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TMI Blog2019 (10) TMI 522X X X X Extracts X X X X X X X X Extracts X X X X ..... for commerce, industry, or any other business or profession is liable to tax at the rate of 6% under the CGST Act. Similar notification also exists under the Karnataka Goods and Services Tax Act and also under the Integrated Goods and Services Tax Act (wherein the tax rate is 12% IGST). The applicant is undertaking a contract of works contract of construction of a civil structure or any other original works for the Airport Authorities of India. The Department of Personnel and Training, Government of India has shown in the company profile that the shareholding of the Government of India in the Airport Authorities of India is 100% and hence the AAI is a Government Entity. Whether the constructed works is a civil structure or any other original works? - HELD THAT:- The applicant is engaged in construction of new civil structures. The activities carried out by the applicant are covered under the relevant serial number of the Notification. Whether the works are meant predominantly for use other than for commerce, industry, or any other business or profession? - HELD THAT:- The airlines that use the runway and the aprons etc constructed by the applicant work with a view to earn profits. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oject on 16th August 2017 by the Airport Authority of India and the contract allotted is in the nature of works contract. The scope of the project is development and up-gradation of Airports by construction or extension of Runway, construction of new Taxi track, Apron, Isolation bay, Perimeter road and other allied works. 4. With reference to the above contract under question, the applicant states that work got allotted to them through a tender of Airport Authority of India for original works like construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation or alteration of the airports. 4.1 The applicant states that the scope of work is basically a works contract as defined under section 2(119) of the Central Goods and Services Tax Act, 2017 (CGST Act) and the rate of tax for composite supply of works contract as defined in Section 2(119) of the CGST Act has been notified through Notification No. 11/2017 - Central Tax (Rate) dated 28th June, 2017. As per the applicant, his scope of work was covered by the Notification under Sl.No.3 (ii) of the said Notification and hence was taxable at the rate of 18%. 4.2 The applicant states th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntity" means an authority or 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" The applicant hence states that Airport Authority of India is a Government Entity as it is set up by an Act of Parliament and the shareholding of the Government of India in the AAI is 100%. 4.7 Further, the works are entrusted to the Airports Authority of India on the direction of the Central Government. On combined reading of the above provisions, the applicant claims that the works allotted to the applicant by the AAI which in turn is as per the directions of the Central Government are in the nature of original works and shall be taxed at the rate of 12% GST after fulfilling all the conditions specified. Otherwise the rate of tax shall be 18% GST. 5. Applicant has submitted copies of the letters issued by the Airport Authority of India. PERSONAL HEARING: / PROCEEDINGS HELD ON 21.05.2018 6. Sri Sanjay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 Explanation. - For the purposes of this item, the term 'business' shall not include any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities (inserted by Notification No.17/2018 - Central Tax (Rate) dated 26-07-2018. 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 Central Government, State Government, Union territory or local authority, as the case may be (vii) . . . . . (viii) . . . . . (ix) construction services other than (i), (ii), (iii), (iv), (v), (vi), (vii) and viii above 9 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tures. The activities carried out by the applicant are covered under the relevant serial number of the Notification. 7.8 The next issue is whether these works are meant predominantly for use other than for commerce, industry, or any other business or profession? In this regard, the original works done by the applicant are for use by the Airports Authority of India for supplying services to the Airway operations and hence is in the course of business. The airlines that use the runway and the aprons etc constructed by the applicant work with a view to earn profits. They are engaged in commerce and business. Entry at Serial number 3(vi)(a) specifically provides that works be 'meant predominantly for use other than for commerce, industry, or any other business or profession'. As the works carried out by the applicant are used in the process of commerce and business, the applicant does not qualify for the works to be classified under Serial number 3(vi)(a). The Hence the works contract performed by the applicant cannot be considered as covered under Serial No. 3(vi) of the Notification No. 11/2017 - Central Tax dated 28.06.2017 liable to tax at 6%, but are more appropriately covered un ..... X X X X Extracts X X X X X X X X Extracts X X X X
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