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of <h1>UPJN lacks elected representation and autonomy, doesn't qualify as local authority under GST laws, attracts 18% tax rate</h1> <h3>In Re: M/s Concrete Udyog Limited</h3> In Re: M/s Concrete Udyog Limited - TMI Issues Involved:1. Whether Uttar Pradesh Jal Nigam (UPJN) qualifies as a 'local authority' under the CGST Act, 2017.2. Applicability of Entry 3(iii) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 to the composite works contract services supplied to UPJN.Issue-wise Detailed Analysis:1. Whether Uttar Pradesh Jal Nigam (UPJN) qualifies as a 'local authority' under the CGST Act, 2017:The applicant argued that UPJN qualifies as a 'local authority' based on Section 2(69) of the CGST Act, which includes any authority legally entitled to or entrusted by the government with the control or management of a municipal or local fund. The applicant cited the UP Water Supply and Sewerage Act, 1975 (UPWSS Act), which states that UPJN is a local authority and has its own fund deemed to be a local fund.However, the ruling analyzed the definition of 'local authority' as per Section 2(69) of the CGST Act and the General Clauses Act, 1897, along with the Supreme Court's interpretation in Union of India vs. R.C. Jain. The ruling found that UPJN does not satisfy all the criteria, such as being elected by inhabitants, enjoying autonomy, and having control over a municipal or local fund. The ruling also referenced the Allahabad High Court's decision, which held that UPJN is not a 'local authority' for the purposes of the Income Tax Act, 1961.2. Applicability of Entry 3(iii) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 to the composite works contract services supplied to UPJN:The applicant sought clarification on whether their composite works contract services supplied to UPJN would fall under Entry 3(iii) of Notification No. 11/2017-CT (Rate), attracting a GST rate of 12%. This entry pertains to works contract services supplied to the Central Government, State Government, Union territory, or a local authority.The ruling concluded that since UPJN does not qualify as a 'local authority,' the composite works contract services supplied to UPJN do not fall under Entry 3(iii) of the Notification. Instead, UPJN qualifies as a 'governmental authority' as per Notification No. 31/2017-Central Tax (Rate), which defines 'governmental authority.' However, the amended Notification No. 15/2021-Central Tax (Rate) dated November 18, 2021, restricts the lower GST rate of 12% to works contract services supplied to the Central Government, State Government, Union territory, or a local authority only.Therefore, the applicable GST rate for the services provided to UPJN is 18%, as per Entry 3(xii) of Notification No. 11/2017-Central Tax (Rate), which covers construction services not specified in other entries.Ruling:The composite works contract services supplied to Uttar Pradesh Jal Nigam involving construction and design of prestressed concrete cylinder pipelines (PCCP) and pumping plant, along with ancillary works, do not fall under Entry 3(iii) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. The applicable GST rate is 18% as per Entry 3(xii) of the same notification.
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