Residential colony construction for Airport Authority qualifies for concessional tax rate under CGST & KGST Acts.

The construction of a residential colony for the Airport Authority of India (AAI) by the applicant is subject to a tax rate of 12% (6% CGST + 6% KGST) as per relevant notifications. The AAI qualifies as a "governmental authority," and the construction services provided are predominantly for non-commercial use, warranting the concessional tax rate. The ruling clarifies the tax liability based on the specific provisions and notifications under the CGST and KGST Acts.

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Issues Involved:
1. Determination of the applicable GST rate on the construction of a residential colony for the Airport Authority of India (AAI) by the applicant.

Issue-wise Detailed Analysis:

Admissibility of the Application:
The application is admissible under Section 97(2)(e) of the CGST Act 2017 as it pertains to the "determination of the liability to pay tax on any goods or services or both."

Facts Relevant to the Issue:
- The applicant, a registered person under the CGST and KGST Acts, is engaged in the construction of residential and commercial complexes.
- The applicant has been awarded a contract by the Airport Authority of India (AAI) for constructing a residential colony for AAI employees near Kempegowda International Airport, Bengaluru.
- AAI is a statutory body established under the Airports Authority of India Act, 1994, and functions under the Ministry of Civil Aviation, Government of India.

Contentions by the Applicant:
- The applicant argued that AAI qualifies as a "governmental authority" as defined under Notification No. 31/2017-CT(R) dated 13.10.2017.
- The construction services provided to AAI should be taxed at a concessional rate of 6% CGST and 6% SGST as per Notification No. 11/2017-CT(R) dated 28.06.2017, as amended by Notification No. 24/2017-CT(R) dated 21.09.2017.

Findings & Discussion:
- The provisions of the CGST Act and the KGST Act are in pari-materia, meaning they have the same provisions except for a few specific differences.
- The applicant’s contract with AAI for constructing a residential colony for AAI employees is examined under Notification No. 11/2017-CT(R) dated 28.06.2017, as amended.
- Serial No. 3(vi)(c) of the Notification covers composite supply of works contract to governmental authorities for residential complexes predominantly meant for self-use or use by their employees.
- The AAI, being a statutory body set up by an Act of Parliament, qualifies as a "governmental authority." The construction of the residential colony for AAI employees is considered a function entrusted under Article 243W of the Constitution.
- An explanation inserted by Notification No. 17/2018-CT(R) dated 26.07.2018 clarifies that the term 'business' does not include activities undertaken by the Central Government, State Government, or local authorities as public authorities. This does not exclude a Government Entity like AAI.
- The construction services provided by the applicant to AAI are predominantly for use other than commerce, industry, or any other business or profession, thereby qualifying for the concessional tax rate.

Ruling:
The construction of the residential colony for AAI employees by the applicant attracts a tax rate of 12% (6% CGST + 6% KGST) as per Notification No. 11/2017-CT(R) dated 28.06.2017, as amended by Notification No. 24/2017-CT(R) dated 21.09.2017.

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