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TMI Blog2022 (9) TMI 417X X X X Extracts X X X X X X X X Extracts X X X X ..... on of smart city project in the city of Belagavi. Hence Belagavi Smart City Limited is neither a Governmental Authority nor a Government Entity as per the explanation mentioned in para 13 supra. In view of the same, the services provided by the applicant to BSCL is liable to CGST at 9% as per the entry 3 (xii) of Notification No.11/2017 - Central Tax (Rate), dated 28.06.2017 further amended vide Notification No.03/2022-Central Tax (Rate) dated: 13.07.2022 and is taxable at 18%. The Composite supply of works contract provided by a sub-contractor to the main contractor who provides services specified in item 3(iii) or item 3(vi) to the Central Government, State Government, Union territory or a local authority are liable to tax at 12% GST. Since the services provided by the applicant are not covered under entry 3(iii) or item 3(vi), the same are liable to tax at 18% GST even though the services are executed as a subcontractor. - KAR ADRG 30/2022 - - - Dated:- 29-8-2022 - DR. M.P. RAVI PRASAD AND SRI. T. KIRAN REDDY, MEMBER Represented by : Sri B. Shrinivasa, Chartered Accountant ORDER UNDER SECTION 98(4) OF THE CGST ACT, 2017 UNDER SECTION 98(4) OF THE KGST ACT, 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cant states that they are engaged in the business of civil works contract services under section 2(119) of the CGST Act, 2017 as a main contractor as well as sub-contractor, under the HSN 9954 mainly to Karnataka Slum Development Board for the construction of houses including infrastructure work in various slums in the State of Karnataka under Pradhan Mantri Awas Yojana (Urban) - HFA, construction services activities to Smart City Projects to Belagavi Smart City Limited, Belagavi. 5.2 The applicant has stated that they have discharged the tax up to 31.12.2021 for all the said civil works contract services at 12% - SGST 6% and CGST 6% under the HSN 9954 on the basis of the following Notifications. a. As per the Notification No. 20/2017-Central Tax (Rate) dated 22nd August 2017- Si No. (iv)(c) a Civil structure or any other original works pertaining to the In-situ rehabilitation of existing slum dwellers using land as a resource through private participation under the Housing for all (Urban) Mission / Pradhan Mantri Awas Yojana, only for existing slum dwellers Substituted, namely as per the Notification No. 1/2018 - Central Tax (Rate) dated 25th January 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds Union Territory or a local authority shall be substituted; (3) in column (5), in the heading Condition the entries against items (iii), (vi), (vii), (ix) and (x), shall be omitted; 5.5 As per the above said amendment, the applicant has requested for the clarification of rate of GST on the works contract executed as per the Clause (119) of section 2 of the CGST Act, 2017 on the works contract services mentioned at para 3 supra. 5.6 This office had addressed a letter to the Commissioner of Central Tax, Bengaluru West GST Commissionerate on 05-02-2022 to file comments on the application filed. In response to this, the Assistant Commissioner (Legal) Central Tax, Bengaluru has furnished comments as below: The applicant is engaged in supply of Civil Works Contract Services in the form of construction of Houses and Infrastructure activities to Karnataka Slum Development Board under PMAY (U), construction of Building to Belagaui Smart City Limited under the Smart City Projects and construction of Police Station under the Karnataka Housing Board, Bangalore as a Main Contractor as well as Sub-Contractor. Consequent to amendment to Notification No.11/ 2017 dated 28-06 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... constituted under the Sixth Schedule to the Constitution; (f) a Development Board constituted under article 371 and article 371J of the Constitution; or (g) a Regional Council constituted under article 371A of the Constitution; (ix) Government Authority means an authority or a board or any other body, - (i) set up by an Act of Parliament or a State Legislature; or (ii) established by any Government, with 90per cent or more participation by way of equity or control, to carry out any function entrusted to a Municipality under article 243W of the Constitution or to a Panchayat under article 243G of the Constitution. (x) Government Entity means an authority or a board or anu 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. Thus, the definition of 'local authority' is very specific as explained above and only those bodies which fall in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e