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TMI Blog2018 (12) TMI 591X X X X Extracts X X X X X X X X Extracts X X X X ..... een defined in GST Act, that as per the definition under the erstwhile Finance Act, 1994, i) All new constructions, ii) All types of additions and alterations to abandoned or damaged structures on land that are required to make them workable; iii) Erection, commissioning or installation of plant, machinery or equipment or structures, whether pre-fabricated or otherwise - As per para 1.3.1 of CPWD Manual, 2014, “original works” means (i) all new constructions, (ii) all types of additions, alterations and/ or special repairs to newly acquired assets, abandoned or damaged assets that are required to make them workable. (iii) major replacements or remodeling of a portion of an existing structure or installation or other works, which results in a genuine increase in the life and value of the property. Taking into consideration the nature of works contracts allotted to the applicant, it is found that the works to be undertaken by them can be considered as “original work”. Thus, the works undertaken by them are in the nature of original works. Whether they are fulfilling the conditions in respect of Government Entity as inserted vide Notification No. 31/ 2017 dated 13.10.2017? - Hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x rate of 12% (CGST 6% + SGST 6%) is applicable to the contract entered into by the Applicant with CIDCO, in pursuance of Notification No. 24/2017 - Central Tax (Rate) dated 21 September 2017 read with Notification No. 31/2017 - Central Tax (Rate) dated 13 October 2017? At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / MGST Act would be mentioned as being under the GST Act . 02. FACTS AND CONTENTION - AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus- Statement of relevant facts having a bearing on the question(s) raised 1. The Applicant, M/s. Leena Powertech Engineers Private Limited (hereinafter referred to as the Applicant or Company ) is a company engaged in the business of Electrification projects, undertaking deve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax (Rate) 13 th October 2017 1. Without prejudice to the facts of the case, it is submitted that CIDCO shall be covered under the definition of the term Government Entity. 2. The term Government Entity is defined in the Notification No. 31/2017 - Central Tax (Rate) dated 13 October 2017. The relevant portion of the definition is reproduced below: Government Entity means an authority or a board or any other body including a society, trust, corporation, V set up by an Act of Parliament or State Legislature; or i) 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. 3. CIDCO is - a. Established by Govt. of Maharashtra b. With 100% Participation by way of equity and control c. CIDCO is carrying out the function entrusted by Govt. of Maharashtra 4. The relevant extract of resolutions by the State Government of Maharashtra for establishing CIDCO is reproduced below: a. Govt. of Maharashtra Resolution dt. 18.3.1970, reproduced verbatim : Government has had under consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany will in due course be notified as New Town Development Authority under the Maharashtra Regional and Town Planning Act. The subsidiary company will work under the control and supervision of the State Government in the General Administration Department. By and order and in the name of the Governor of Maharashtra. b. Govt. of Maharashtra Notification dt. 20.3.1971, reproduced verbatim : URBAN DEVELOPMENT. PUBLIC HEALTH AND HOUSING DEPARTMENT Sachivalaya. Bombay, 20the March 1971 Maharashtra Regional Planning and Planning Act, 1966 No. RPB. 1171-18124-1-W- Whereas, the State Government is satisfied that it is expedient in public interest that the said area should be developed as a site for the proposed new town: Now, therefore, in exercise of the powers conferred by sub-section (1) of section 113 of the said Act, the Government of Maharashtra hereby designates the said area as the site for the proposed new town, which shall be known by the name of New Bombay . And, whereas, having regard to the complexity and magnitude of the work involved in developing the area comprised in the site of the new town aforesaid the time whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur Department No. IDL-5770/IND-l, dated 18th March, 1970, on behalf of the Government and to dispose of land to the extent appropriate. It should also rehabilitate the persons displace from the land acquired for the Project. 2) From the proceeds collected out of such disposals, the Corporation should recoup the expenditure it incurs on the items referred to in sub-para(1) above, inclusive of administrative expenses thereon, plus agency remuneration at Rs, 3.00 lacs, for the year ended 31st March, 1971 to be increased each year by ₹ 1.00 lacs, subject to a maximum of ₹ 5.00 lacs for any one year, before remitting the remained to the Government. 