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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 ..... ral 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 development of power supply infrastructure with various Government Entities. 2. City and Industrial Development Corporation of Maharashtra Limited ('CIDCO'), a 100% Governme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 the development of the trans-Thana and trans-Harbour areas in uran, Panvel and Thana Tehsils as a new township or new Metro centre with a view to decongesting industrial and other concentrations in Bombay and with a view generally t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 which may be required for setting up new machinery for undertaking and completing such work of development and the comparative speed with which such work can be undertaken and completed in the public interest, if the work is done through the agency of a corporation or a company owned or controll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Rs. 1.00 lacs, subject to a maximum of Rs. 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 Advance Payment" made by the Corporation should be adjusted in due course. This Resolution issues with concurrence of the Finance Department vide its unofficial reference No.; 145/72/F-12 dated 24th January, 1972. 5. Further, the Company is fully controlled by the State Government of Maharashtra with 100% shareholding by the State Government by way of equit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 applicant for CIDCO is eligible for 12% GST (CGST 6% + SGST 6%). 2. The relevant extract of the notification no. 31/2017 is reproduced below: Particulars Rate of Tax Conditions vi) Services provided to the Central Government, State Government, Union Territory, a local authority or a governmental authority 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 comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) of MR & TP Act, 1966, shall emerge that the activity so performed by the assessee is nothing but an act of State without any profit or commercial motive attached with it. The only clause left for our consideration then would be clause (3), which shall come into play once clause (2) is disbanded and as soon as it become disbanded, clause (3) come to life, which operates only if, "Parliament may by Law declare to be incidental to the ordinary functions of Government". Here, in the instant case, we have to read "Parliament" as "State Government" because in the instant case, it is the State Government which has authorized the assessee to perform the development projects at Navi Mumbai, Vasai, Virar, Waluj and such other places. 40. We cannot agree with the argument of the DR that there is no document which has drawn out the Agent-Principal relationship, because the very first Resolution dated 18th March, 1970 mention in para no. 2 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 & 113A of MR&TP Act along with Articles 289(1) & 289(3) and holding that the assessee corporation is not doing any trade activity on its own accord, we hold, relying on the decision of the Hon'ble Bombay High Court in the assessee's own case, in the Writ Petition, following the decision Percival case (2009 (11) TMI 889 - BOMBAY HIGH COURT), wherein it has been held, that CIDCO, the assessee herein, is an agent of the State Government of Maharashtra. We, therefore, respectfully follow the Hon'ble jurisdictional High Court of Bombay, as held in the case of Percival (2009 (11) TMI 889 - BOMBAY HIGH COURT), and hold, the assessee to be the "agent" of the State Government of Maharashtra, read with the entire overwhelming documents, suggesting that there is no income to the assessee as such, and whatever is, generated, it gets deposited in the Consolidated Fund of the State. 10. It is evident from the above that CIDCO is a non-commercial entity and thus the original works constr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification No. 31/2017 - Central Tax (Rate) dated 13 October 2017? Response Yes, the contracts undertaken by the Applicant shall be covered by the notification no. 31/2017 for reasons elaborated above. 03. CONTENTION - AS PER THE CONCERNED OFFICER The submission, as reproduced verbatim, could be Seen thus- As required the details with respect to applicant M/s. Leena Powertech Engineers Pvt. Ltd. (the appellant for short) and comments on the application filed by them for advance ruling are submitted as under: (a) Classification of Service/Services as applicable. i. Works contract service. ii. Election Commissioning and Installation Service. iii. Rent a Cab service (Under RCM) iv. Security / detective agency service (Under RCM) v. Legal Consultancy Service (Under RCM) vi. Manpower Supply Agency (Under RCM) (b) Rate/ rates of Service Tax as applicable to Services provided i) 15% after abatement as per law (on above services except Sr. no. ii) 15% on Sr. no. li above, (c) Details of benefits of notification of Central Excise if any availed. i. 30/ 2012 - Reverse Charge Mechanism ii. 26/ 2012 - Abatement iii. 25/2012 - Mega Exemption. iv. 24/2012 Rule 2 A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tire 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 - (iii) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied to the Governmental Authority or a Government Entity by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of, (a) a historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under the Ancient Monuments and Archaeological Sites and Remains Act, 1958 (24 of 1958); (b) canal, dam or other irrigation works; (c) pipeline, conduit or plant for (i) water supply (ii) water treatment, or (iii) sewerage treatment or disposal. 6 - (iv) Composite supply of works contract as defined in clause (119) of secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vernment, State Government, Union Territory, a local authority or a governmental authority 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 IIII of the Central Goods and Services Tax Act, 2017 (vii) Construction services other than (i), (ii), (iii), (iv), (v) and (vi) above. 