2022 (4) TMI 1341 - AAR - GST

Classification of composite supply - works contract service by way of construction of Construction of New Adarsh Nivashi Shala (Kumar) / School Hostel (324 Bed ) / Staff Quarters and Kumar Chhatralay for the Road and Building Department in the Government of Gujarat - merits classification at Serial Number 3(vi)(a) and (b) of N/N. 11/2017 Central Tax(Rate) dated 28.06.2017, as amended from time to time and last amended by N/N. 21/2012-Central Tax(Rate) dated 31.12.2021 w.e.f. 01.01.2022 or not - HELD THAT - The subject contract is for the construction of immovable property wherein transfer of property in goods is involved in the execution of subject contract. The subject supply is Works Contract Service. The Supply comprises supply of school building, school hostel, college hostel, Principal s bungalow and staff quarters. The subject supply is a composite supply of works contract service. Thus, the service recipient is Government of Gujarat (GoG). Explanation to Serial No 3(vi) of said NT, 'business' shall not include any activity or transaction undertaken by the State Government in which they are engaged as public authorities. Thereby, this activity undertaken by GoG out of the purview of business, as described at sr no 3(vi)(a) of Said NT. Also, School building is a structure meant for use as an educational establishment as described at entry at Sr no 3(vi)(b)(i) of said NT; and supply of Staff Quarters is covered at 3(vi)(c) of said NT. It is noted that Revenue submits that said civil structure may be used for commerce or business. It is held that a School building will be used by State Government for education and cannot be considered a commercial building. Further, with the explanation of term business incorporated into Sr no 3(vi) of said NT as discussed and nothing of contrary vide a specific intelligence report submitted by Revenue that the structure supplied is for business/ commerce purpose, there are no merit in Revenue s submission. The subject Supply merits entry at Sr. No. 3(vi) of said NT.

Summary

Issues Involved:
Classification of works contract service for construction of educational establishment under Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017.

Detailed Analysis:
1. Applicability of Works Contract Definition:
The applicant contends that the construction contract for New Adarsh Nivashi Shala, School Hostel, Staff Quarters, and Kumar Chhatralay falls under the definition of a works contract as per Section 2(119) of the CGST Act, 2017 involving both goods and labor.

2. Tax Liability and Notifications:
The applicant argues that CGST and SGST are applicable on the intra-state supply of service as per Sections 9 of the CGST Act, 2017 and SGST Act, 2017. They rely on Notification No. 11/2017-Central Tax (Rate) for specified rates.

3. Interpretation of Notification:
The applicant seeks clarification on the classification of the works contract service under Entry 3(vi) of the said Notification, which pertains to composite supply of works contracts for educational establishments and civil structures for non-commercial use.

4. Advance Ruling Sought:
The main issue raised is whether the construction activity qualifies for classification under Serial Number 3(vi)(a) and (b) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended.

5. Revenue Submission and Findings:
The Revenue points out that the civil structure must be predominantly for non-commercial use as per the Notification. The Authority finds that the subject supply is a composite works contract service for the Government of Gujarat, predominantly for educational purposes, thus meeting the criteria for classification under the said Notification.

6. Ruling and Conclusion:
After considering all submissions, the Authority rules that the construction activity falls under Entry 3(vi) of the Notification, confirming the classification of the works contract service for the educational establishment under the specified rates of CGST and SGST.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved, interpretations made, and the final ruling given by the Authority for Advance Ruling in Gujarat.