3) The expenditure incurred by the Government on the acquisition of such lands should be treated as Government s own capital outlay and debited to the appropriate head of account and such lands on acquisition shall vest in the Corporation establishing New Bombay. 4) The Corporation may make On Account Advance Payment to Government from the proceeds of land disposal to meet Government expenditure on capital outlayon account of payment of compensation for land acquisition for New Bombay. 5) Such On Account Adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... citizens of the proposed new city to live fuller and richer life, free of physical and social tensions commonly associated with urban living; e. To facilitate efficient and rational distribution of industries over the State, balancing development of urban centres in the hinterland; f. To provide training and all possible facilities to the existing local people in the project area, to enable them to adapt to the new urban setting and actively participate in the economic and social life of the new city. 7. It is evident from the above resolutions and the functioning of CIDCO that CIDCO is entirely owned and established by the State Government and performs the functions entrusted to it by the State Government. Accordingly, CIDCO is covered by the definition of Government Entity as per Notification No. 31/2017-Central (Rate) dated 13 October 2017. B. To Contract undertaken by the Applicant is eligible for 12% GST rate as per Notification No. 24/2017-Central Tax (Rate) dated 21 September 2017 read with Notification No. 31/2017 -Central Tax (Rate) dated 13 October 2017. 1. Without prejudice to the facts of the case, it is submitted that the contract undertaken by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Business or Profession 6. It is submitted that the original works established and constructed by the Applicant are meant predominantly for use other than Commerce, Industry, Business or Profession. 7. It is reiterated and emphasized that CIDCO is a Public Sector Undertaking incorporated as a Company to undertake functions entrusted by the State Government. Further, the basic function of CIDCO is to undertake town planning and development of areas so designated. 8. The supply of electricity to any human settlement township, city or district is a basic infrastructure essential for creation of such township. Given this such activity of establishing power supply networks by CIDCO is for creation of a new town for rehabilitation and resettlement of project affected people. 9. The Hon ble Income Tax Appellate Tribunal in case of ACIT vs. CIDCO (ITA No. 1234/Mum/2016] = 2018 (1) TMI 668 - ITAT MUMBAI has recently held that CIDCO is an agent of the State Government of Maharashtra and that the income earned by CIDCO belongs to the State and thus is not taxable. The relevant portion of the judgement is reproduced below: This observation read together with section 113(3A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Divisional Commissioner, Bombay Division, Bombay The Budget Branch, Industries Labour Department, Bombay The Director of Publicity, Bombay 42. We find that according to MR TP Act, 1966, the machinery sections, i.e. sections 113 113A talk of appointment of Development Authority and Local Authority and accordingly, through various Resolutions, in compliance of these sections, MR TP Act has appointed the assessee as the Development Authority for development to new townships and Local Authorities for streamlining the functions of already existing towns like Aurangabad, Nashik, Nagpur etc. This, itself shows that the assessee is acting totally on behalf of the Government. Another distinguishing feature that can be seen in that as soon as the Project is complete, the project gets handed back to the State, i.e. when there is a development project, as per phases, and in the case of local authority, as and when the authorizing committee is satisfied, the reins are transferred to the municipal boards, from whom, the project was taken over, as we have seen from Resolution no. 10375 dated 06/08/2010. 43. In tune with these observations, read with sections 113 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Applicant are meant predominantly for use other than commerce, industry, business or profession, insofar as the same are directed towards the residential locations of the respective nodes. 