre are liable to GST at the rate of 12% [6% - CGST + 6% - SGST] as per entry at SI No. 3(vi) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 till 31.12.2021. From 01.01.2022 onwards, the services will be liable to GST at the rate of 18% [9% - CGST + 9% - SGST] as per entry at SI No. 3(xii) of the Notification No. 11/2021 Central Tax (Rate).