Tirunelveli Smart City Limited qualifies as Governmental Authority but not Local Authority under GST notifications

The AAR held that Tirunelveli Smart City Limited qualifies as a Governmental Authority but not a Local Authority under GST notifications. For works contract services provided to this entity, the tax rate was governed by entry 3(vi) of Notification No. 11/2017 until December 31, 2021. However, following the amendment removing "Government Entity" from the service description effective January 1, 2022, such services now fall under entry 3(xii) and attract 9% CGST rate.

---

---

Issues Involved:
1. GST rate applicable on composite supply of works contract to Tamil Nadu Urban Habitat Development Board.
2. GST rate applicable on composite supply of works contract to Tirunelveli Smart City Limited.
3. Determination of whether Tirunelveli Smart City Limited is a Government Authority or not.

Issue 1: GST Rate on Works Contract to Tamil Nadu Urban Habitat Development Board
The applicant did not submit details and nature of services provided to Tamil Nadu Urban Habitat Development Board. As per Section 95(a) of CGST Act, 2017, advance ruling is confined to matters on questions in relation to supply of goods or services or both being undertaken or proposed to be undertaken by the applicant. Since the applicant withdrew the application for advance ruling on this issue, no ruling was provided.

Issue 2: GST Rate on Works Contract to Tirunelveli Smart City Limited
The applicant sought to determine the GST rate applicable to the composite supply of works contract to Tirunelveli Smart City Limited for the period from 01.01.2022 to 18.07.2022. The Authority examined the nature of the services provided and concluded that the services of the applicant provided to Tirunelveli Smart City Limited are covered under serial number 3(xii) of Notification No. 11/2017-C.T (Rate) dated 28.06.2017, and attract CGST of 9% and SGST of 9% with effect from 01.01.2022.

Issue 3: Determination of Government Authority Status
The Authority examined the legal status of Tirunelveli Smart City Limited. It was determined that Tirunelveli Smart City Limited falls under the definition of 'Governmental Authority' as per explanation in Para 4(ix) of Notification No. 11/2017-C.T (Rate) dated 28.06.2017, as amended. However, it does not qualify as a 'Local Authority' under Section 2(69) of the CGST Act, 2017, as it does not have control or management of a municipal or local fund.

Ruling:
1. No ruling provided for the GST rate on composite supply of works contract to Tamil Nadu Urban Habitat Development Board.
2. The GST rate applicable on composite supply of works contract to Tirunelveli Smart City Limited is 18% (CGST 9% and SGST 9%) with effect from 01.01.2022.
3. Tirunelveli Smart City Limited is considered a 'Governmental Authority' but not a 'Local Authority'.

---