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TMI Blog2023 (2) TMI 1084X X X X Extracts X X X X X X X X Extracts X X X X ..... n relation to sewage treatment made to BWSSB, on or after 1st Jan 2022 - HELD THAT:- The entry 3(iii) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 itself was omitted and now the works contact services supplied by the Applicant to BWSSB is covered under entry No.3(xii) of the same Notification - thus the works contract services provided by the Applicant to BWSSB are covered under this entry and the same is exigible to GST at 18%. - KAR ADRG 08/2023 - - - Dated:- 17-2-2023 - DR. M.P.RAVI PRASAD AND SRI. KIRAN REDDY T, MEMBER Represented by : Ms. Priyanka Rathi, Advocate ORDER UNDER SECTION 98(4) OF THE CGST ACT, 2017 AND UNDER SECTION 98(4) OF THE KGST ACT, 2017 M/s. Suez India Private Limited, CSI Compound, 2nd Floor, Mission Road, Bengaluru-560027 (hereinafter referred to as The applicant'), having GSTIN 29AAACD0136D1Z8 have filed an application for Advance Ruling under Section 97 of CGST Act, 2017 read with Rule 104 of CGST Rules, 2017 and Section 97 of KGST Act, 2017 read with Rule 104 of KGST Rules, 2017, in FORM GST ARA-01 discharging the fee of Rs.5,000/- each under the CGST Act and the KGST Act. 2. The Applicant is a Private L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igning, construction, commissioning and operation and maintenance of the constructed work. 5.3 The applicant has stated that as per Section 2(119) of the Central Goods and Service Tax Act, 2017 ( CGST Act ), works contract has been defined to mean 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 the execution of such contract. 5.4 The applicant has stated that Notification No. 11/2017 Central Tax (Rate) dated June 28, 2017, notified the rate of tax on certain intra-State supply of services. Vide Entry 3 of the said notification, 18% tax rate was prescribed for works contract services. Entry 3 of the Notification No. 11/2017 Central Tax (Rate) dated June 28, 2017, is as follows: S.N. Chapter, Section, or heading Description of Service Rate (percent) 3 Heading 9954 (Construction services) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation also defined Governmental Authority and Government Entity as follows:- 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 90per cent, or more participation by way of equity or control, to carry out any function entrusted to a Municipality under article 243 W of the Constitution or to a Panchayat under article 243 G of the Constitution. 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. 5.7 The applicant states that BWSSB is an autonomous body formed by the State legislature under Bangalore Water supply and Sewerage Board Act, 1964, on November 10, 1964, for water supply sewage disposal. Further, BWSSB has 100% participation of State of Karnataka and is entrusted with work rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice Rate (percent) (xii) Construction services other than (i), (ia), (ib), (ic), (id), (ie), (if), (iii), (iv), (v), (va), (vi), (vii), (viii), (ix), (x) and (xi) above. 9 5.11 This office had addressed a letter to the Assistant Commissioner of Commercial Taxes, LGSTO-110, Bengaluru on 04-11-2022 to file comments on the application filed. In response to this, the ACCT has furnished comments as below: Question (s) on which Advance Ruling is required The Applicant requests this Hon'ble Authority to provide a ruling on the following question: Whether the services provided to Bengaluru Water Supply Sewerage Board would be considered as a service provided to a Governmental Authority under GST Laws? What is the applicable GST rate on supply of works contracts services in relation to sewage treatment made by the Applicant to Bengaluru Water Supply Sewerage Board, on or after 1st Jan 2022? COMMENTS As per Advance Ruling No. KAR ADRG 23/2022 dtd: 12-08-2022 Bengaluru Water Supply Sewerage Board is said to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is entrusted with the function of supply and improving the existing supply of water in the Bangalore Metropolitan Area and of making adequate provision for the sewerage and the disposal of the sewage in the Bangalore Metropolitan Area. This is clear from S. 15 of the BWSSB Act. As per Article 243W read with Twelfth Schedule of the Constitution of India, water supply for domestic, industrial and commercial purposes and public health, sanitation conservancy and solid waste management is a function of municipality. In view of the above, the requirement that the authority must be established to carry out any function entrusted to a Municipality under article 243W of the Constitution has also been fulfilled in the present case. Thus, the Applicant in the present is providing services to BWSSB, which is a governmental authority and therefore, the Applicant is liable to discharge tax at the rate of 18% on the works contract service supplied to BWSSB. 