2023 (8) TMI 1204 - AAR - GST

Works contract services - Applicable rate of Tax under Goods and Services Act, 2017 - Supply of services by the applicant to M/s Tamilnadu Water Supply and Drainage Board - applicability of N/N. 15/2021-CT(Rate) dated 18.11.2021 r/w Notification No. 22/2021-CT (Rate) dated 31.12.2021 - HELD THAT - It is clear that TWAD Board has been constituted only to implement certain functions (not all the functions) of local bodies and it cannot be equated to a local body and hence it can be concluded that TWAD Board is not a Local Authority. M/s Tamil Nadu Water Supply and Drainage Board is a 'Governmental Authority' as defined under 2(zf) of the Notification No. 12/2017-CT(rate) as amended effective from 13.10.2017 and thereby supply is made to the 'Governmental Authority' by the Applicant. The works contract services provided by the Applicant to TWAD Board is covered under the above entry and exigible to tax @18%, in as much as TWAD Board qualifies as a Governmental Authority.

Summary

Issues Involved:
1. Whether the supply of services by the applicant to M/s Tamilnadu Water Supply and Drainage Board is covered by Notification No. 15/2021-CT(Rate) dated 18.11.2021 r/w Notification No. 22/2021-CT(Rate) dated 31.12.2021.
2. If the supplies as per Question 1 are covered by the said Notification, then what is the applicable rate of Tax under Goods and Services Act, 2017 on such supplies.
3. In case if the supplies as per Question 1 are not covered by the said Notification then what is the applicable rate of tax on such supplies under the Goods and Services Act.

Summary:

Issue 1: Coverage by Notification No. 15/2021-CT(Rate) and Notification No. 22/2021-CT(Rate)
The applicant sought an advance ruling to determine if their supply of services to M/s Tamilnadu Water Supply and Drainage Board (TWAD Board) falls under Notification No. 15/2021-CT(Rate) dated 18.11.2021, read with Notification No. 22/2021-CT(Rate) dated 31.12.2021. The applicant argued that TWAD Board is classified as a 'Local Authority' and thus should be covered under these notifications. However, the Authority for Advance Ruling (AAR) concluded that TWAD Board is not a 'Local Authority' but a 'Governmental Authority.' Consequently, the services provided by the applicant to TWAD Board are not covered by the said notifications.

Issue 2: Applicable Rate of Tax if Covered by the Notification
Since the supply of services by the applicant to TWAD Board is not covered by Notification No. 15/2021-CT(Rate) and Notification No. 22/2021-CT(Rate), this issue is deemed not applicable.

Issue 3: Applicable Rate of Tax if Not Covered by the Notification
The AAR determined that the supply of services by the applicant to TWAD Board falls under serial number 3(xii) of Notification No. 11/2017-CT(Rate) dated 28.06.2017. This classification attracts a CGST of 9% and SGST of 9%, effective from 01.01.2022. The ruling emphasized that TWAD Board qualifies as a 'Governmental Authority,' and therefore the applicable rate of tax on such supplies is 18% (CGST - 9% + SGST - 9%).

Ruling:
1. The supply of services by the applicant to M/s Tamilnadu Water Supply and Drainage Board is not covered by Notification No. 15/2021-CT(Rate) dated 18.11.2021 r/w Notification No. 22/2021-CT(Rate) dated 31.12.2021.
2. Since the supplies are not covered by the said Notification, this issue is not applicable.
3. The supply of services by the applicant to M/s Tamilnadu Water Supply and Drainage Board is covered under serial number 3(xii) of Notification No. 11/2017-CT(Rate) dated 28.06.2017 and attracts CGST @ 9% and SGST @ 9% with effect from 01.01.2022.