9911796707
TMI Blog2023 (7) TMI 519X X X X Extracts X X X X X X X X Extracts X X X X ..... ail the benefit of exemption notification Entry No. 3; "Pure Services (excluding work contract services or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local authority or a governmental authority by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution vide Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017 as the services are provided to the Irrigation Department which is under the direct control of the Kerala State? 3.2 Suppose the ruling for the above question is taxable, whether the applicant can pay the goods and services tax to the government under reverse charge basis as per SI. No. 5; i.e., "Services supplied by the Central Government, State Government, Union territory or local authority to a business entity" of Notification No. 13/2017 Central Tax (Rate) dated 28.06.2017? 4. Contentions of the Applicant: 4.1. The applicant submits that they have been awarded a tender from the Irrigation Department of the Government of Kera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red under the exemption notification. Hence, they are of the view that the above services provided to Government are exempt. 4.7. As per Section 2 (119) of the CGST Act, 2017; "Works Contract" means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, 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. Under their contract there is no material element involved and hence the same is not covered under the definition of works contract. Therefore, on detailed analysis of the various provisions it can be seen that the service is a pure service and the service recipient is the Government and hence they have satisfied all the conditions mentioned in the above notification for claiming exemption. 4.8. If the ruling for the first question is taxable, they can pay the tax on reverse charge basis as per Notification No. 13/2017-CT (Rate) dated 28.06.2017. The lumpsum payment is made to the Irrigation Department of the Government of Kerala and hence it is evident that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for personal hearing on 08.12.2021. The authorised representative of the applicant represented the applicant in the personal hearing. The representative reiterated the contentions made in the application and requested to issue ruling on the basis of the submissions in the application. 7. Discussion and Findings: 7.1. The matter was examined in detail. The Irrigation Department of the Government of Kerala has granted a right to the applicant for desilting the reservoir of Mangalam Dam, Palakkad for removing the mud and sand and taking the same for a lumpsum consideration of Rs. 15 Crores which to be payable in instalments during the period of contract. The question raised is regarding the classification; the rate of tax applicable and the person liable to pay the tax on the services rendered as per the tender awarded by the Irrigation Department. In order to answer the questions raised by the applicant it is necessary to determine the supplier of service and the recipient of service in the transaction between the Government and the applicant. To determine the supplier and recipient of service in the transaction, it is necessary to analyse the terms of the contract with reference t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsideration, recipient of service and supplier of service as extracted above; it is evident that the transaction covered by the subject contract between the applicant and the Government in sum and substance confers the right to the applicant to extract the mud and sand lying underneath the reservoir of Mangalam Dam and appropriate the same by way of sale or otherwise during the term of the contract for a lumpsum consideration of Rs. 15 Crores payable in instalments spread over the contract period. Therefore, in the subject transaction the supplier of service is the Irrigation Department of the Government of Kerala and the recipient of service is the applicant. 7.4. Having come to the conclusion that the recipient of service in the subject transaction is the applicant, the next issue to be decided is the classification and rate of GST of the service. The Scheme of Classification of Services is notified as Annexure to Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017. Chapter 99 - Heading - 9973 pertains to leasing or rental services and 997337 pertains to licensing services for the right to use minerals including its exploration and evaluation. As per the Explanatory Not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.2017. 7.5. The next question to be answered is regarding the person who is liable to pay the tax; whether the supplier of service under forward charge or the recipient of service under reverse charge. We have already discussed and concluded that in the instant case the applicant is the recipient of service supplied by the Irrigation Department of the Government of Kerala. As per entry at SI. No. 5 of Notification No. 13/2017 Central Tax (Rate) dated 28.06.2017 the tax in respect of services supplied by the Central Government, State Government, Union territory or local authority to a business entity shall be paid by the business entity located in the taxable territory on reverse charge basis. Therefore, the applicant is liable to pay the GST on reverse charge basis on the consideration of Rs. 15 Crores given to the State Government for grant of the right to desilt the dam and extract the sand and mud lying underneath for appropriation. In view of the observations stated above, the following rulings are issued: RULING Question 1: Whether we can avail the benefit of exemption notification Entry No. 3; "Pure Services (excluding work contract services or other composite supplies i ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