14. Accordingly, the applicant s interpretation and understanding of the impugned notifications and on the basis of the facts the applicant s response to the queries are as follows: Query 1. Whether CIDCO is covered under the definition of the term Government Entity as per Notification No. 31/2017 - Central Tax (Rate) dated 13 October 2017? Response Yes, CIDCO is covered by the definition of the term Government Entity as per Notification No. 31/2017 - Central Tax (Rate) dated 13 October 2017 Query 2. If CIDCO falls under the definition of Government Entity, Then Kindly also Clarify Whether the tax rate of 12% (CGST 6% + SGST 6%) is applicable to the contract entered into by the Applicant with CIDCO, in pursuance of Notification No. 24/2017 - Central Tax (Rate) dated 21 September 2017 read with Notification No. 31/2017 - Central Tax (Rate) dated 13 October 2017? Response Yes, the contracts undertaken by the Applicant shall be covered by the notificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, Navi Mumbai (Work Order No CIDCO/EE (Elect-AP)/ AP-001/2017/172 dtd.21.06.2017) for the project affected people of the Navi Mumbai International Airport Project. b. Development of power supply infrastructure distribution network including construction of 33KV substation equipment construction of 11/0.4 KV HT substation allied electrical works in Ulwe Node, Navi Mumbai (Phase -1) Priority - 11 (Work order No. CIDCO/EE(Elect-111419/2013/109 dated 11.01.2013. With effect from 22.08.2017, their services were covered by item (vi) attracting Central. Tax @ 9%. (iv) Notification No.11/2017-Central Tax (Rate) dated 28.06.2017 as amended vide Notification No.24/2017-Central Tax (Rate) dated reads as under: Sl.No. Chapter, Section or Heading Description of Service Rate (per cent.) Condition (1) (2) (3) (4) (5) 1 Chapter 99 All Services 2 Section 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tructure or any other original works pertaining to the Beneficiary led individual house construction / enhancement under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana; (e) a pollution control or effluent treatment plant, except located as a part of a factory; or (f) a structure meant for funeral, burial or cremation of deceased. 6 - (v) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied by way of construction, erection, commissioning, or installation of original works pertaining to,- (a) railways, excluding monorail and metro; (b) a single residential unit otherwise than as a part of a residential complex; (c) low-cost houses up to a carpet area of 60 square metres per house in a housing project approved by competent authority empowered under the Scheme of Affordable Housing in Partnership framed by the Ministry of Housing and Urban Poverty Alleviation, Government of India; (d) low cost houses up to a carpet area of 60 square metres per house in a housing project approved by the competent authority under- (1) the Afford ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) (2) (3) (4) (5) 1. C hapter 99 All Services 2. Section 5 Construction services 3. Heading 9954 (Construction Services) (i) Construction of a complex, building, civil structure or a port thereof, including a complex or building intended for sale to a buyer, wholly or partly; except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier. (Provisions of paragraph 2 of this notification shall apply for valuation of this service) 9 (ii) composite supply of works contract as defined in clause 119 of section 2 of Central Goods and Services Tax Act, 2017. 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 (v) composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied by way of construction, erection, commissioning, or installation of original works pertaining to, (a) railways, excluding monorail and metro; (b) a single residential unit otherwise than as a part of a residential complex; (c) low-cost houses up to carpet area of 60 square meters per house in a housing project approved by competent authority empowered under the Scheme of Affordable Housing in Partnership framed by the Ministry of Housing and Urban Poverty Alleviation, Government of India; (d) low cost houses up to a carpet area of 60 square meters per house in a housing project approved by the competent authority under- (1) the Affordable Housing in Partnership component of the Housing for All (Urban) Mission Pradhan Mantri Awas Yojana; (2) any housing scheme of a State Government; (e) post-harvest storage infrastructure for agricultural produce including a cold storage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 90 per cent. or more participation by way of equity or control, to carry out any function entrusted to a Municipality under article 243 W 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 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 (vii) The applicant has now claimed that with effect from 13.10.2017 their services are Covered by item (vi) in view of amendment to No.11/2017-Central Tax (Rate) dated attracting Central Tax @6% on the following grounds: (a) CIDCO is covered by definition of Government Entity as per Explanation (x) in para 4 of Notification No. No- 11/2017-Central Tax (Rate) dated 28.06.2017 as amended. (b) Their services are covere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clares the said subsidiary company to be the New Town Development