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TMI Blog2023 (8) TMI 1206X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the CGST Act, 2017 - it is clear that Tirunelveli Smart City Limited has been constituted with a different purpose to implement certain functions and it cannot be equated to a local body and hence it can be concluded that Tirunelveli Smart City Limited is not a Local Authority. The effective rate of duty on work executed for Tirunelveli Smart City Limited, which is a Government Authority and the nature of service provided by the applicant is covered under entry in serial number 3(vi) of Notification No. 11/2017-C.T (Rate) dated 28.06.2017 till 31.12.2021. However, after omission of Government Entity from the description of service under the said entry vide Notification No. 15/2021-C.T (Rate) dated 18.11.2021 read with Notification No. 22/2021-C.T (Rate) dated 31.12.2021 with effect from 01.01.2022, the services of the applicant are covered under serial number 3 (xii) of Notification No. 11/2017-C.T (Rate) dated 28.06.2017 and attract CGST of 9%. - SHRI R. GOPALSAMY, I.R.S., AND SMT. N. USHA, MEMBER, 1. Any appeal against this Advance Ruling order shall be filed before the Tamil Nadu State Appellate Authority for Advance Rulings, Chennai under Sub-section (1) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the control of Tirunelveli City Municipal Corporation works; 3. Whether they are Government Authority or not? 1.2 The applicant submitted a copy of challan evidencing payment of application fees of Rs. 5,000/- each under sub-rule (1) of Rule 104 of CGST Rules 2017 and SGST Rules 2017. 2.1 The applicant desires to ascertain the rate of GST with effect from 01.01.2022 for Composite supply of Works Contract Services provided to Tamil Nadu Urban Habitat Development Board and Tirunelveli Smart City Limited after amendment of Notification No. 11/2017-C.T.(Rate) vide Notification No. 15/2021-C.T.(Rate) dated 18.11.2021. 2.2 The applicant submitted a copy of Agreement dated 18.01.2021 between Managing Director, Tirunelveli Smart City Limited and the Applicant for construction of commercial mall at corporation land near Palai Bus Stand - Phase I in Tirunelveli Corporation for the contract price of Rs. 14,89,71,625/-. The following documents viz (i) Tender document including Contractor s Bid Documents and other documents submitted as part of the Bid, (ii) Conditions of contract, (iii) Specifications, (iv) Drawings, (v) Bill of Quantities and (v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14,89,71,625/- 6. 04/2020-21/SCM 18.01.2021 Construction of Multi Level Car Parking at Corporation land near Palai Bus Stand in Tirunelveli Corporation 12,71,55,849/- 7. 05/2020-21/SCM 18.01.2021 Construction of Commercial Mall at Corporation land near Palai Bus Stand - Phase II in Tirunelveli Corporation 11,60,91,661/- 3.4.1 The Memorandum of Association of Tirunelveli Smart City Limited specifies ten main objects, wherein one of the objects is to act as special purpose vehicle to do all acts and deeds for the implementation of mission as per smart city mission statement and guidelines of the central government. Some of the other relevant main objects are;- (i) To create some core infrastructure elements in Tirunelveli Smart city area for adequate and continuous water supply, assured electricity supply, sanitation including solid waste management, efficient urban mobility and public transport, affordable housing for the poor, robust Information Technology connectivity and digitalization, good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... caption Taxability Department Contention (without mentioning the specific Department) Government or Local Authority -Taxable at 12% Government Authority - Taxable at 18% Tirunelveli Smart City Limited is a Government Authority and the works contract is to be taxed at 18% (CGST 9% SGST 9%). Dealer Contention Tirunelveli Smart City Limited is neither a Government Authority nor Government Entity and the works contract is to be taxed at 12% (CGST 6% SGST 6%). 3.5.3 For applicant s interpretation of law and facts in respect of the questions raised, they relied on the composition of shareholding of M/s Tirunelveli Smart City Limited and stated that Government of Tamil Nadu collectively holds 50% of the shares and Tirunelveli City Municipal Corporation holds 50% of the shares collectively. Neither State Government nor the local authority holds 90% or more equity holding of the company. Hence, M/s Tirunelveli Smart City Limited cannot be considered as a Government Authority or Government Entity . Further, construction agreement is executed by the applicant and Executive Engineer, Tirunelveli Corporation. 3.5.4 Applicant further st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 017, as amended. 