6 (v) Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 was further amended vide Notification No. 31/2017-Central Tax (Rate) dated 13.10.2017: (a) to insert "Government Entity" in items (iii) & (vi) (b) to insert condition in column No. 5 in items (iii) & (vi) (c) to substitute item No. (vii) (d) to insert Explanation (ix) & (x) in para 4 (vi) Notification No.11/2017-Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rks contract as 6 defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of; (a) a rood, bridge, tunnel, or terminal for road transportation for use by general public; (b) a civil structure or any other original works pertaining to a scheme under Jawaharlal Nehru National Urban Renewal Mission or Rajiv Awaas Yojana; (c) a civil structure or any Other original works pertaining to the "in-situ rehabilitation of existing slum dwellers using land as a resource through private articipation" under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana, only for existing slum dwellers; (d) a civil structure 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mposite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, involving predominantly earth work (that is, constituting more than 75 per cent of the value of the work contract) provided to the Central Government, State Government, Union territory, local authority; a Governmental Authority or a Government Entity. 2.5 Provided that where the services are supplied to a Government Entity, they should have been procured by the said entity in relation to a (ix) Construction services other than (i), (ii), (iii), (iv), (v), (vi), (vii)and (viii) above, 9 Explanation (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 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 Parli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tification dt 20.3.1971 : And whereas, the City and Industrial Development Corporation of Maharashtra Limited, registered under the Companies Act, 1956 (1 of 1956), a subsidiary company of the State Industrial and Investment Corporation of Maharashtra, a company owned and controlled by the State is at present equipped with the machinery for undertaking and completing the work involved speedily in developing any area as a new town. Now, therefore in exercise of the potter conferred by the sub-section (3A) of section 113 of Maharashtra Regional and Town Planning Act, 1966 (Mah. XXXVII of 1966), the Government of Maharashtra hereby declares 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 In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as amended by Notification No. 24/2017 - Central Tax (Rate) attracting Central Tax @6% as below: 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. 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 2106.2017 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. (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 writ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tral Government, State Government, Union 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 art ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 (Construction services) (i) ............................... 9 (ii) .............................. 9 (iii) .............................. 6 Provided ... ... ... (iv) .............................. 6 (v) .............................. 6 (vi) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, provided to the Central Government, State Government, Union Territory, a local author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nto existence of CIDCO as submitted by the applicant and also considered by the jurisdictional officer in his submission, we find as under:- (I) Govt. of Maharashtra Resolution dt. 18.3.1970 as reproduced in Applicant's submissions above proposed for constitution of New Company as under:- 'Government has had under consideration the development of the trans-Thana and trans-Harbour areas in uran, Panvel and Thana Tehsils as a new township or new Metro centre with a view to decongesting industrial and other concentrations in Bombay and With a view generally to resolve the problems of urban congestion in Bombay City. The development of these areas will also have to be integrated with the development of an industrial base in Maharashtra for exporting industries. With the growing support that the Central Government is giving to export oriented industries, the contemplated new town development in the above area will not only provide relief to Bombay City but will also accelerate the promotion of industries in the State and open out and speed up industrial development of the Konkan Region. Decongestion of industrial and office concentration in Bombay has now become an urgent problem and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eas, 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 which may be required for setting up new machinery for undertaking and completing such work of development and the comparative speed with which such work can be undertaken and completed in the public interest, if the work is done through the agency of a corporation or a company owned or controlled by the State or a subsidiary company thereof; the State Government is of opinion that such work of development of the area comprised in the site of New Bombay should be entrusted to subsidiary company mentioned hereinafter: And whereas, the City and Industrial Development Corporation of Maharashtra Limited, registered under the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Government on the acquisition of such lands should be treated as Governments's own capital outlay and debited to the appropriate head of account and such lands on acquisition shall vest in the Corporation eastablishing 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 Advance Payment" made by the Corporation should be adjusted in due course. This Resolution issues with concurrence of the Finance Department vide its unofficial reference No.; 145/72/F-12 dated 24th January, 1972. Thus from the details as above, we clearly find that CIDCO is constituted and established by the State Government of Maharashtra with 100% participation by way Of Equity or Control to carry out the function of development of new township of New Bombay and therefore CIDCO is clearly covered under the definition of 'Government Entity' , Now we proceed to the second question raised by the applicant which is as under:- Question 2:- If CIDCO falls under the definition of Government Entit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Taking into consideration the nature or contracts. (b) 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" We find from the contracts that they are undertaking works as under:- "Power Supply Infrastructure Development work at R&R Pockets under NMI A Projects, Navi Mumbai. Development of power supply infrastructure distribution network in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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