9911796707
TMI Blog2021 (8) TMI 531X X X X Extracts X X X X X X X X Extracts X X X X ..... Shaooorji Pallonji & Company Private Limited (hereinafter referred to as applicant), registered under the AP Goods & Services Tax Act, 2017. 3. Brief Facts of the case: The applicant, M/s. Shapoorji Pallonji and Company Private Limited are primarily engaged in the construction business and provide works contracts services to various customers including the Government, public Sector undertakings. Government Entities and Private sector entities. The applicant is registered under GST bearing Registration No.37AAACS6994C1Z4 3.1. The applicant entered into a contractual arrangement with Greater Visakhapatnam Smart City Corporation Limited ("GVSCCL"). "GVSCCL" was constituted by Greater Visakhapatnam Municipal Corporation ("GVMC") on 11.03.2016. It is a limited company incorporated under the Companies Act, 2013 at the city level, in which the state and the urban local body (GVMC) are the promoters with 50:50 equity share holding as per G.O.MS.No.43 3.2 In June 2015, the Government of India ("GOI") initiated "Smart City Mission", as a part of which Special Purpose Vehicles ("SPV") are created. The SPVs will Plan, appraise, approve, release funds, implement, manage, operate, monitor an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd; * Supply and installation of Rock Bench; * Supply and installation of Manhole covers; * Providing and applying Dashes, Arrows, Letters, Bus stop, Cycle Mark, Kerb Stone; * Painting two coats on new concrete surfaces; * Supply and installation of stainless-steel tree grate; * Providing and installation of rubber speed breaker; * Providing and fixing of signal, street, tourism, school, hospital sign boards; * Supply and fixing of retro reflective landmark sign boards; * Supplying of solar raised pavement markers; * Providing fixing of median marker; * Providing and fixing of vertical delineator; * Supply and fixing of AFP Sheeting, flexible prismatic sheeting; * Providing of touchscreen systems with projected capacitive touchscreen; * Installation and commissioning of Smart Variable Message (VMS) sign boards; * Install pedestrian lights; * Removing, transporting, storage reinstallation, testing and commissioning of external pole existing Street light; 3.5. In this regard, the Applicant submitted that an advance amount of INR 4,19,70,000/- had been received from GVSCCL on 23.08.2018. On receipt of such amount, the applicant discharged its GST liabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dvance Ruling on the questions listed. 4 Questions raised before the authority: 1) Whether the Services provided by the applicant is a composite supply of works contract as per clause (30) and (119) of section 2 of the CGST Act, 2017? 2) Whether the same would be taxable at the rate of 12% as prescribed under entry 3(vi)(a) of Notification No. 11/2017 - Central Tax (Rate), dated 28.06.2017? 3) What is the applicable GST Rate and SAC/HSN? If it is not covered by entry 3(vi)(a) of Notification No.11/2017 - Central Tax (Rate), dated 28.06.2017? On Verification of basic information of the applicant, it is observed that the is under State jurisdiction, i.e. Assistant Commissioner (ST) Chirala Nellore Division. Accordingly, the application has been forwarded to the jurisdictional officer and a copy marked to the Central Tax authorities to offer their remarks as per Sec. 98(1) of CGST /APGST Act 2017. In response, remarks are received from the State jurisdictional officer concerned stating that no proceedings are lying pending or passed relating to the applicant on the issue, for which the Advance Ruling sought by the applicant. 5. Applicant's Interpretation of Law and Facts: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ambit of Entry 3(vi) (a) of the Notification B1. Under GST law, Notification no.11/2017 Central Tax (Rate) dated 28.06.2017 specifies the rate of GST applicable on provision of construction services. Entry 3(vi)(a) of the notification provides that works contract services provided to Central Government, State Government, Union Territory, a Local Authority, a Governmental Authority or a Government Entity shall be taxable at the rate of 12%. B2. With reference to the said entry, the applicant submits that for any activity to fall under the ambit of Entry 3(vi)(a) of Notification, following conditions must be satisfied: (a) There must be a 'composite supply' of 'works contract' as defined in clause (30) and (119) of section 2 of CGST Act 2017 and (b) Such supply shall not fall under the exception i.e. under clause (i) (ia)(ib) (ic)(id), (ie) and (if) of entry 3 as provided under the said notification; and (c) Such supply shall be provided to Central Government, State Government, Union Territory, a Local Authority, a Governmental Authority or a Government Entity. (d) Such supply shall be meant predominantly for use " other than commerce, industry or any other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, it satisfies the first condition. In respect of condition (b) GVSCCL is a limited company incorporated under the Companies Act 2013 in which the Andhra Pradesh State Government and Greater Visakhapatnam Municipal Corporation are the promoters having 50:50 equity share holding, which substantiates more than 90% of participation of the Government. Furthermore, G.O. Ms. No.43 provides the list of all the shareholders of GVSCCL as mentioned under: * Governor of Andhra Pradesh represented by Principal secretary, MA & UD, GoAP * Commissioner and Director of Municipal Administration GoAP, Hyderabad. * Engineer -in- Chief, public Health Department, GoAP. * Director of Town and Country Planning, GoAP. * GVMC represented by its Commissioner. * Additional Commissioner, GVMC. * Examiner of Accounts, GVMC and * Superintending Engineer, GVMC. In view of the afore-mentioned, as all shareholders are Government authorities the applicant submits that the composition of the GVSCCL leaves no further doubts regarding the complete control wielded by the Government and it qualifies second condition too. iii. In respect of condition (c), it is pertinent to refer twelfth schedule to A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness with the objective to fulfil his responsibilities. If someone is fulfilling the responsibilities bestowed upon him, it cannot be considered as a situation where that person is doing business. ii. In the present factual scenario, the situation is different as GVSCCL has been established with a very specific objective. The said objective is derived from the Article 243W of the Constitution of India which provides the list of responsibilities of Municipalities. Basis the same, municipalities are bound to perform their functions and implement the schemes as may be entrusted to them including those in relation to the matters as listed under Schedule 12. iii. The functions to be performed by SPV include plan, appraise, approve, release funds, implement, manage, operate, monitor and evaluate the smart city development projects. iv. Keeping in view the same, GVSCCL (a SPV) was created by the Municipality Corporation i.e., GVMC to carry out its functions and implement "Smart City Mission". It shall be noted that main functions of the Municipality which are in line with the objective of "Smart City Mission" are enshrined under Visakhapatnam Municipality Corporation Act, 1979 will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, landscaping, Street lighting etc., c) Maintenance of the project. The clause (119) of the section (2) of the CGST Act defines 'works Contract' as "a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property where in transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract". The composite supply of works contract as defined at Section 2 of CGST Act, 2017 and APGST Act, 2017 is treated as supply of service in terms of serial No. 6, Schedule II of CGST Act, 2017 and APGST Act, 2017. The "Government Entity" is defined under the explanation at serial no 4(x) of the Notification No.31 Central Tax -Rate dated 13.10.2017 which reads as under: "(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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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