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TMI Blog2019 (10) TMI 523X X X X Extracts X X X X X X X X Extracts X X X X ..... vil structure and since it is a residential real estate project, the works is predominantly for use other than commerce, industry or any other business or profession and hence it is covered under clause (a) of the entry 3(vi) of the Notification, subject to the conditions. Applicability of clauses (a), (b) or (c) of the entry no.3(vi) of the said Notification - HELD THAT:- The applicant is constructing a Housing Project at two places in around Bangalore on subcontract basis rewarded from M/s. Gowri Infra Engineers Private Limited. The Bangalore Development Authority in its tender has stated that it has taken up construction of housing in and around Bangalore City as designed by the Government of Karnataka. Since this is a residential project for general public, the same is not covered under clause (b) or (c) - The projects of the applicant are involving the supply of both goods and services and is in relation to an immovable property and hence is a works contract within the meaning of section 2(119) of CGST Act. This works contract is for a construction of a civil structure and since it is a residential real estate project, the works is predominantly for use other than commerc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Company and is registered under the Goods and Services Act, 2017. The applicant has sought advance ruling in respect of the following question: a) Whether the activity undertaken by the applicant is covered under section 2(119) of the CGST Act, 2018 read with point 6 Schedule II of the CGST Act, 2017 read with the Karnataka GST Act, 2017 and the IGST Act, 2017? b) Whether Bangalore Development Authority is a Government Authority as per the provisions of GST Law? c) Whether the transaction covered under point 3(ii) of the Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017 as amended? d) Whether the transaction covered under point 3(ix) of the Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017 as amended? 3. The applicant furnishes some facts relevant to the stated activity: a. The applicant states that he is engaged in the business of Civil Construction and Works Contract Services. The applicant has furnished an agreement on 06-06-2014 to undertake the sub-contract work of civil construction of residential complexes/ row of residential houses in turn has been allotted to Gowri Infra Engineers P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f supply as per section 7 (1) of the CGST Act, 2017 is inclusive definition, where it covers transaction of sale, exchange, barter, licence, rental, lease, or disposal like activities. The independent transaction of supply of goods or services can be charged to GST based on the nature of activity undertaken for supply of such goods/ services. However, in certain transaction there will be supply of both goods and services, which cannot be bifurcated/ indivisible from each other due to nature of work / contract. In general, when more than one supply of goods or services or both are involved one of such supply of goods or services or both may act as an ancillary activity. In such cases, the provision of GST considers such activity as composite supply and tax liability will be discharged based on the nature of the principal activity of such composite supply. 4.1 The applicant highlights that in the given case, the activity of construction of residential complex / residential houses undertaking on behalf of BDA (The applicant is undertaking sub-contract work on behalf of main contractor GIPL, who is entrusted to construct the residential complexes / residential houses), which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and collected in such manner as may be prescribed and shall be paid by the taxable person. 5.1 In the light of the above provision, the applicant states that the Central Government notified rate of GST for supply of various services along with SAC Code vide Notification No. 11/2017 - Central Tax (Rate). In this regard, the applicant reproduced the rate of GST applicable for supply of service in the form of construction along with amended details made to the said Notification. 6. The applicant submits that the Central Government is empowered to specify the rate of GST, on the recommendation of the GST Council, for the supply of goods and supply of services with or without conditions. In this regard, the Central Government issued Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017 (as amended) to specify the effective rate of GST for different categories of supply of services. In the said notification, the Chapter Heading 9954 notifies the rate of GST on Construction Services. The three rates of GST are applicable, i.e. 2.5%, 6% and 9%. Sl. No. Rate of GST Nature of Activitie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3(vi) of the Notification No. 11/2017 - Central Tax (Rate), i.e. a. Civil Structure / 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 c. 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, i.e. MPs, MLAs, etc. Central Government, State Government, Union Territory, Local Authority, Government Authority and Government Entity 7. The applicant submits that as per the above analysis of Notification No. 11/2017 - Central Tax (Rate), it is submitted that the activity undertaken by the applicant to GIPL is liable for GST at 6% CGST and 6% SGST. The reasons are as follows: 7.1 The activity undertaken by the applicant is construction of residential complex or residential houses to Government Authority. Hence, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsaction undertaken by BDA, the sale of construction of residential complexes and residential houses are not meant for commerce, industry, or any other business or profession but it is a sovereign function, Therefore, the activity of construction of residential complexes and residential houses are liable for GST at 12% (CGST 6% and SGST 6%) as per point 3(vi) of the Notification No. 11/2017 - Central Tax (Rate) 9. The applicant also states that the activity of construction of residential complex/ residential houses undertaken by the applicant to GIPL inter-alia covered under point 3 (vi) supra. Therefore, it is submitted that activity undertaken by main contractor is liable to GST at 12% i.e., (CGST 6% and SGST 6%). In the backdrop of above submission, the applicant submits that the activity undertaken by the applicant, which is sub-contracting activity, is covered under the category of point 3 (ix) of the Notification No. 11/2017 Central Tax (Rate). PERSONAL HEARING:/ PROCEEDINGS HELD ON 21.05.2018 10. Sri Rajesh Kumar and Kiran Kumar, C A, authorized representatives of the applicant appeared for personal hearing proceedings held on 21.05.2018 reit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11.5 The Entry No.3(vi) of the Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017 (as amended by Notification No.24/2017- Central Tax (Rate) dated 21.09.2017) reads as under: (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 authority, a Governmental Authority or 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) 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 Schedule 111 of the Central Goods and Services Tax Act, 2017. and the condition stated in the Column (5) of the Notification is Provided that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Commissioner, Corporation of the City of Bangalore, ex-officio; (ff) an officer of the Secretariat Department incharge of urban development, not below the rank of a Deputy Secretary to Government. (g) two persons who are members of the Karnataka State Legislature; (gg) two persons of whom one shall be woman and one shall be a person belonging to the Scheduled Castes or the Scheduled Tribes; (h) four others of whom one shall represent the labour; (i) a representative of the Bangalore Water Supply and Sewerage Board; (j) a representative of the Karnataka Electricity Board; (k) a representative of the Karnataka State Road Transport Corporation; (l) two persons elected by the councillors of the Bangalore City Corporation from among themselves in the prescribed manner: Provided that during the period of supersession of the Corporation or where any Administrator has been appointed, the two persons shall be nominated by the Administrator from among the officers of the Corporations. (m) the Commissioner, ex-officio; (n) the Secretary of the Authority, who shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e it is a residential real estate project, the works is predominantly for use other than commerce, industry or any other business or profession and hence it is covered under clause (a) of the entry 3(vi) of the Notification, subject to the conditions. 11.10.3 Regarding the issue as to whether the recipient has procured the said services in relation to a work entrusted to it by the State Government, it is observed that the Bangalore Development Authority Act, which is passed by the State Legislature, has entrusted the activity of development of the City of Bangalore and areas adjacent thereto and for matters connected therewith to the BDA and the Authority has to obtain the sanction of the Government of Karnataka for every scheme they propose to implement. Hence, the condition is also satisfied. 11.10.4 Hence for the reasons stated above, the services provided by M/s. Gowri Infra Engineers Private Limited to Bangalore Development Authority in relation to the construction of housing complexes are covered under clause (a) of entry no.3(vi) of the Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017 as amended from time to time. 11.10.5 The applica ..... X X X X Extracts X X X X X X X X Extracts X X X X
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