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TMI Blog2022 (8) TMI 1242X X X X Extracts X X X X X X X X Extracts X X X X ..... e term works contract under GST has been restricted to any work undertaken for an Immovable Property wherein transfer of property in goods whether as goods or in some other form is involved - the service rendered by the applicant squarely falls under the definition of works contract in Section 2 (119) of the CGST Act. Whether the works contract services rendered by the applicant attract GST at the rate of 12% under SI No. 3 (vi) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017? - HELD THAT:- As per the above entry, the composite supply of works contract as defined in Section 2 (119) of the CGST Act, 2017 provided to a Government by way of construction of a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession attract GST at the rate of 12%. In the instant case though the contract of construction of the terminals and other infrastructural facilities for the integrated water transport project is awarded to the applicant by Kochi Metro Rail Ltd as the executing and operating agency [Project Management Consultants] the contract is awarded on behalf of the Government of Kera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods and Services Tax Act, 2017 (hereinafter referred to as KSGST Act) are the same except for certain provisions. Accordingly, a reference hereinafter to the provisions of the CGST Act, Rules and the notifications issued thereunder shall include a reference to the corresponding provisions of the KSGST Act, Rules and the notifications issued thereunder. 3. The applicant had requested an advance ruling on the following 3.1. Whether the Kochi Water Metro Project comes under exclusion specified for the term 'business' as per the explanation to heading 9954; Item o.(vi) of Notification No. 11/2017 dated 28th June 2017? 3.2. Whether the works contract awarded to Kool Home Builders qualifies to tax under CGST Act @ 6% as per Notification No. 11/2017 - Central Tax (Rate) dated 28th June 2017 under clause (a) of item number (vi) of serial number 3, under Section 5 of Chapter 99 as amended by Notification No.24/2017 - Central Tax (Rate) dated 21st September 2017? 3.3. Whether the said works contract qualifies to tax under SGST Act (a 6% as per Notification SRO.No.370/2017 dated 30th June 2017 under clause (a) of item number (vi) of serial number 3 of heading 9954, secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation 11/2017 - Central Tax (Rate) dated 28.06.2017 as amended by Notification No.24/2017 CGST (Rate) dated 21-09-2017 - which read as follows:- (vi) Composite supply of works contract as defined in clause (119) of Section 2 of the Central Goods and Services Tax Act, 2017, 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- i) a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession; ii) a structure meant predominantly for use as (i) an educational, (ii) a clinical, or (iii) an art or cultural establishment; or iii) a residential complex predominantly meant for self-use or the use of their employees or other persons specified in paragraph 3 of schedule III of the CGST Act, 2017. Explanation .- For the purpose 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elation to a work entrusted to the Government under Article 234G and 234W of the Constitution of India. 4.5. The Applicant submits that this AAR in Ruling No. KER/75/2019 dated 20-05-2020 in the application submitted by KMRL for Kochi Water Metro Project, has held that:- 24. The applicant is an entity whose equity shares are fully held by the Government of India and Government of Kerala in equal proportion. It has been established as a Special Purpose Vehicle for the implementation, operation and maintenance of Kochi Metro Rail Project in the city of Kochi. Now, by G.O.(Ms)No.44/2016/Trans dated 13.06.2016 it has been entrusted with the task of executing and operating the Integrated Water Transport Project at Kochi on behalf of the Government of Kerala. The establishment, operation and maintenance of the metro rail project as well as the water metro by the Government of Kerala is part of its function of urban planning and providing public amenities which are functions entrusted to a Municipality under Article 243W of the Constitution which are listed in the Twelfth Schedule to the Constitution. Further, the functions entrusted to a Panchayat under the Eleventh Schedule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017. 4.6. Hence, the civil structure and related original works are for use by the Government for functions entrusted to it under Article 243W of the Constitution. 