KHB is carrying out the functions entrusted to a municipality under Article 243W of the Constitution. The applicant has provided Works Contract Service and construction services -construction of police station to KHB. Even though, the construction of police station or police quarters is service to the Government, it is not a specified service / activity under either Article 243W or 243G of the Constitution. Hence Karnataka Housing Board is not a 'Government Entity' in terms of the Notification No.11/ 2017-CT (Rate) dated 28-06-2017, as amended. Belgaum Smart City Limited The company was incorporated on 11 th May 2016 in pursuance of the Smart city mission statement of the Central Government by the Government of Karnataka and the City Corporation Belagavi as the Urban Local Body on 50:50 shareholding basis. The main objective of the Company as per its memorandum of association is to appraise and sanction smart city and other infrastructure projects of Ministry of Urban Development (MOUD), Government of India / Karnataka in the city of Belagavi. Although incorporated as a Non-Government Public Limited Company, this is a Company controlled by the Government as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by the applicant in their application for advance ruling. We have also considered the issues involved on which advance ruling is sought by the applicant and the relevant facts along with the arguments made by the applicant and also their submissions made during the time of hearing. 10. The applicant states that they are engaged in the business of civil works contract services (HSN 9954) under section 2(119) of the CGST Act, 2017 as a main contractor as well as sub-contractor supplying services to Karnataka Slum Development Board for the construction of houses including infrastructure work in various slums in the State of Karnataka under Pradhan Mantri Awas Yojana (Urban) - HFA, Smart City Projects to Belagavi Smart City Limited, Belagavi and to Karnataka Housing Board, Bangalore with respect to construction of police station at Govindarajanagar, Bangalore. The applicant wishes to know the rate of GST to be charged on the supply of above said services both as a main contractor as well as sub-contractor. 11. Now we examine one by one. The applicant has entered into a contract agreement with Karnataka Slum Development Board, for the construction of 888 houses including inf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Urban) will be exigible to CGST at 9% with effect from 18.07.2022 as per entry No. 3(xii) of Notification No.11/2017 - Central Tax (Rate), dated 28.06.2017 further amended vide Notification No.03/2022-Central Tax (Rate) dated: 13.07.2022. 13. The applicant states that he has also entered into an agreement with Karnataka Housing Board for construction of Magadi Road Police Station at Govindarajanagar constituency, Bengaluru. Karnataka Housing Board is established under Karnataka Housing Board Act 1962. Notification No. 11/2017-Central Tax (Rate), dated: 28.06.2017 as amended vide Notification No.31/2017-Central Tax (Rate), dated: 13.10.2017 defines Governmental Authority and Government Entity in entry (iii) as below: (iii) in paragraph 4, after clause (viii), the following clause shall be inserted, namely: - (ix) Governmental Authority means an authority or a board or any other body, - (i) set up by an Act of Parliament or a State Legislature; or (ii) established by any Government, with 90 percent. or more participation by way of equity or control, to carry out any function entrusted to a Municipality under article 243W of the Constitution or to a Pan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated: 13.07.2022 and is taxable at 18% mentioned in para 14 supra. 16. The applicant likes to know the rate of GST on the services executed by him, that is, Services executed to Karnataka Slum Development Board under the Prime Minister Awaz Yojana services executed to Karnataka Housing Board, Bangalore with respect to construction of police station Services executed to Belagavi Smart City Limited projects if the are executed by him as a subcontractor. Now let us verify whether the above mentioned services provided by the applicant are covered under serial No.3(ix) of Notification No. 11/2017 - Central Tax (Rate) dated 28th June, 2017, as amended vide Notification No.01/2018 Central Tax Rate, Dated: 25.01.2018, which is reproduced below: Sl.No. Chapter, Section or Heading Description of Service Rate (per cent.) Condition 3. Heading 9954 (Construction services) (ix) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017 provided by a sub ..... 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