2019 (6) TMI 549 - AAR - GST

Works contract services for fisheries development qualify for GST exemption under Notification 9/2017 Sl No. 3A

In Re: M/s. Dredging and Desiltation Company Private Limited

AAR, West Bengal ruled that works contract services for up-gradation of Jalda Kuti Landing Centre and dredging of Mandarmani River qualify for GST ... GST on development of fisheries - Exemption under Sl No. 3A of Notification No 9/2017 - Integrated Tax (Rate) dated 28/06/2017 - Works Contract Service - contract for up-gradation of Jalda Kuti Landing Centre by protection to Mandarmani River and up-gradation of navigability by dredging of Mandarmani River in Purba Medinipur - Composite supply - service to Governmental authority - functions of a panchayat under the Constitution - HELD THAT:- The recipient is engaged in the development of fisheries. The term 'fisheries' is typically defined in terms of the people involved, species or type of fish, area of water or seabed method of fishing, class of boats, the purpose of the activities or a combination of the preceding features. The occupation of fishing and fishermen are included in the ambit. The up-gradation of Jalda Kothi Landing Centre and the related work that has been awarded to the Applicant has a direct nexus with fisheries development, as evident from a reference in the reports mentioned in para 2.4 to the mass petition of the fishermen. It is, therefore activity in relation to the development of fisheries - a function listed under Sl No. 4 of the Eleventh Schedule, and, therefore, entrusted to a panchayat under Article 243G of the Constitution of India. Exemption under Sl No. 3A of the Exemption Notification is, therefore, applicable to the Applicant's supply of the above works contract service. Issues:1. Admissibility of the application2. Interpretation of the Exemption Notification3. Eligibility criteria for exemption under Sl No. 3A4. Determination of the recipient as a government entity5. Analysis of the works contract in relation to functions entrusted to a PanchayatAdmissibility of the application:The Applicant sought a ruling on the applicability of an exemption under the Exemption Notification for a contract awarded by the West Bengal Fisheries Corporation. The application was admitted as per the provisions of the GST Act, with no objections raised by the Revenue officer.Interpretation of the Exemption Notification:The Applicant argued that the works contract in question falls under Sl No. 3A of the Exemption Notification, which exempts composite supplies where the value of goods does not exceed 25% of the total value. The Applicant provided evidence to support the recipient's status as a government entity and the nature of the work involved.Eligibility criteria for exemption under Sl No. 3A:The Bench analyzed Circulars clarifying that functions related to public welfare services entrusted to Panchayats or Municipalities are eligible for exemption under the Exemption Notification. The works contract involved protection against land erosion and dredging, constituting a composite supply where goods accounted for 11% of the total value.Determination of the recipient as a government entity:Based on the evidence presented, it was established that the recipient, West Bengal Fisheries Corporation, qualifies as a government entity under the Exemption Notification, meeting the criteria for exemption eligibility.Analysis of the works contract in relation to functions entrusted to a Panchayat:The works contract aimed at upgrading the Jalda Khoti Landing Centre directly related to fisheries development, a function listed under the Eleventh Schedule of the Constitution entrusted to Panchayats. The work awarded to the Applicant had a clear nexus with fisheries development, making it eligible for exemption under Sl No. 3A of the Exemption Notification.The ruling concluded that the Applicant's supply to the West Bengal Fisheries Corporation was eligible for exemption under the specified Notification. The decision is subject to the provisions of the GST Act until declared void under the relevant sections.