Service provide to Police Housing Corporation, Goods and Services Tax - GST

[Rajesh Kumar]

Dear experts,

Please guide whether the WCS provided to the Haryana Police Housing Corporation Ltd is taxable @12% or 18%?

Posts / Replies

[Padmanathan Kollengode]

18% under Sl No.3 (xii) of Notification No.11/2017 - Central Tax (rate)

[Amit Agrawal]

Dear Querist,

What is the cause of your doubt/s?

[Rajesh Kumar]

Sir, is it @18% from July 2017?

It is a 100% state government department.

[Amit Agrawal]

'Haryana Police Housing Corporation Ltd' cannot be 'state government department'.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Rajesh Kumar]

Sir,

Haryana police Housing Corporation Ltd. (HPHC) was established on 29.12.1989 under Company’s Act, 1956. It is a State Government undertaking with 100% share holding subscribed by the State Government, Haryana.

Is it sufficient to charge @12% instead of 18% ?

[Amit Agrawal]

Thus, it is clear that 'Haryana Police Housing Corporation Ltd' is not cannot be 'state government'.

Many things are unclear, at-least to my mind.

First, kindly check definitions of 'governmental authority' & 'government entity' and second, check status of 'Haryana Police Housing Corporation Ltd' in this context and then, lastly, let me know which serial number of Notification No.11/2017 - Central Tax (rate) & for which period, you are talking about (for applying gst rate @ 12%)?

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Amit Agrawal]

(Re-posting after correcting typo errors)

Thus, it is clear that 'Haryana Police Housing Corporation Ltd' is not 'state government'.

But, so many other things are unclear, at-least to my mind.

First, kindly check definitions of 'governmental authority' & 'government entity' and second, check status of 'Haryana Police Housing Corporation Ltd' in this context & link them with WCS done by you / your client for said corporation and then, lastly, let me know which serial number of Notification No.11/2017 - Central Tax (rate) & for which period, you are talking about (for applying gst rate @ 12%)?

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[KASTURI SETHI]

When the word, 'corporation' is used it means out of status of 'fully Govt.' For example; FCI, PRTC, IOC etc. for all purposes.

[Shilpi Jain]

Also check what is the purpose of the buildings constructed? Is it for business / commerce - if not there could be a possibility to check for lower rate of tax.

However, as mentioned by the other experts, further facts required.

[Shilpi Jain]

However, now the rate of tax is 18% only for this service as the entries providing the lower rate of tax are removed.

[Rajesh Kumar]

Sir/ma’am

As It is a State Government undertaking with 100% share holding subscribed by the State Government, Haryana. So, 'Haryana Police Housing Corporation Ltd' is a state government entity.

All the buildings constructed are for the use of police official not for commercial or business activities.

Construction period is from Jan 2020 to Nov 2022.

Is GST rate 12% correct?

[Padmanathan Kollengode]

Pls see the definition of Government Authority and Government Entity

(ix) “Governmental Authority” means an authority or a board or any other body, -

(i) set up by an Act of Parliament or a State Legislature; or

(ii) established by any Government,

with 90per cent. or more participation by way of equity or control, to carry out any function entrusted to a Municipality under article 243W of the Constitution or to a Panchayat under article 243G of the Constitution.

(x) “Government Entity” means an authority or a board or any other body including a society, trust, corporation,

i) set up by an Act of Parliament or State Legislature; or

ii) established by any Government,

with 90 per cent. or more participation by way of equity or control, to carry out a function entrusted by the Central Government, State Government, Union Territory or a local authority under article 243G of the Constitution.

Pls note that 100% share holding by State Government is not the only criteria and such body have to carryout the functions entrusted under Article 243G and Article 243W of the Constitution.

[KASTURI SETHI]

I agree with Sh.Padamanathan Ji. There are so many strings attached to it to qualify as 'Government' .

I further add as under :-

'A corporation' can never be Government. Even if a corporation has 100% Govt. shares, it cannot be called a Central Govt .or State Govt. or department of Govt. A Corporation has entirely different identity.

[Amit Agrawal]

Dear Querist,

With regards to post by my learned colleague Shri Padnanatham Ji at serial no 12 above, my views are as under:

For Notification No.11/2017 - Central Tax (rate) (as inserted vide Notification No. 31/2017-Central Tax (Rate) dated 13.10.2017), “Government Entity” means an authority or a board or any other body including a society, trust, corporation,

i) set up by an Act of Parliament or State Legislature; or

ii) established by any Government,

with 90per cent. or more participation by way of equity or control, to carry out a function entrusted by the Central Government, State Government, Union Territory or a local authority.]

For falling under “Government Entity”, please note that such entity need not be formed to carryout ONLY the functions entrusted under Article 243G and Article 243W of the Constitution, but same could be to carry out ANY function entrusted by the Central Government, State Government, Union Territory or a local authority.

Depending about relevant facts (many of which is unclear, to me at-least & need deep analysis of many factual aspects), it is good possibility that applicable GST rate was 12% for the period till 31.12.2021 & 18% there-after on subject work / supply.

Tip: Please note changes brought vide NOTIFICATION NO. 22/2021-Central Tax (Rate) dated 31.12.2021 and analyse all factual aspects (covering both periods - prior to amendment & there-after in multiple entries of Notification No.11/2017 - Central Tax (rate)) and then, take a call.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.