Authority for the area comprised in the site of New Bombay. C. Govt. of Maharashtra Resolution dt. 24.1.1972: Government has decided to entrust to the City and Industrial Development Corporation of Maharashtra Limited, as New Town Development Authority, the task of development of the New City in Thana, Panvel and uran tahsils of Thana and Kolaba districts, and to acquire the privately-owned land in that area for that project. The question of financing the development work of City and Industrial Development Corporation of Maharashtra Limited has been under consideration for some time. Government is now pleased to issue the following instructions: 1) The Corporation should undertake all the development work, provide the social and physical infrastructure to attain the objectives laid down in the Government resolution, Industries and Labour Department No. IDL-5770/1ND-1, dated 18th March, 1970, on behalf of the Government and to dispose of land to the extent appropriate. It should also rehabilitate the persons displace from the land acquired for the Project. 2) From the proceeds collected out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Construction services 3. Section 5 Heading 9954 (Construction Services) (vi) Services provided to the Central Government, 6 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; (b) a structure meant predominantly for use as (i) an educational, (ii) a clinical, or(iii) an art or cultural establishment; or (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 Ill of the Central Goods and Services Tax Act, 2017 6 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 C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leted in Ulwe Node. As per Notification dated 20,03.1971 issued by Government of Maharashtra Ulwe is notified as a site for development. In this case also, the condition in Column 5 of the Table is fulfilled. (xiv) Therefore applicant is eligible for benefit of Sr. No. 3 of item no (vi)(a) of Notification No. 11/2017 Central Tax read as amended. It is also mentioned that with effect from 14.11.2017 only such activity that is composite supply of works contract as defined in clause 119 of Section 2 of the Central Goods and Service Tax Act, 2017 would be eligible for benefit of the Notification against aforesaid Sr. No. and item NO. in view Of Notification No. 46/2017 - Central Tax (Rate) dtd. 14.11.2017. 04. HEARING The case was taken up for Preliminary hearing on dt. 07.08.2018 when Sh. S. V. Apte Advocate along with Sh. Amit Tekchandani, C. M.D, and Sh. Ashish Singh Advocate appeared and made written and oral submissions for admission of application as per contentions in their ARA. Jurisdictional Officer, Sh. U. S. Rananaware, Suptt., CGST, Belapur appeared and made written submissions and stated that they do not have any objection with respect to admission of appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on territory, a local authority, a Governmental Authority or a Government Entity shall be substituted; B. in item (vi), in column (3), for the words a local authority or a Governmental authority the words a local authority, a Governmental Authority or a Government Entity shall be substituted; C. in items (iii) and (vi), in column (5), for the existing entry, the following entry shall be substituted, namely: - 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 Central Government, State Government, Union territory or local authority, as the case may be ; (iii) in paragraph 4, after clause (viii), the following clause shall be inserted, namely: - (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 Panchaya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt; or (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 Central Goods and Services Tax Act, 2017. 6 (vii) Construction services other than (i), (ii), (iii), (iv), (v) and (vi) above. 9 NOW With the amendment as brought out by Notification 31/2017 mentioned above, the relevant entry in the original Notification 11/2017 dated 28th June, 2017 reads as under:- Sl.No. Chapter, Section or Heading. Description of Service Rate (per cent.) Condition 1 2 3 4 5 1. Chapter 99 All Services 2. Section 5 Construction Services 3. Heading 9954 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hould have been procured by the said entity in relation to a (ix) Construction services other than Ii), (ii), (iii), (iv), (v), (vi), (vii)and (viii) above. 