2023 (12) TMI 938 - AAR - GST

UIT Kota deemed government entity, construction work taxable at 18% GST from January 2022

In Re: M/s. Raghubala Construction Co.,

The AAR Rajasthan ruled that UIT Kota constitutes a Government Entity, being established by the State Legislature under the Rajasthan Urban Improvement ... Government Entity or not - Urban Improvement Trust (UIT) Kota - constructing a Community Hall by the applicant at Bapu Nagar Residential Scheme, Kota, in accordance of works contract allotted by UIT Kota - taxability under GST law - paid tax shall be refunded to the assessee along with appropriate interest or not - Applicability of change in tax rate during continuing of a works contract, where the works contract has pre-fixed terms and conditions including total tender rate. Whether Urban Improvement Trust (UIT) Kota is “Government Entity”? - HELD THAT:- UIT Kota is established by Govt, of Rajasthan (State Legislature) in 1970 under The Rajasthan Urban improvement Act 1959 and it is established by Govt, of Rajasthan with 90% or more participation by way of equity or control to carry out a function entrusted by the State Government. Thus UIT Kota falls under the category of “Government Entity”. Whether constructing a Community Hall by the applicant at Bapu Nagar Residential Scheme, Kota, in accordance of works contract allotted by UIT Kota, is a taxable service under GST law and if yes, then determination of the liability to pay tax after applicable exemption and deductions? - HELD THAT:- The applicant is liable to pay GST on supply of this services and there no exemption and deduction is available to applicant in respect of aforesaid service provided to UIT Kota. If no, then whether the paid tax shall be refunded to the assessee along with appropriate interest? - HELD THAT:- This question need not be answered. Applicability of change in tax rate during continuing of a works contract, where the works contract has pre-fixed terms and conditions including total tender rate - HELD THAT:- The benefit of the reduced tax rate, i.e., 12% instead of 18% on works contract supplied to a Governmental Authority or a Government Entity regarding the works contract services mentioned in the corresponding entry, stands discontinued with effect from 01.01.2022. The revised rate applicable for the said supply is 18%. The revised rate is applicable from the 01st day of January, 2022. In case, where the time of supply of the work completed is on or before 31st December, 2021, GST at pre-revised rate is applicable and in case where the time of supply of the work completed is on or after, 01st day of January, 2022, GST at the revised rate is applicable. Issues Involved:1. Whether Urban Improvement Trust (UIT) Kota is a 'Government Entity'.2. Whether constructing a Community Hall by the applicant at Bapu Nagar Residential Scheme, Kota, is a taxable service under GST law and determination of the liability to pay tax.3. Refund of paid tax along with interest if the service is not taxable.4. Applicability of change in tax rate during the continuation of a works contract with pre-fixed terms and conditions.Summary:1. Whether Urban Improvement Trust (UIT) Kota is a 'Government Entity':The Authority examined the constitution and objectives of UIT Kota, established by the Government of Rajasthan under the Rajasthan Urban Improvement Act 1959. UIT Kota is a body corporate with government officials and public persons as trustees. The Authority ruled that UIT Kota falls under the category of 'Government Entity' as per Notification No. 31/2017 - Central Tax (Rate) dated 13.10.2017, which defines a Government Entity as an authority established by any government with 90% or more participation by way of equity or control to carry out functions entrusted by the government.2. Whether constructing a Community Hall by the applicant at Bapu Nagar Residential Scheme, Kota, is a taxable service under GST law and determination of the liability to pay tax:The Authority held that the construction of a Community Hall falls under the definition of Civil Work under HSN Code 9954 and is taxable under GST law. The service provided by the applicant to UIT Kota does not qualify for any exemption or deduction. The applicable GST rate for such services, as per Notification No. 22/2021-Central Tax (Rate) dated 31st December 2021, is 18%.3. Refund of paid tax along with interest if the service is not taxable:Since the service provided by the applicant is taxable, the question of refund does not arise.4. Applicability of change in tax rate during the continuation of a works contract with pre-fixed terms and conditions:The Authority clarified that the amendment in GST rate came into effect on 01.01.2022. For works completed on or before 31st December 2021, the pre-revised GST rate is applicable. For works completed on or after 01st January 2022, the revised GST rate of 18% is applicable. The Authority referred to Section 14 of the CGST Act, which deals with the change in the rate of tax in respect of supply of goods or services, to determine the time of supply and applicable tax rate.Ruling:1. UIT Kota is a 'Government Entity'.2. The construction of a Community Hall by the applicant is a taxable service under GST law, and no exemption or deduction is available.3. The question of refund does not arise as the service is taxable.4. The revised GST rate of 18% is applicable from 01st January 2022 for works completed on or after this date.