Composite supply of works contract taxed at 12% under CGST Act

The services provided by the applicant were deemed a composite supply of works contract under the CGST Act, 2017. The services were found taxable at a rate of 12% under a specific entry of the Central Tax (Rate) notification. The Authority ruled in favor of the applicant, concluding that the services fell within the prescribed category for the concessional tax rate. The question regarding the applicable GST rate and SAC/HSN became irrelevant due to the determination on taxability at 12%.

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Issues Involved:
1. Whether the services provided by the applicant are a composite supply of works contract as per clause (30) and (119) of section 2 of the CGST Act, 2017.
2. Whether the same would be taxable at the rate of 12% as prescribed under entry 3(vi)(a) of Notification No. 11/2017 - Central Tax (Rate), dated 28.06.2017.
3. What is the applicable GST Rate and SAC/HSN if it is not covered by entry 3(vi)(a) of Notification No.11/2017 - Central Tax (Rate), dated 28.06.2017.

Detailed Analysis:

1. Composite Supply of Works Contract:
The applicant, engaged in the construction business, entered into a contract with Greater Visakhapatnam Smart City Corporation Limited (GVSCCL) for beautification and development projects. The applicant contended that their services constitute a composite supply of works contract as defined under clause (30) and (119) of section 2 of the CGST Act, 2017. The agreement includes construction, development, and maintenance of the project, which involves various activities such as dismantling, excavation, installation of materials, and landscaping. The definition of "works contract" under Section 2(119) includes services related to immovable property, and Schedule II of the CGST Act classifies such composite supplies as services. The Authority concluded that the services provided by the applicant fall under the definition of a composite supply of works contract.

2. Taxability at 12%:
The applicant argued that their services should be taxed at a concessional rate of 12% under entry 3(vi)(a) of Notification No. 11/2017 - Central Tax (Rate). This entry specifies that works contract services provided to the Central Government, State Government, Union Territory, Local Authority, Governmental Authority, or Government Entity are taxable at 12%, provided the services are predominantly for non-commercial use. The applicant demonstrated that GVSCCL is a Government Entity as defined under the notification, with more than 90% government participation and control. The functions of GVSCCL align with municipal responsibilities under Article 243W of the Constitution, indicating that the services are for public, non-commercial use. The Authority agreed with the applicant's interpretation and ruled that the services are taxable at 12%.

3. Applicable GST Rate and SAC/HSN:
Given the affirmative answers to the first two questions, the third question regarding the applicable GST rate and SAC/HSN if the services are not covered by entry 3(vi)(a) became irrelevant.

Ruling:
1. The services provided by the applicant are a composite supply of works contract as per clause (30) and (119) of Section 2 of the CGST Act, 2017.
2. The services are taxable at the rate of 12% as prescribed under entry 3(vi)(a) of Notification No. 11/2017 - Central Tax (Rate), dated 28.06.2017.
3. The third question was deemed irrelevant as the services were covered by entry 3(vi)(a).

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