Applicant not Govt Authority under GST Act; Services Taxable at 18%

The applicant, M/s Sri Satya Sai Water Supply Project Board, does not qualify as a 'Governmental Authority' under the GST Act. Consequently, the services procured are not exempt from GST but are taxable at a rate of 18% (CGST 9% + SGST 9%). The applicant is liable to remit GST for the services procured from contractors.

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Issues Involved:
1. Whether the applicant qualifies as a 'Governmental Authority' under the Act.
2. Whether the services availed by the applicant are exempt from GST by virtue of Entry 3 in Notification 12/2017 (Rate) dated 28.06.2017.
3. Whether the Applicant is liable to remit GST to its suppliers for services procured for supplying water for domestic purposes.

Issue-wise Detailed Analysis:

1. Qualification as a 'Governmental Authority':
The applicant, M/s Sri Satya Sai Water Supply Project Board, contended that it qualifies as a 'Governmental Authority' under the GST Act. The definition under Section 2(16) of the IGST Act and Notification No. 31/2017 - Central Tax (Rate) states that a 'Governmental Authority' must be set up by an Act of Parliament or State Legislature or established by any Government with 90% or more participation by way of equity or control to carry out any function entrusted to a panchayat or municipality under the Constitution.

Upon examination:
- The applicant is constituted by the Government of Andhra Pradesh under G.O. Ms No. 344 dated 16.09.1997, thus meeting the criterion of being established by the Government.
- However, the Board consists of 9 members, with only 7 being officers/employees of the Government of Andhra Pradesh, equating to 77% government control, which falls short of the required 90% participation by way of equity or control.

Therefore, the applicant does not meet the criteria to be considered a 'Governmental Authority' under the Act.

2. Exemption from GST under Entry 3 in Notification 12/2017 (Rate) dated 28.06.2017:
The applicant sought exemption under Entry 3 of Notification 12/2017, which exempts pure services provided to a 'Governmental Authority' in relation to any function entrusted to a Panchayat or Municipality under the Constitution.

Since the applicant does not qualify as a 'Governmental Authority', it cannot avail of the exemption under Entry 3 of Notification 12/2017. Consequently, the services procured by the applicant are not exempt from GST.

3. Liability to Remit GST for Services Procured:
The services procured by the applicant from contractors, such as M/s. Larsen & Toubro Limited, for the operation and maintenance of water supply schemes, are classified under SI.No. 25, Heading 9987 "Maintenance repair and installation (except construction) Services". These services attract a tax rate of 18% (CGST 9% + SGST 9%) under Notification 11/2017- Central Tax (Rate) dated 28.06.2017.

Therefore, the applicant is liable to remit GST at the specified rate for the services procured.

Ruling:
1. The applicant does not qualify as a 'Governmental Authority' under the Act, and thus, the services procured by it are not exempt from GST but are taxable.
2. The services procured by the applicant fall under SI.No. 25, Heading 9987 "Maintenance repair and installation (except construction) Services" and attract a tax rate of 18% (CGST 9% + SGST 9%) under Notification 11/2017- Central Tax (Rate) dated 28.06.2017.

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