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2023 (7) TMI 572 - AAR - GSTClassification of supply - Works contract or composite supply of services or mixed supply - Deposit work contained in the MoU entered into between CoPT and IN - scope of Government Entity - contractors engaged by COPT to execute works and subcontractors engaged by the main contractor also would be eligible to avail the benefits of exemption on Notification No 12/2017-Central Tax (Rate) dated 28.06.2017 or not - benefits of reduced rate of 12% GST as per Notification No 24/2017-Central Tax (Rate) dated 21,09.2017, in respect of the services provided by them to CoPT - entitlement to claim the full amount of tax (if exemption notification is applicable) or to claim a refund of the excess remittance of GST (6% if 12 % is the rate applicable) as the case may be, from the date of inception of the project work? Nature of the services provided as per the MoU As per the MOU dated 22.02.2019 - HELD THAT - As per Section 2 (119) of the CGST Act, 2017; works contract means 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 the terms and conditions of the MoU dated 22.02.2019; it is evident that the activity undertaken by the applicant for the Construction of Jetty for Indian Navy squarely falls within the ambit of Works Contract as defined in Section 2 (119) of the CGST Act, 2017. As per S. No. 6 (a) of Schedule II of the CGST Act, 2017; the composite supply of works contracts as defined in clause (119) of Section 2 shall be treated as a supply of services. Exemption as per Notification No. 12/2017 Central Tax (Rate dated 28.06.2017 as amended by Notification No. 32/2017- Central Tax (Rate) dated 13.10.2017 - HELD THAT - The conditions to be satisfied for exemption under the above entry are; a) The supply should be a supply of service; b) The supplier should be a government Entity. c) The recipient must be Central Government, State Government, Union territory, local authority or any -person specified by Central Government,; State Government, Union territory or local authority; and d) The consideration must be received in the form of grants from Central Government, State Government Union territory or local authority. The subject supply is Work Contract as defined in Section 2 (119) of the CGST Act, 2017 and as per SI. No. 6 (a) of Schedule II of the CGST Act; it is treated as a supply of services. Hence the first condition is satisfied - as per Section 3 of the Major Port Trusts Act, 1963 which governs the constitution of board of trustees it is seen that 100% control of applicant is with the Central Government. Hence the applicant falls within the definition of Government Entity and accordingly the second condition is satisfied - recipient of the services is the Indian Navy, which is the Central Government and hence the third condition is also satisfied. However, there is nothing in the MOU dated 22.02.2019 or in any other document submitted with the application to show that the consideration for the services are received by the applicant in the form of grants from the Central Government - the 4th condition is not satisfied and accordingly the service provided by the applicant to the Indian Navy as per MoU dated 22.02.2019 is not eligible for exemption under the entry at Si No. 9C of Notification No. 12/2017 CT (Rate) dated 28.06.2017 as inserted by Notification No. 32/2017-CT (Rate) dated 13.10.2017. Eligibility to take the benefit of the reduced rate of 12% GST as per Notification No 24/2017-Central Tax (Rate) dated 21.09.2017, in respect of the services provided by it to Indian Navy under the MoU - HELD THAT - The services provided by the applicant is works contract services as defined in section 2 (119) of the CGST Act, 2017 and it is provided to the Indian Navy, the Central Government for the purpose of reconstruction of North Jetty after demolition of existing Jetty at Naval Base, Kochi. Therefore, the works contract services are provided to the Central Government for construction and commissioning of jetty meant for use for undertaking activities of the Indian Navy as a public authority. Hence the services provided by the applicant as per the MoU dated 22.02.2019 are eligible for the concessional rate of GST of 12 % as per the entry at Item (vi) of SI No. 3 of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended - it is seen that the entry at Item (vi) of SI No. 3 of Notification No. 11/2017 Central Tax (Rate) dated 28,06.2017 as amended has been omitted by Notification No, 03/2022 Central Tax (Rate) dated 13.07.2022 with effect from 18,07,2022. Therefore, the concessional rate of GST of 12% is applicable only in respect of the services supplied as per the said MoU for which the time of supply as determined in terms of Sections 13 and 14 of the CGST Act, 2017 falls between 21.09.2017 and 17.07.2022. The services supplied as per the said MoU for which the time of supply as determined in terms of Sections 13 and 14 of the CGST Act, 2017 falls on or after 18.07,2022 will be liable to GST at the rate of 18% as per entry at Item No. (xii) of SL No. 3 of Notification No. 11/2017 Central Tax (Rate) dated 25.06.2017.
Issues Involved:
1. Nature of services under the MoU. 2. Eligibility for GST exemption under Notification No. 12/2017. 3. Eligibility for reduced GST rate of 12% under Notification No. 24/2017. 4. Eligibility of contractors and sub-contractors for GST exemption. 5. Eligibility of contractors for reduced GST rate of 12%. 6. Eligibility for refund of excess GST paid. Summary: Issue 1: Nature of Services Rendered by CoPT The Authority ruled that the activity undertaken by the applicant for the Construction of Jetty for the Indian Navy as per the MoU dated 22.02.2019 falls within the ambit of "Works Contract" as defined in Section 2(119) of the CGST Act, 2017. Issue 2: Eligibility for GST Exemption The Authority concluded that the service provided by the applicant to the Indian Navy as per the MoU dated 22.02.2019 is not eligible for exemption under the entry at SI. No. 9C of Notification No. 12/2017 CT (Rate) dated 28.06.2017, as inserted by Notification No. 32/2017-CT (Rate) dated 13.10.2017. The fourth condition, which requires the consideration to be received in the form of grants from the Central Government, was not satisfied. Issue 3: Eligibility for Reduced GST Rate of 12% The Authority ruled that the applicant is eligible for the concessional rate of GST of 12% [6% CGST + 6% SGST] as per the entry at Item (vi) of SI. No. 3 of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended, for services supplied as per the MoU dated 22.02.2019, for which the time of supply falls between 21.09.2017 and 17.07.2022. For services supplied on or after 18.07.2022, the GST rate of 18% [9% CGST + 9% SGST] applies. Issue 4: Eligibility of Contractors and Sub-contractors for GST Exemption The Authority did not provide a ruling on this issue as the question does not pertain to a transaction being undertaken or proposed to be undertaken by the applicant. Issue 5: Eligibility of Contractors for Reduced GST Rate of 12% The Authority did not provide a ruling on this issue as the question does not pertain to a transaction being undertaken or proposed to be undertaken by the applicant. Issue 6: Eligibility for Refund of Excess GST Paid The Authority did not provide a ruling on this issue as it is not covered by any of the matters enumerated in sub-section (2) of Section 97 of the CGST Act, 2017.
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