Clarification regarding rate of tax applicable on construction services provided to a Government Entity, in relation to construction such as of a Ropeway on turnkey basis - GST - States - CIRCULAR No. 07/2021(STATE)

File No.REV03-12039(31)/53/2021-AC-GST-CCT Government of Andhra Pradesh Commercial Taxes Department Proceedings of the Chief Commissioner of State Tax, Andhra Pradesh CIRCULAR No. 07/2021(STATE) IN REFERENCE TO 152/08/2021(CENTRAL), 01/07/2021 Sub:- Clarification regarding rate of tax applicable on construction services provided to a Government Entity, in relation to construction such as of a Ropeway on turnkey basis-reg. Ref:- From the GOI, MOF, DOR, CBIC, Circular No.152/08/2021-GST, dated 17-06-2021. Reference has been received by the Board for a clarification whether services supplied to a Government Entity by way of construction such as of a ropeway are eligible for concessional rate of 12% GST under entry No. 3 (vi) of the notification issued in the G.O.Ms.No.259, Revenue (Commercial Taxes-II) Department, dated 29-6-2017 (Notification No.11/2017- CT (R) dt. 28.06.2017). On the recommendation of the GST Council, this issue is clarified as below. 2. According to entry No.3 (vi) of G.O.Ms.No.259, Revenue (Commercial Taxes-II) Department, dated 29-6-2017 (notification No.11/2017-CT (R) dated 28.06.2017), GST rate of 12% is applicable, inter alia, on- (vi) Composite supply of works contract as defined in clause (119) of section 2 of the Andhra Pradesh Goods and Services Tax Act, 2017, (other than that covered by items (i), (ia), (ib), (ic), (id),(ie) and (if) above) provided to the Central Government, State Government, Union Territory, a local authority a Governmental Authority or a Government Entity, by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of (a) a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession; . 2.1 Thus, said entry No 3 (vi) does not apply to any works contract that is meant for the purposes of commerce, industry, business of profession, even if such service is provided to the Central Government, State Government, Union Territory, a local authority a Governmental Authority or a Government Entity. The doubt seems to have arisen in the instant cases as Explanation to the said entry states, the term business shall not include any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities. However, this explanation does not apply to Governmental Authority or Government Entity, as defined in clause (ix) and (x) of the explanation to said notification. Further, civil constructions, such as rope way for tourism development shall not be covered by said entry 3(vi) not being a structure that is meant predominantly for purposes other than business. While road, bridge, terminal, or railways are covered by entry No. 3(iv) and 3(v) of said notification, structures like ropeway are not covered by these entries too. Therefore, works contract service provided by way of construction such as of rope way shall fall under entry at sl.No.3 (xii) of notification issued in the G.O.Ms.No.259, Revenue (Commercial Taxes-II) Department, dated 29-6-2017 (notification 11/2017-(CTR) and attract GST at the rate of 18%. 3. Difficulty if any, may be brought to the notice of the Chief Commissioner. Peeyush Kumar Commissioner