9 In view of the above factual position, we are required to ascertain whether CIDCO would be covered under the definition of Government Entity as given in Notification No. 31/2017 dated 13.10.2017 referred above. We find that the definition of Government Entity as given in this Notification is 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 control, to carry out a function entrusted by the Central Government, State Government, Union Territory or a local authority. From the detailed submissions in respect of the constitution and coming into existence of CIDCO as submitted by the applicant and also considered by the jurisdictional officer in his submission, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -Thana and trans-Harbour areas should be entrusted to the subsidiary company, which would act as an agent of Government for the development of the areas with a view to secure the above objectives. The subsidiary company will in due course be notified as New Town Development Authority under the Maharashtra Regional and Town Planning Act. The subsidiary company will work under the control and supervision of the State Government in the General Administration Department. (II) Thereafter we find that the Government of Maharashtra vide Notification dated 20.03.1971 and vide Resolution dated 24.01.1972 constituted CIDCO as a company fully controlled by the State Government of Maharashtra with 100% shareholding by the State Government by was of Equity and Control which would be clear from the Notification and Resolution as under:- Govt. of Maharashtra Notification dt. 20.3.1971. reproduced verbatim : URBAN DEVELOPMENT. PUBLIC HEALTH AND HOUSING DEPARTMENT Sachivalaya. Bombay, 20the March. 1971 Maharashtra Regional Planning and Town Planning Act, 1966 No. RPB. 1171-18124-1-W- Whereas, the State Government is satisfied that it is expedient in p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tricts, and to acquire the privately owned land in that area for that project. The question of financing the development work of City and Industrial Development Corporation of Maharashtra Limited has been under consideration for some time. Government is now pleased to issue the following instructions: 1) The Corporation should undertake all the development work, provide the social and physical infrastructure to attain the objectives laid down in the Government resolution, Industries and Labour Department No. IDL-5770/IND-I, dated 18th March, 1970, on behalf of the Government and to dispose of land to the extent appropriate. It should also rehabilitate the persons displace from the land acquired for the Project. 2) From the proceeds collected out of such disposals, the Corporation should recoup the expenditure it incurs on the items referred to in sub-para(1) above, inclusive of administrative expenses thereon, plus agency remuneration at ₹ 3.00 lacs, for the year ended 31st March, 1971 to be increased each year by ₹ 1.00 Iacs, subject to a maximum of ₹ 5.00 lacs for any one year, before remitting the remained to the Government. 3) The expenditure in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt predominantly for use other than for commerce, industry, or any other business or profession Further they are claiming that they are fulfilling this condition also which is as under:- 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 Central Government, State Government, Union territory or local authority, as the case may be From the detailed submissions made by the applicant as well as the jurisdictional officer we find that there is no doubt that CIDCO is a Government Entity. Now we examine their second claim if they are providing services by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintainance, renovation or alteration of any other original works, apart from a civil structure, meant predominantly for use other than for commerce, industry, or any other business or profession. With regard to the above we find that:- (a) applicant in their application for advance ruling has stated that the contracts undertaken by them are original works, that the term original works has not been defined in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olution dated 25.06.2014, the work of rehabilitation and resettlement with respect to Navi Mumbai International Airport has been given to M/s. CIDCO. As such condition in Column 5 of the Table is fulfilled as far as the first contract (work order) dated 21.06.2017 is concerned. As regards other contract (work order) dated 11.01.2013, the same is to be completed in Ulwe Node. As per Notification dated 20.03.1971 issued by Government of Maharashtra Ulwe is notified as a site for development. In this case also, the condition in Column 5 of the Table is fulfilled. (ii) Therefore applicant is eligible for benefit of Sr. No. 3 of item no (vi)(a) of Notification No. 11/2017 - Central Tax read as amended. We find that with effect from 14.11.2017 only such activity that is composite supply of works contract as defined in clause 119 of Section 2 of the Central Goods and Service Tax Act, 2017 would be eligible for benefit of the Notification against aforesaid Sr. No. and item No. in view of Notification No. 46/2017 - Central Tax (Rate) dtd. 14.11.2017. 05. In view of the extensive deliberations as held hereinabove, we pass an order as follows : ORDER (Under section 98 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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