5. The concerned State Tax Officer vide letter Roc. No. 711/2022/Al dated 06.06.2022 stated that no proceeding is pending against the applicant in the assessment circle regarding the issue raised in the application. 6.1 We have carefully considered the questions raised by the applicant in the advance ruling application, the additional submissions made during the personal hearings and the comments furnished by the jurisdictional and concerned Tax Authorities. The applicant filed advance ruling application for determination of the liability to pay tax on any goods or services or both in respect of works contract services being provided to M/s Tamil Nadu Urban Habitat Development Board and M/s Tirunelveli Smart City Limited, within the meaning of that term as per Section 97(2)(c) of GST Act, 2017. 6.2 The question which needs to be answered is the rate of tax applicable for the works contract services undertaken by the applicant to M/s Tamil Nadu Urban Habitat Development Board and M/s Tirunelveli Smart City Limited with effect from 01.01.2022 consequent to amendment of Notification No. 11/2017-C.T (Rate) dated 28.06.2017 by Notification No. 15/2021-C.T (Rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of legal status of the service recipients for the works contract service provided. Hence, ascertaining the legal status of the said service recipients gains paramount importance. 8.1 The statutory provisions relevant to the above contentions of the applicant are discussed as under: Section 2(119) of the Act defines Works Contract as under:- (119) works contract means 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; 8.2.1 Serial No. 3(iv) of Notification No. 11/2017-C.T (Rate) dated 28.06.2017, as amended, reads as follows;- (iv) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of, - (a) a road, bridge, tunnel, or terminal for road transportation for use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... local authority in which they are engaged as public authorities. 8.2.3 The terms Government Authority Government entity were inserted by Notification No. 31/2017-Central Tax (Rate) dated 13.10.2017 in Notification No. 11/2017 as clauses (ix) (x) of explanation in Para 4 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 90 percent 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 90 per 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. 8.2.4 As per Section 2(69), local authority means- (a) a Panchayat as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mission Statement Guidelines issued by Ministry of Urban Development, Government of India, in June 2015, states that the implementation of the Mission at the City level will be done by a Special Purpose Vehicle (SPV) created for the purpose. The SPV will plan, appraise, approve, release funds, implement, manage, operate, monitor and evaluate the Smart City development projects. Each Smart City will have a SPV which will be headed by a full time CEO and have nominees of Central Government, State Government and ULB (Urban Local Bodies) on its Board. The States/ULBs shall ensure that,- (a) a dedicated and substantial revenue stream is made available to the SPV so as to make it self-sustainable and could evolve its own credit worthiness for raising additional resources from the market and (b) Government contribution for Smart City is used only to create infrastructure that has public benefit outcomes. 8.4.2 The SPV will be a limited company incorporated under the Companies Act, 2013, at the city-level, in which the State/UT and the ULB will be the promoters having 50:50 equity shareholding. The private sector or financial institutions could be considered for taking equi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment Entity from the description of service under the said entry vide Notification No. 15/2021-C.T (Rate) dated 18.11.2021 read with Notification No. 22/2021-C.T (Rate) dated 31.12.2021 with effect from 01.01.2022, the services of the applicant are covered under serial number 3 (xii) of Notification No. 11/2017-C.T (Rate) dated 28.06.2017 and attract CGST of 9%. 9. In view of the above, we rule as under: RULING 1. The GST rate @ 12% or 18%, which rate of tax applicable on composite supply of works contract to Tamil Nadu Urban Habitat Development Board, known formerly as Tamil Nadu Slum Clearance Board works; Reply : No Ruling as discussed at para 6.4. 2. The GST rate @ 12% or 18%, which rate of tax is applicable on composite supply of works contract to Tirunelveli Smart City Limited under the control of Tirunelveli City Municipal Corporation works; Reply : The services of the applicant provided for Tirunelveli Smart City Limited, are covered under serial number 3 (xii) of Notification No. 11/2017 C.T (Rate) dated 28.06.2017 and attract CGST of 9% and SGST @ 9% with effect from 01.01.2022. 3. Whether they are Government Authority or not? Reply : ..... X X X X Extracts X X X X X X X X Extracts X X X X
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