2022 (9) TMI 781 - AAR - GST

Classification of goods - rate of GST - TS Government, HMWSSB work contracts including material services and services only - Government Authority and Government entity or not - pure services or not - HELD THAT - The entry S.No 3(vi) of Notification No. 11/2017 covers the services i.e., works contract provided to Governmental Authority upto 31.12.2021. The rate of tax applicable to this service is 6% CGST SGST each - From 01.01.2022, Governmental Authority is excluded from S.No 3(vi) of Notification No. 11/2017 vide Notification No. 15/2021 dt. 18.11.2021. Therefore the work contract provided to Governmental Authority or a Government Entity from 01.01.2022 is 9% CGST SGST each as covered under Entry S.No. 3(xii). Thus, pure services provided by the applicant to HMWSSB are exempt.

Summary

Issues: Determination of GST rate of tax on TS Government, HMWSSB work contracts including material & services and services only.

Analysis:

1. Admission of Application: The applicant, M/s. Power Solutions, filed an application under Section 97(1) of TGST Act, 2017 seeking clarification on the GST rate applicable to works executed for Hyderabad Metropolitan Water Supply and Sewerage Board (HMWSSB). The application fee was duly paid, and no objection was raised by the jurisdictional officer, leading to the admission of the application.

2. Facts of the Case: M/s. Power Solutions is involved in executing works for HMWSSB and sought clarification on the tax rate applicable to such works through the advance ruling process.

3. Legal Provisions: The discussion delved into the definitions of 'Governmental Authority' and 'Government Entity' as per relevant notifications. It was established that HMWSSB qualifies as a governmental authority based on these definitions.

4. Applicable Notification: The contracts executed by the applicant were found to fall under a specific entry of Notification No. 11/2017, which pertains to composite supply of works contract provided to governmental authorities. Initially taxable at 6% CGST & SGST each, this entry was amended in November 2021, resulting in a revised tax rate of 9% CGST & SGST each from January 2022 for works executed for governmental entities.

5. Exemption for Pure Services: Pure services provided to governmental authorities are exempt from tax under a separate entry of Notification No. 12/2017. This exemption applies to services not involving any material and is applicable to the services provided by the applicant to HMWSSB.

6. Ruling: The ruling clarified that for works contract including material & services, the tax rate was 6% CGST & 6% SGST until 31st December 2021, and increased to 9% CGST & 9% SGST from 1st January 2022. Additionally, pure services not involving any material were deemed exempt from tax, as discussed in the legal provisions.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the legal reasoning behind the ruling provided by the Authority for Advance Ruling, Telangana.