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2024 (7) TMI 1193 - AAR - GSTRate of GST - works executed by the company for the period from 01/01/2022 to 17/07/202 - GST rate as per notification from State Goods and Services Tax Department, Government of Kerala vide Circular No. 01/2022, No CT/3/2021-C1 dated 19/01/2022 - Government entity or not - HELD THAT - The applicant M/s. Kerala Land Development Corporation Ltd. (M/s. KLDC) was incorporated in 1972 under the Companies Act, 1956 as a fully owned Government Undertaking with 4.77% of the shares of the company are in possession with the Central Government and 95.23% of the shares are with the Government of Kerala. M/s. KLDC is established with more than 90% or more participation of the Govt, and falls under the definition of Governmental Entity as the same is established and controlled by the State Government. The applicant has sought clarification on the matter that whether GST @12% is applicable for the works executed by them for the period 01.01.2022 to 17.07.2022 as per SGST Cir. No. 01/2022 dated 19.01.2022. As per Clause 4 of the said circular, it is clarified that w.e.f 01.01.2022, the benefit of the reduced tax rate, i.e., 12% instead of 18% on works contract supplied to a Governmental Authority or a Government Entity regarding the works contract services mentioned in the corresponding entry, stands discontinued. It is evident that the works contract services supplied to the applicant being a Govt, entity are liable for the taxable rate of 18% w.e.f 01.01.2022. Further, the services rendered by the applicant do not fall under SI. Nos. 3 in column (3) - (iii), (vi) (ix) above, the rate of tax 12% is not applicable in this case and the proper entry to the services provided may be the entry at column (3) (xii), i.e, @ 18 % w.e.f 01.01.2022.
Issues Involved
1. Applicability of GST rate for works executed by the applicant from 01/01/2022 to 17/07/2022. 2. Classification of the applicant as a "Governmental Entity." 3. Interpretation of relevant GST notifications and circulars. Detailed Analysis 1. Applicability of GST Rate for Works Executed from 01/01/2022 to 17/07/2022 The applicant sought clarification on whether GST at 12% is applicable for works executed during the period from 01/01/2022 to 17/07/2022, as per the notification from the State Goods and Services Tax Department, Government of Kerala, vide Circular No. 01/2022 dated 19/01/2022. The ruling clarified that, effective from 01/01/2022, the benefit of the reduced tax rate of 12% on works contract services supplied to a Governmental Authority or a Government Entity was discontinued. Consequently, the applicable GST rate for the services provided by the applicant during this period is 18%. 2. Classification of the Applicant as a "Governmental Entity" The applicant, Kerala Land Development Corporation Limited (KLDC), is a fully owned Kerala Government undertaking under the administrative control of the Agriculture Department. The corporation was established with more than 90% participation by the Government, fulfilling the criteria under Notification No. 12/2017 C.T. (Rate) dated 28.6.2017, which defines a "Governmental Entity" as an authority or body set up by an Act of Parliament or State Legislature or established by any Government with 90% or more participation by way of equity or control to carry out functions entrusted by the Government. 3. Interpretation of Relevant GST Notifications and Circulars The ruling examined Circular No. 01/2022 dated 19/01/2022, which was based on amendments to Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, revised by Notification No. 22/2021-Central Tax (Rate) dated 31.12.2021. These amendments specified that, effective from 01/01/2022, the reduced tax rate of 12% for works contract services supplied to Governmental Authorities or Government Entities was discontinued, and the rate was revised to 18%. The relevant entries in the notification were amended to reflect that the reduced rate of 12% would no longer apply to services provided to Governmental Authorities or Government Entities, but only to services provided to the Central Government, State Government, Union Territory, or local authorities. Conclusion The ruling concluded that the applicant, being a Government Entity, is liable to pay GST at the rate of 18% for the works executed during the period from 01/01/2022 to 17/07/2022. The services rendered by the applicant do not fall under the specific entries that would qualify for the reduced rate of 12%, and therefore, the applicable rate is 18%. Ruling Question: Whether GST at 12% is applicable for the period from 01/01/2022 to 17/07/2022 for the works executed by the applicant as per notification from SGST Kerala vide Circular No. 01/2022, No. CT/3/2021-C1 dated 19/01/2022? Ruling: No. The applicant is liable to pay GST at 18% for the period from 01/01/2022 to 17/07/2022.
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