6.5 The applicant has relied on the decision of the Hon ble High Court of Patna in the case of Shapooiji Paloonji Company Pvt. Ltd. vs. C.C., C. Ex. S.T., Patna 2016 (42) STR 681 (Pat.), Advance Ruling passed in the case of In Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supply and Sewerage Board Act, 1964 ( BWSSB Act ). As per S. 9 of the BWSSB, BWSSB is a corporate body. Thus, the first condition that the authority must be a separate corporate body having a legal existence stands fulfilled in the present case. 6.6.3 The authority must function in a defined area and should, wholly or partly, directly, or indirectly, be elected by the inhabitants of the area. As per the preamble of the BWSSB Act, the said Act is to make provision for water supply, sewerage and sewage disposal in Bangalore Metropolitan area and for matters connected therewith. Further, as per S. 2(la) of the BWSSB Act, 'Bangalore Metropolitan Area' means the area falling within the jurisdiction of the Bruhat Bangalore Mahanagara Palike and includes such other areas adjacent thereto as the State Government may, by notification, from time to time specify. Thus, in terms of the BWSSB Act, BWSSB can undertake its functions only within the Bangalore Metropolitan Area. However, BWSSB is not elected by the inhabitants of the area but is established by the State. Thus, the second condition is not met in the present case. 6.6.4 The applicant states that the State Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een entrusted by the Government. BWSSB has the authority to collect funds but is not legally entitled to control/manage any fund. Under Section 24(A) of the BWSSB Act, BWSSB has authority to create a reserve for improvement works and under Section 24 the Board can create a depreciation reserve. However, the said reserve cannot be equated with a local or a government fund. Thus, the important requirement in order to qualify as a local authority, viz. control and management of a municipal/local fund is absent in the present case. In view of the above, it can be concluded that BWSSB is not a local authority and thus, the Applicant is not eligible to pay 12% GST on the works contract service supplied to BWSSB on or after 1st Jan 2022. 6.7 In view of the above, the Applicant submits that the Applicant is liable to discharge tax at the rate of 18% on the works contract service provided to BWSSB. VIRTUAL HEARING / PROCEEDINGS HELD ON 10-11-2022 7. Ms.Priyanka Rathi, Advocate and Duly Authorised Representative appeared for personal hearing proceedings held on 10.11.2022 through video conference and reiterated the facts narrated in their application. FINDINGS DISCUSSION ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act 1964, to supply water in Bangalore Metropolitan area and to make adequate provision for the sewerage and disposal of sewage in the Bangalore Metropolitan area. These duties performed by BWSSB are covered under the functions entrusted to a Municipality under article 243W of the Constitution that is 5th and 6th entry of 12th schedule of the constitution which are as below:- 5. Water supply for domestic, industrial and commercial purposes. 6. Public health, sanitation conservancy and solid waste management. Since the BWSSB is set up by the Act of State Legislature to carry out any function entrusted to a Municipality under article 243W of the Constitution, the same can be considered as Governmental Authority. 12. The Applicant wants to know the applicable GST rate on supply of works contracts services in relation to sewage treatment made to BWSSB, on or after 1st Jan 2022. For this we invite reference to entry No.3(iii) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017, as amended vide Notification No. 20/2017-Central Tax (Rate) dated 22.08.2017 which is reproduced below: SI No Chapter, Section or Heading ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 3, in column (3), - (a) items (iii), (iu), (v), (va), (vi) and (ix) and the corresponding entries relating thereto in columns (4) and (5) shall be omitted; (b) against items (vii) and (x), for the entry in column (4), the entry 6 shall be substituted; (c) in item (xii), for the brackets and figures (Ui), (iv), (v), (va), (vi), (vii), (viii), (ix) , the brackets and figures (vii), (viii), shall be substituted; Thus the entry 3(iii) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 itself was omitted and now the works contact services supplied by the Applicant to BWSSB is covered under entry No.3(xii) of the same Notification which is as below: SI No Chapter, Section or Heading Description of Service Rate (percent) Condition 3 Heading 9954 (Construction services (xii) Construction services other than (vii), (viii) above. 9 Thus the works contract services provided by the Applicant to BWSSB are covered under this entry and the same is ex ..... 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