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TMI Blog2021 (8) TMI 531X X X X Extracts X X X X X X X X Extracts X X X X ..... P., (under promoter category) as chairman. The SPV is owned by the Government of A.P. And GVMC ON 50:50 ratio and is governed by a Board of Directors answerable to the Government of A.P., Government of India and GVMC. The Government of A.P. and GVMC are the shareholders in the GVSCCL - the GVSCCL rightly fits into the definition of the 'Government Entity' as per the said notification. The functions carried out by the said GVSCCL are the functions which were entrusted by the Central Government, State Government and Local Authority i.e. of Municipal Administration. The service provided by the applicant is Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, provided to a Government Entity by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession. The same is classifiable under the Heading 9954 Entry at Serial No. 3(vi) (a) of the Notification No.il/2017 Central Tax (Rate) dated 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent, State Government and Urban Local Bodies ( ULB ) on its Board. GVSCCL is one of such Special Purpose Vehicles (SPV). 3.3. The applicant entered into an agreement dated 04.06.2018 ( Agreement ) with GVSCCL for beautification of Streets deluding Streetscape Design, Landscaping and Intersection Redesign in Visakhapatnam's Area Based Development under Smart Cities Mission. This Agreement includes the supply of materials and the provision of services by the Supplier to the Applicant. 3.4 In order to understand the nature of services provided by the applicant the applicant has presented the relevant clauses of the agreement as under: Article 2 of the Agreement provides that the scope of project includes construction and development of the project on the site and thereafter, maintenance of the project. Article 28 of the Agreement provides definition of various terms. The extracts of relevant terms are reproduced as under: Project means the construction and maintenance of the project in accordance with the provisions of this Agreement, and includes all words, services and equipment relating to or in respect of the Scope of the Project; Schedule D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods and Services Tax ( CGST ) Act, 2017. However, upon perusal of Notification No. 11/2017- Central Tax (Rate) dated 28.06.2020 ( Notification ), the applicant comprehended that the services provided by it may be taxable at the rate of 12% i.e., concessional rate as provided under Notification. The relevant entry 3(vi)(a) of the said Notification is as under: Sl.No. Chapter, Section or Heading Description of Service Rate (per cent.) Condition (1) (2) (3) (4) (5) 3 Heading 9954 (Construction services) (vi) Composite supply of works contract as defined in clause (119) of section 2 of the Andhra Pradesh Goods and Services Tax Act, 2017 other than that covered by items (i), (ia), (ib), (ic), (id), (ie) and (if) above, provided to the Central Government, State Government, Union Territory, a a local authority, a Governmental Authority or a Government Entity by way of construction, erection, commissioning, installation, completion, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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: A. The applicant submits that the services provided by him are a composite supply of works contract as per clause (30) and (119) of section 2 of the CGST Act, 2017. A1. As per the scope of work provided under the Agreement the applicant provides the following supplies to GVSCCL: Construction of the Project; Development of the Project which includes plantation, landscaping etc.; Maintenance of the project. A2. Section 2(30) and 2(90) of the CGST Act, 2017 define the term composite supply and principal supply respectively. The co-joint reading of afore-mentioned provisions provide that when a taxable person is providing two or more naturally bundled taxable supplies, wherein one of such supplies is of predominant nature amongst others, it constitutes a composite supply . In the instant case, as the applicant is providing two or more supplies wherein the construction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )(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 business or profession . Each condition has been analysed in detail separately in the subsequent paragraphs. (a) There must be a 'composite supply' of 'works contract as defined in clause (30) and (119) of section 2 of CGST Act 2017. The same has been explained in detail under point A. (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. i. Clause (i) (ia) (ib) (ic) (id), (ie) and (if) of entry 3 notification pertain to construction of residential / commercial apartments (shops, offices, godowns etc.) whereas in the instant case, the applicant is providing completely different services which do not fall under the ambit of said clauses. ii. Thus, the applicant submits that supply provided b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... miner 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 Article 243W of the Constitution which provides the category of the functions entrusted to a municipality. The relevant extract of the said schedule is as under: TWELTH SCHEDULE (Article 243 W) 1. Urban planning including town planning, 2. Regulation of land use and construction of buildings, 3. Planning for economic and social development, 4. Roads and bridges, 5. Water supply for domestic, industrial and commercial purposes, 6. health, sanitation conservancy and solid waste management, .. 12. Provision oi urban amenities and facilities such as parks, gardens, playgrounds, (........) 17. Public amenities including street lighting, parking lots, bus stops and public conveniences . Upon perusal of the afore-mentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lan, 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 mutatis mutandis apply. Section 8A of the Greater Hyderabad Municipal Corporation Act, 1955 (the name has been amended by Act No.13 of 2008, earlier it was known as Hyderabad Municipal Corporation Act, 1955) provides that ward committee constituted by Municipal Corporation is obligated to perform following functions. a. Sanitation work and drainage maintenance, b. Distribution of water supply; c. Working of the street lights; d. Minor repair of roads; e. Maintenance of markets; f. Maintenance of parks and playgrounds v. From the afore-mentioned background and the responsibility on Municipality, it is clear that GVSCCL was constituted solely with the objective to perform municipality fun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Central Government, State Government, Union Territory or a Local Authority. Now we examine whether the GVSCCL fits in the above definition or not? Greater Visakhapatnam Smart City Corporation Limited (GVSCCL) is a Special Purpose Vehicle (SPV) created by the Government of Andhra Pradesh vide G.O.MS.No.43, Municipal Administration Urban Development (UBS) Department, Government of A.P. dated 17.02.2016. GVSCCL is a limited company incorporated under the Companies Act, 2013 in which the Andhra Pradesh State Government and the Greater Visakhapatnam Municipal Corporation are the promoters having 50:50 equity share holding, which substantiates more tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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