2023 (4) TMI 539 - AAR - GST

IIT Madras civil contract services face GST rate hike from 12% to 18% after notification amendments

The AAR, Tamil Nadu ruled on GST classification for civil contract services provided to IIT Madras. Initially, services to IIT Madras qualified for 12% ... Classification of services - Works Contract - rate of GST - 12% or 18%? - Civil Contract Services (SAC 995415) undertaken / to be undertaken to customer M/s IIT, Madras (GST NO.33AAAAI3615G1Z6) - Government Entity - amendment to Notification No. 11/2017 C.T. (Rate) vide Notification No.15/2021 C.T (Rate) dated 18.11.2021 - HELD THAT:- Description of service in Serial No. 3(vi) of Notification No. 11/2017 C.T (Rate) dated 28.06.2017 was amended by Notification No. 15/2021 C.T (Rate) dated 18.11.2021 and the same superseded by Notification No.22/2021 C.T (Rate) dated 31.12.2021. The said amendment substituted the words 'Union territory, a local authority, a Governmental Authority or a Government Entity' with the words 'Union territory or a local authority' with effect from 01.01.2022 and also the condition under column 5 has been omitted. In short the words 'a Governmental Authority or a Government Entity' have been deleted - Notification No.3/2022 C.T (Rate) dated 13.07.2022 omitted, inter alia, item (vi) and the corresponding entries in column 4 of serial number 3 of Notification No. 11/2017 C.T (Rate) dated 28.06.2017, as amended, with effect from 18.07.2022. It is evident from Section 3 (j) (iii) of The Institutes of Technology Act, 1961 that Indian Institute of Technology Madras is a 'Society' registered under the Societies Registration Act, 1860, conferred with the status of 'body corporate' by Section 4 (1) of the said Act for the promotion of science, education, diffusion of useful knowledge, etc. under the control of Central Government. Accordingly, Indian Institute of Technology Madras is a 'Government Entity' within the meaning of explanation 4(x) of Notification No. 11/2017 C.T (Rate) dated 28.06.2017, as amended, and the nature of service provided by the applicant narrated under para 7.1 is covered under entry in serial number 3(vi) of Notification No. 11/2017 C.T (Rate) dated 28.06.2017 till 31.12.2021. However, after omission of 'Government Entity' from the description of service under the said entry vide Notification No. 15/2021 C.T (Rate) dated 18.11.2021 read with Notification No.22/2021 C.T (Rate) dated 31.12.2021 with effect from 01.01.2022, the services of the applicant is covered under serial number 3 (xii) of Notification No. 11/2017 C.T (Rate) dated 28.06.2017 and attract CGST of 9%. Issues Involved:1. Applicable rate of tax under CGST Rules for Civil Contract Services provided to IIT Madras with effect from 01.01.2022.Summary:Issue 1: Applicable Rate of Tax for Civil Contract Services:The applicant, M/s ESVEE Constructions, sought an advance ruling on the applicable rate of tax under CGST Rules for Civil Contract Services (SAC 995415) provided to IIT Madras from 01.01.2022, following the amendment to Notification No. 11/2017 C.T. (Rate) by Notification No. 15/2021 C.T. (Rate) dated 18.11.2021.The applicant contended that IIT Madras is a Central Government Entity, and thus, the applicable GST rate for the services provided should remain at 12% even after the amendment.Upon review, the Authority noted that IIT Madras is a 'Government Entity' as per explanation 4(x) of Notification No. 11/2017 C.T (Rate) dated 28.06.2017. However, the amendment via Notification No. 15/2021 C.T (Rate) dated 18.11.2021, effective from 01.01.2022, omitted the term 'Government Entity' from the relevant entry.Consequently, the services provided by the applicant to IIT Madras fall under serial number 3 (xii) of Notification No. 11/2017 C.T (Rate) dated 28.06.2017, as amended, attracting a CGST of 9% and SGST of 9%.Ruling:The applicable rate of tax for the Civil Contract Services provided by the applicant to IIT Madras with effect from 01.01.2022 is CGST @ 9% and SGST @ 9%, totaling 18%.