Odisha Power Transmission Corporation Limited (OPTCL) Classified as Government Entity for GST, Impacts Service Tax Rates

The ruling authority classified Odisha Power Transmission Corporation Limited (OPTCL) as a "Government Entity" under relevant GST notifications due to its establishment under the Companies Act, 1956, and complete ownership by the Government of Odisha. Consequently, services provided to OPTCL by M/s. Vishwanath Projects Limited are subject to an 18% GST rate (9% CGST + 9% SGST) as they are considered works contract services used for commercial purposes, not qualifying for the concessional rate of 12%.

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Issues Involved:
1. Classification of EPC Contract for power distribution and transmission company as a "Government Entity."
2. Applicable rate of GST for services provided under the EPC Contract.

Detailed Analysis:

1. Classification of EPC Contract for Power Distribution and Transmission Company as a "Government Entity":
The applicant, M/s. Vishwanath Projects Limited, sought an advance ruling on whether Odisha Power Transmission Corporation Limited (OPTCL) qualifies as a "Government Entity" under GST Notification No. 1/2018 – Central Tax (Rate).

Facts and Submissions:
- The applicant is engaged in providing services such as Supply, Erection, Testing & Commissioning of substations to OPTCL.
- The applicant contends that power distribution and transmission companies are treated as Government Entities, attracting a GST rate of 12%.

Discussion and Findings:
- The ruling authority examined the definition of "Government Entity" as per Notification No. 31/2017 – Central Tax (Rate), which includes any authority or board established by the government with 90% or more participation by way of equity or control to carry out governmental functions.
- OPTCL, established under the Companies Act, 1956, and wholly owned by the Government of Odisha, qualifies as a Government Entity. It undertakes electricity transmission activities under regulatory control and is a deemed transmission licensee.

Conclusion:
- OPTCL is classified as a "Government Entity" as per the relevant GST notifications.

2. Applicable Rate of GST for Services Provided Under the EPC Contract:
The applicant also sought clarification on the applicable GST rate for the services provided to OPTCL.

Facts and Submissions:
- The applicant provides services for the erection, testing, and commissioning of substations, which they argue should attract a concessional GST rate of 12%.

Discussion and Findings:
- The ruling authority referred to various GST notifications and amendments, specifically Notification No. 11/2017 – Central Tax (Rate), which prescribes different GST rates for construction services based on their nature and usage.
- The services rendered by the applicant fall under the composite supply of works contract, which is treated as a supply of service.
- The authority noted that the works contract services provided by the applicant are used for commercial purposes by OPTCL, thus not qualifying for the concessional rate of 12%.
- The applicable GST rate for such services is 18% (9% CGST + 9% SGST) for the period from 01.07.2017 to 31.03.2019. Post 01.04.2019, the services fall under a residual entry attracting the same rate of 18%.

Conclusion:
- The applicable rate of GST for the services provided by the applicant to OPTCL is 18% (9% CGST + 9% SGST).

Advance Ruling:
1. Classification as Government Entity:
- Services rendered to OPTCL fall under services provided to a Government Entity.

2. Applicable GST Rate:
- The applicable rate of tax for the services referred to by the applicant is 18% (9% CGST + 9% SGST).

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