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TMI Blog2018 (11) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... ss to say that in the given circumstances M/s MPPGCL qualifies to be called and termed as a Government Entity for the purpose of GST law, as it fulfils the necessary and sufficient conditions laid down under notification. Applicable Rate of GST - benefit of concessional rate of GST - Held that:- The civil construction of residential quarters is neither the primary work entrusted to MPPGCL nor it has any bearing on the work i.e. power generation by any means. Accordingly, we fail to understand as to why the benefit of concessional rate @12% GST should be available to this particular works contract awarded to the Applicant? The intention of the legislature has been to concessional rate to such work which has been entrusted to a government entity for public interest in general. Any work having direct involvement in the entrusted work i.e. power generation would merit exemption envisaged under Sr.No.3(vi)(c) of the Notification No.11/2017-CT(Rate) under CGST Act and corresponding notification under MPGST Act 2017, but extrapolating and extending this concessional rate to any or all activities of MPPGCL will not only be unwarranted but also defeat the very purpose of concessional rate. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be necessary for completing this package on turnkey basis. 1.4. That, during the course of carrying out the construction work, the applicant company raised Running Bills (RA bills) for the portion of work completed at a point of time. To MPPGCL by charging CGST and SGST at the rate of 9% each, in view of Notification no. 11/2017Central Tax (rate) dated 28.06.2017 Chapter 99 Section 5 Heading 9954- entry 3(ii) S.No. Chapter, Section or Heading Description of Service Rate (per cent.) Condition 1 Chapter 99 All Services - 2 Section 5 Construction Services - 3 Heading 9954 (Construction services) (ii) composite supply of works contract as defined in clause 119 of section 2 of Central Goods and Services Tax Act, 2017. 9 - 1.5. Whereas, on the other hand, the service recipient, MPPGCL is of the opinion that in the work under reference, the applicable rate of GST should be 12%(6+6), as against 18(9+9)% as claimed by the applicant company (service provider) in their bill. For this belief, MPPGCL finds its base from Notification no. 11/2017Central Tax (rate) dated 28.06.2017 Chapter 99 Section 5 Heading 9954- entry 3(vi)(c), by treating itself as a govern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ach. i. The issued, subscribed and paid up capital is ₹ 5325,54,68,800 (Rs. Five Thousand Three Hundred Twenty Five Crores Fifty Four Lacs Sixty Eight Thousand Eight Hundred only) divided into 5,3255,4,688 shares of ₹ 100 each. j. The Govt. of MP vide Gazett Notification (Extraordinary) No. 226 notified order no. 3679/ FRS/ 18/13/2002 Dtd. 31-05-2005 to give effect to the reorganization of the Madhya Pradesh State Electricity Board. The Para2(a) of the said order is reproduced below : k. "With effect from 01.06.2005 (the effective date) the function of Generation of electricity as specified in schedule A to the Transfer Scheme Rules, 2003, shall be conducted and shall be carried on by Madhya Pradesh Power Generating Company Limited as its own business and not as an agent of or on behalf of the Madhya Pradesh State Electricity Board" l. The opening balance sheet of Madhya Pradesh Power Generating Company Limited as on 31.05.2005 has also been notified m. Accordingly, the Company has started functioning independently, from 01-06-2005 n. The Corporate Identity Number(CIN) of MPPGCL is U40109MP2001SGC014882 1.8. That, as per explanation to the said Notification no. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es at 12%, on fulfilment of the following condition: "Composite supply of works contract as defined in clause(119) of section 2 of the CGST Act, 2017 provided to the Central government, State government; or a local authority or government authority or a government entity by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation or alteration of- (a) to (b) ** ** ** (c) A residential complex predominantly meant for self use or the use of their employees or other persons specified in paragraph 3 of the schedule III of the CGST Act, 2017, Provided that where the services are supplied to a government entity, they should have been procured by the said entity in relation to a work entrusted to it by the CG, SG or the Union Territory or local authority, as the case may be." 1.13 That, in view of the above facts and circumstances, even if we consider MPPGCL to be a "Government Entity", then also the moot question remains as to whether the construction work of 599 residential quarters as allotted to the applicant company by MPPGCL is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be a 'Government Entity' for the purpose of CGST Act 2017. However, in respect of the service impugned in the Application, it has been opined that '.... Composite work contract service of 599 residential quarters proposed to be provided by the applicant to M/s.MPPCGL appears taxable under Heading 9954 at the rate of 9% CGST and 9% SGST for intra state supply and 18% IGST for inter state supply. The concessional Rate of 6% CGST provided in Serial Number 3(vi)(c) of Notification no.11/2017-CT (R) does not appear to be applicable in this case as the construction of residential quarters does not appear to be a service supplied to a Government entity, which have been procured by the said entity in relation to a work entrusted to it by the Central Government, State Government, UT or local authority as the case may be (which is a condition for concessional rate of 6%). 4. RECORD OF PERSONAL HEARING: 4.1. Shri Anil Kumar Gupta, C.A. Authorised Representative, appeared on behalf of the applicant for Personal Hearing on 11.10.2018 and he reiterated the submissions already made in the application. He urged for an early ruling in the matter. 5. DISCUSSIONS AND FINDINGS: 5.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pradesh. Though we do not have details of work entrusted by the State Government to MPPGCL, on the basis of facts brought on record through the present application, we safely conclude that the essential and sole work entrusted to MPPGCL by the Government of Madhya Pradesh is of electricity (power) generation. M/s.MPPGCL has awarded a works contract for construction of 599 residential quarters at Shri Singaji Thermal Power Project Stage-ll, Near Village Dongalia Distt Khandwa, to the Applicant. However, the civil construction of residential quarters is neither the primary work entrusted to MPPGCL nor it has any bearing on the work i.e. power generation by any means. Accordingly, we fail to understand as to why the benefit of concessional rate @12% GST should be available to this particular works contract awarded to the Applicant? The intention of the legislature has been to concessional rate to such work which has been entrusted to a government entity for public interest in general. Any work having direct involvement in the entrusted work i.e. power generation would merit exemption envisaged under Sr.No.3(vi)(c) of the Notification No.11/2017-CT(Rate) under CGST Act and correspondin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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