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TMI Blog2018 (11) TMI 1265X X X X Extracts X X X X X X X X Extracts X X X X ..... and applicability of GST on reimbursement lost its relevancy. Ruling:- No GST is applicable on the activity of the applicant since the same falls under exempted services in terms of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 (as amended time to time). On the issues of time of supply and applicability of GST on reimbursement, no provisions of GST is applicable on said issues as supply of service in question falls under exempted services. - AAR Ruling No. 10/2018-19 in Application No. 11/2018-19 - - - Dated:- 22-10-2018 - SHRI VIPIN CHANDRA AND SHRI AMIT GUPTA MEMBER Present for the Applicant: Shri N.K. Gupta, Senior Manager Shri J.C. Pant, Manager (Law) Present for the Concerned Officer: None RULING 1. This is an application under Sub-Section (1) of Section 97 of the CGST/SGST Act, 2017 (herein after referred to as Act) and the rules made thereunder filed by M/s. NHPC, Admin Building, Tanakpur Power Station, Banbasa, Uttrakhand seeking an advance ruling on following issues: (a) Whether they are required to pay GST under reverse charge in terms of Notification No. 13/2017 dated 28.06.2017 while making payment to PWD, Uttrakhand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ahakali Treaty signed between India Nepal. M/s. NHPC (implementing agency) in consultation with State Government of Uttarakhand will submit the road aligment and prepare project report. The said work has been entrusted by MEA to NHPC and PWD, Uttarakhand and the funding for the said project will be done by MEA [rom its own budget under the head Aid to Nepal . Initially NHPC can spend the money, if required, subsequently the same can be recouped from the budget of MEA to NHPC directly. Budget releases will be made by MEA to NHPC which is executing the project as a turnkey agency of MEA based on the recommendation of the Ministry of Power. 7. In the present case we are restricting our conclusion to the facts and circumstances which was filed for our consideration in the application. Now we proceed by taking the issue one by one: (A) Whether they are required to pay GST under reverse charge in terms of Notification No. 13/2017 dated 28.06.2017 while making payment to PWD, Uttarakhand for construction of road. In the instant case the work allotted to the applicant is related to construction pf road which involves both supply of goods as well as supply of services. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supply of service by a Government Entity to Central Government, State Government, Union territory, local authority or any person specified by Central Government, State Government, Union territory or local authority against consideration received from Central Government, State Government, Union territory or local authority, in the form of grants. Nil Nil ; We also find that that Government Entity has been defined in the said amended notification and the same read as under: 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 carry out a function entrusted by the Central Government, State Government, Union Territory or a local authority. From the aforesaid definition we observe that condition of 90% 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 is relatable to only sub-clause (ii) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Government by way of 90% or more equity or control. The definition does not contemplate continuous fulfillment of such requirement post establishment of the entity. Therefore the intention of the above amended notification is to enlarge the scope of the definition to cover Government Companies incorporated under the Companies Act also within the ambit of the definition of Government entity . Thus, if the criterion is fulfilled, at the time of establishment by way of 90% or more Government participation in the equity or by way of control, the entity would be considered as governmental entity , within the meaning assigned under the said amended notification. Accordingly we observe the M/s. NHPC Ltd falls under the definition of Government entity in as much as at the time of establishment of the company the Hon ble President of India and its nominees hold 100% equity shares of the company. There can be no government entity if the very essential ingredients for being recognized as a government entity gets lost over a period of time and the control or equity by way of 90% or more does not vest with the Government. We observe that a Company or a Society or a trust in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e gone through the recommendations made on GST Rate changes on services by the 25 th GST Council Meeting wherein it was decided as under: To reduce GST rate (from 18% to 12%) on the Works Contract Services (WCS) provided by sub-contractor to the main contractor providing WCS to Central Government, State Government, Union territory, a local authority, a. Governmental Authority or a Government Entity , which attract GST of 12%. Likewise, WCS attracting 5% GST, their sub-contractor would also be liable @ 5% We are of the view that the above recommendations makes it clear that if GST rate on the work contract is 12% or 5% then sub-contractor is also liable to discharge his GST liability @ 12% or 5% as the case may be. Similarly if GST rate on the said work contract is exempted or 0%, then supply of service in the form of work contract by the sub-contractor will also come in the purview of exempted or 0%. Thus we are of the firm view that if the principal contractor is providing an exempt works contract service to Government and in such case if works contract is partially or wholly sub-contracted then the sub-contractor would also be exempt from payment of GST. In support of o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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