2020 (5) TMI 603 - AAR - GST

Taxable Rate for Works Contract Services Provided to Research Institute: 9% CGST, 9% KGST

In Re: M/s. Hombale Constructions And Estates Private Limited.,

The Authority for Advance Ruling determined that the works contract services provided by a Private Limited Company to a research institute were taxable at ... Government Entity or not - Rate of tax - Works Contract - agreement with National Centre for Biological Sciences for construction of Hostel building at NCBS Campus in Bangalore - N/N. 24/2017 Central Tax (Rate) dated 21-09-2017 - HELD THAT:- On verification of the nature of the activity carried out by the applicant it was observed that applicant is providing works contract service to National Centre for Biological Science (NCBS), and there is no dispute whatsoever that it is a works contract service as per the clause (119) of Section 2 of the Central Goods and Services Tax Act, 2017. Nature of the organisation covering NCBS - HELD THAT:- The NCBS has obtained registration under the GST Act as a Trust with GSTIN 29AAATT3951F1ZC and the Council managing this organisation has three members appointed by the Government of India, one member appointed by the Government of Maharashtra, two members appointed by the Trustees of Sir Dorabji Tata Trust, the Director of the Institute (NCBS) is an ex-officio member and one co-opted member appointed by the Council. Hence four members are from the Government. Whether NCBS is a Government Entity or not? - HELD THAT:- NCBS is neither set up by an Act of Parliament or State Legislature nor is established by any Government. Further the council which administers this institute has only four members appointed by the Government and hence the Government does not have more than 90% control over it. One more important point to note is that this institute is not established to carry out a function entrusted by the Government. Hence, for all these reasons, NCBS is not covered under the definition of a “Government Entity” as per the clause (x) of paragraph 4 of Notification No.11/2017- Central Tax (Rate) dated 28.06.2017. The service supplied by the applicant is not covered under clause (vi) of Serial No.3 of Notification No.11/2017- Central Tax (Rate) dated 28.06.2017 as amended from time to time and hence is not taxable at 6% CGST and 6% KGST. And it is taxable at 9% CGST and 9% KGST under the residual item no. (xii) of Serial No.3 of Notification No.11/2017- Central Tax (Rate) dated 28.06.2017 as amended from time to time. Issues involved:1. Determination of applicable GST rate for services provided in a works contract agreement with a research institute.Analysis:1. The applicant, a Private Limited Company, entered into a works contract agreement with a research institute for construction services and sought an advance ruling on the applicable GST rate.2. The applicant believed that the general GST rate of 18% applied to the services provided, while the research institute contended that the 12% rate was applicable based on specific notifications.3. The key question revolved around whether the research institute qualified as a 'Government Entity' under the relevant GST notifications, impacting the applicable GST rate for the services provided.4. The Authority for Advance Ruling analyzed the nature of the organization, the composition of its governing council, and the criteria for classification as a 'Government Entity' under the GST notifications.5. It was established that the research institute did not meet the criteria to be classified as a 'Government Entity' based on the definitions provided in the GST notifications.6. Consequently, the ruling determined that the services provided in the works contract agreement were not covered under the specific notification for the 12% GST rate but fell under the residual item, warranting a GST rate of 9% for both CGST and KGST.7. The final ruling specified that the works contract services provided by the applicant to the research institute were taxable at 9% CGST and 9% KGST based on the specific notification applicable to such services.