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2023 (2) TMI 1084 - AAR - GSTWorks contract - rate of GST - Service provided to a governmental authority under GST Laws or not - services provided to Bengaluru Water Supply and Sewerage Board - applicable GST rate on supply of works contracts services in relation to sewage treatment made by the Applicant to Bengaluru Water Supply and Sewerage Board, on or after 1st Jan 2022. Governmental Authority or not - HELD THAT - BWSSB was set up by The Bangalore Water Supply and Sewerage Act 1964, to supply water in Bangalore Metropolitan area and to make adequate provision for the sewerage and disposal of sewage in the Bangalore Metropolitan area. These duties performed by BWSSB are covered under the functions entrusted to a Municipality under article 243W of the Constitution that is 5th and 6th entry of 12th schedule of the constitution - Since the BWSSB is set up by the Act of State Legislature to carry out any function entrusted to a Municipality under article 243W of the Constitution, the same can be considered as Governmental Authority. Applicable GST rate on supply of works contracts services in relation to sewage treatment made to BWSSB, on or after 1st Jan 2022 - HELD THAT - The entry 3(iii) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 itself was omitted and now the works contact services supplied by the Applicant to BWSSB is covered under entry No.3(xii) of the same Notification - thus the works contract services provided by the Applicant to BWSSB are covered under this entry and the same is exigible to GST at 18%.
Issues Involved:
1. Whether the services provided to Bengaluru Water Supply and Sewerage Board (BWSSB) are considered services provided to a governmental authority under GST laws. 2. The applicable GST rate on the supply of works contract services related to sewage treatment provided by the Applicant to BWSSB on or after January 1, 2022. Issue-wise Detailed Analysis: 1. Services Provided to BWSSB as Services to a Governmental Authority: The Applicant, a leader in water resource management, entered into a contract with BWSSB for the design, upgradation, and rehabilitation of water treatment plants. BWSSB was established under the Bangalore Water Supply and Sewerage Board Act, 1964, and is responsible for water supply and sewage disposal in the Bangalore Metropolitan area. The Applicant sought clarification on whether BWSSB qualifies as a governmental authority under GST laws. The authority examined the definition of "Governmental Authority" as per Notification No. 11/2017-Central Tax (Rate), which includes any authority set up by an Act of Parliament or State Legislature with 90% or more government participation to carry out functions entrusted to a Municipality under Article 243W of the Constitution. BWSSB, being established by the State Legislature and performing functions like water supply and sanitation (entrusted to a Municipality under Article 243W), qualifies as a governmental authority. Therefore, the services provided to BWSSB are considered services provided to a governmental authority under GST laws. 2. Applicable GST Rate on Works Contract Services to BWSSB: Initially, works contract services provided to governmental authorities were taxed at 12% under Entry 3(iii) of Notification No. 11/2017-Central Tax (Rate). However, Notification No. 15/2021-Central Tax (Rate) amended this entry, restricting the 12% rate to services provided to the Central Government, State Government, Union territory, or a local authority, excluding governmental authorities and entities. From January 1, 2022, the applicable GST rate for works contract services provided to entities other than the Central Government, State Government, Union territory, or a local authority, including governmental authorities like BWSSB, reverted to 18% under Entry 3(xii) of Notification No. 11/2017-Central Tax (Rate). The authority confirmed that the works contract services supplied by the Applicant to BWSSB are exigible to GST at 18% (CGST @ 9% and SGST @ 9%). Ruling: 1. The services provided to BWSSB are considered services provided to a governmental authority under GST. 2. The applicable GST rate on the supply of works contract services related to sewage treatment provided by the Applicant to BWSSB on or after January 1, 2022, is 18% (CGST @ 9% and SGST @ 9%).
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