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2021 (8) TMI 531 - AAR - GSTComposite supply of works contract - taxable at the rate of 12% as prescribed under entry 3(vi)(a) of Notification No. 11/2017 - Central Tax (Rate), dated 28.06.2017? - applicable GST Rate and SAC/HSN - HELD THAT - Greater Visakhapatnam Smart City Corporation Limited (GVSCCL) is a Special Purpose Vehicle (SPV) created by the Government of Andhra Pradesh vide G.O.MS.No.43, Municipal Administration Urban Development (UBS) Department, Government of A.P. dated 17.02.2016. GVSCCL is a limited company incorporated under the Companies Act, 2013 in which the Andhra Pradesh State Government and the Greater Visakhapatnam Municipal Corporation are the promoters having 50 50 equity share holding, which substantiates more than 90% of participation of the Government. With reference to the 'control' wielded by the shareholders, all the directors of the board are public authorities. Initially the board was constituted with the Principal Secretary for Municipal Administration and Urban Development, Govt, of A.P., (under promoter category) as chairman. The SPV is owned by the Government of A.P. And GVMC ON 50 50 ratio and is governed by a Board of Directors answerable to the Government of A.P., Government of India and GVMC. The Government of A.P. and GVMC are the shareholders in the GVSCCL - the GVSCCL rightly fits into the definition of the 'Government Entity' as per the said notification. The functions carried out by the said GVSCCL are the functions which were entrusted by the Central Government, State Government and Local Authority i.e. of Municipal Administration. The service provided by the applicant is Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, provided to a Government Entity by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession. The same is classifiable under the Heading 9954 Entry at Serial No. 3(vi) (a) of the Notification No.il/2017 Central Tax (Rate) dated 28.06.2017 as amended from time to time and liable to tax @12%.
Issues Involved:
1. Whether the services provided by the applicant are a composite supply of works contract as per clause (30) and (119) of section 2 of the CGST Act, 2017. 2. Whether the same would be taxable at the rate of 12% as prescribed under entry 3(vi)(a) of Notification No. 11/2017 - Central Tax (Rate), dated 28.06.2017. 3. What is the applicable GST Rate and SAC/HSN if it is not covered by entry 3(vi)(a) of Notification No.11/2017 - Central Tax (Rate), dated 28.06.2017. Detailed Analysis: 1. Composite Supply of Works Contract: The applicant, engaged in the construction business, entered into a contract with Greater Visakhapatnam Smart City Corporation Limited (GVSCCL) for beautification and development projects. The applicant contended that their services constitute a composite supply of works contract as defined under clause (30) and (119) of section 2 of the CGST Act, 2017. The agreement includes construction, development, and maintenance of the project, which involves various activities such as dismantling, excavation, installation of materials, and landscaping. The definition of "works contract" under Section 2(119) includes services related to immovable property, and Schedule II of the CGST Act classifies such composite supplies as services. The Authority concluded that the services provided by the applicant fall under the definition of a composite supply of works contract. 2. Taxability at 12%: The applicant argued that their services should be taxed at a concessional rate of 12% under entry 3(vi)(a) of Notification No. 11/2017 - Central Tax (Rate). This entry specifies that works contract services provided to the Central Government, State Government, Union Territory, Local Authority, Governmental Authority, or Government Entity are taxable at 12%, provided the services are predominantly for non-commercial use. The applicant demonstrated that GVSCCL is a Government Entity as defined under the notification, with more than 90% government participation and control. The functions of GVSCCL align with municipal responsibilities under Article 243W of the Constitution, indicating that the services are for public, non-commercial use. The Authority agreed with the applicant's interpretation and ruled that the services are taxable at 12%. 3. Applicable GST Rate and SAC/HSN: Given the affirmative answers to the first two questions, the third question regarding the applicable GST rate and SAC/HSN if the services are not covered by entry 3(vi)(a) became irrelevant. Ruling: 1. The services provided by the applicant are a composite supply of works contract as per clause (30) and (119) of Section 2 of the CGST Act, 2017. 2. The services are taxable at the rate of 12% as prescribed under entry 3(vi)(a) of Notification No. 11/2017 - Central Tax (Rate), dated 28.06.2017. 3. The third question was deemed irrelevant as the services were covered by entry 3(vi)(a).
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