4.7. As per Section 7(2)(b) of the CGST Act, 2017 such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the council shall be treated neither as a supply of goods nor a supply of services. Further the Central Government by Notification No. 14/2017 Central Tax (Rate) dated 28.06.2017 and Notification No.16/2018 Central Tax (Rate) dated 26.07.2018 notified that the following activities or transactions undertaken by the Central Government or State Government or Union territory or any local authority in which they are engaged as a public authority, shall be treated neither as a supply of goods nor a supply of service, namely;- Services by way of any activity in relation to a function entrusted to a Panchayat under article 243G of the Constitution or to a Municipality under article 243W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under article 243G of the Constitution or to a Municipality under article 243W of the Constitution are activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities. The Kerala Authority for Advance Ruling had examined in detail the facts of the project and held in their Ruling No. KER/75/2019 dated 20-05-2020, that the Kochi Water Metro is a project that squarely qualifies the conditions to be classified under the functions or transactions entrusted to the Government as public authorities. Accordingly, it can be concluded that the activity of Water Metro transportation undertaken by the Government of Kerala is for use predominantly other than commerce, industry, any other business or profession. KMRL is entrusted with the task of implementation of the project, on behalf of the Government of Kerala, which acts as an executing agency for the project. It is substantiated in the above advance ruling that KMRL falls under the definition of a Governmental Authority under Para 2(zf) of Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017. Therefore, on a combined reading of Section 7(2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he contentions made in the application and requested to issue a ruling based on the submissions in the application. 7. Discussion and Findings 7.1. The matter was examined in detail. The application is admissible under subsection (2) of section 97 of the Act. The applicant has raised the following questions before the advance ruling authority.- 1. The classification and tax rate applicable to the works contract awarded to the applicant by KMRL. 2. Whether the Kochi Water Metro Project comes under the term 'business' as per the explanation to heading 9954 item no. (vi) of Notification No. 11/2017 Central Tax (Rate) dated 28th June 2017. 7.2. In order to decide these issues, it is to be examined whether the services rendered by the applicant qualify to be classified as works contract services. Section 2(119) of the CGST Act defines a 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 wherein transfer of property in goods (whether as goods or in some other form) is involved in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this item, the term 'business1 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. 7.6. As per the above entry, the composite supply of works contract as defined in Section 2 (119) of the CGST Act, 2017 provided to a Government by way of construction of a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession attract GST at the rate of 12% [6% CGST + 6% SGST] 7.7. This Authority has in Ruling No. KER/75/2019 dated 20.05.2020 in the application of Kochi Metro Rail Ltd (the awarder of the contract to the applicant) has already held that KMRL is a governmental authority as defined in Para 2(zf] of Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017 and also held that the State of Kerala is the de jure owner of the waterways, the boat jetties, the boats and all other infrastructure created for the integrated water transport project, and the status of Kochi Metro Rail Ltd is that of an agency that is executing the integrated water transport project on be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Whether the Kochi Water Metro Project comes under exclusion specified for the term 'business' as per the explanation to heading 9954 item no. (vi) of Notification No. 11/2017 dt.28th June 2017? Ruling : The integrated water transport project namely; Kochi Water Metro Project is an activity undertaken by the Government of Kerala as a public authority and hence squarely covered by the explanation to entry at SI No. 3 (vi) of the Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017. 2. Whether the works contract awarded to Kool Home Builders qualifies to tax under CGST Act at the rate of 6% as per Notification No.11/2017 -Central Tax (Rate) dated 28th June 2017 under clause (a) of the item number (vi) of serial number 3, under Section 5 of Chapter 99 as amended by Notification No.24/2017 - Central Tax (Rate) dated 21st September 2017? Ruling : The works contract services performed by the applicant as per the above-mentioned contracts awarded by Kochi Metro Rail Ltd is exigible to 6% CGST as per entry at SI.No.3 (vi) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended. 3. Whether the said works contract qualifies to tax under SGST ..... X X X X Extracts X X X X X X X X Extracts X X X X
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