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2024 (6) TMI 826 - AAR - GSTIssues Involved: 1. Applicability of Reverse Charge Mechanism (RCM) and tax payment basis. 2. Entitlement to Input Tax Credit (ITC). Summary: Issue 1: Applicability of RCM and Tax Payment Basis The applicant, Uttarakhand Peyjal Sansadhan Vikas Evam Nirman Nigam, sought an advance ruling on whether RCM shall be applicable and tax be paid by THDC on Reverse Charge Basis or this contract will fall under forward charge and tax be paid by THDC to UK Peyjal on forward basis. The authority examined whether the applicant qualifies as a "Local Authority" u/s 2(69) of the CGST Act, 2017. The authority concluded that the applicant does not satisfy the conditions to be considered a "Local Authority" as it lacks autonomy and control over a municipal or local fund. Consequently, the provisions of Notification No. 13/2017-Central Tax (Rate) dated 28.06.2017, which mandates RCM for services supplied by the Central Government, State Government, Union territory, or local authority to a business entity, do not apply. Therefore, the tax is not payable on a reverse charge basis. Issue 2: Entitlement to ITC The applicant also sought a ruling on whether THDC or UK Peyjal is entitled to avail ITC on the GST deposited. The authority held that the applicant is a "Governmental Authority" and not a "Local Authority." As per SI. No. 4 & 5 of Notification No. 12/2017-Central Tax (Rate), dated 28-6-2017, services by a governmental authority in relation to any function entrusted to a municipality under article 243W or a Panchayat under article 243G of the Constitution are exempt from GST. Since the construction of the overhead water tank is an exempt service, the question of claiming ITC does not arise. Ruling: 1. M/s Uttarakhand Peyjal Sansadhan Vikas Evam Nirman Nigam does not qualify as a "Local Authority," and hence, RCM is not applicable as per Notification No. 13/2017-Central Tax (Rate) dated 28.06.2017. 2. Neither THDC nor UK Peyjal is entitled to avail ITC on the GST deposited, as the service provided is exempt from GST.
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