Government entity conducting industrial park development business ineligible for 12% GST rate under notification 24/2017

Andhra Pradesh HC dismissed the writ petition challenging GST assessment at 18% rate for construction works in Electronic Manufacturing Cluster and Mega Industrial Hub. The court held that despite the fourth respondent being a government entity, it conducts business of developing industrial parks and recovers costs from entrepreneurs, making it ineligible for concessional 12% tax rate under notification 24/2017. The petitioner's tax liability at 18% for period 01.04.2021 to 01.01.2022 was upheld, with the fourth respondent bearing the tax burden through contractual arrangement.

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Issues:
1. Whether M/s. APIIC is a government entity.
2. Whether any of the three conditions set out in the notification are applicable to the works executed by the petitioner.

Analysis:
1. The petitioner undertook works for M/s. APIIC, contested the assessment of works conducted from 01.04.2021 to 31.11.2022, and disputed the tax liability. The petitioner claimed liability for CGST and SGST at different rates for distinct periods. The 4th respondent remitted 12% tax instead of 18%, leading to a dispute. A letter from the Zonal Manager of the 4th respondent acknowledged the liability for 18% GST post-01.01.2022.

2. The petitioner argued for a concessional rate of 6% CGST and SGST based on notification No.24/2017 for works done between 01.04.2021 to 01.01.2022. However, the 1st respondent assessed tax at 18% for this period, citing non-fulfillment of conditions for the concessional rate. The petitioner contended that condition-a of the notification applied to their works, disputing the 18% tax imposition.

3. The key issues revolved around M/s. APIIC's status as a government entity and the applicability of the notification conditions. The 4th respondent claimed to be a State entity as most shares were held by the State Government. The works in question aimed at developing infrastructure in industrial clusters and hubs, facilitating entrepreneurs. The notification's conditions were analyzed, with condition-a being the focus, determining eligibility for concessional tax rates.

4. The judgment concluded that M/s. APIIC qualified as a government entity, and none of the notification conditions applied to the petitioner's works. The 1st respondent's assessment of 18% tax for the period 01.04.2021 to 01.01.2022 was upheld. The arrangement between the petitioner and the 4th respondent regarding tax payment was recognized, with the 4th respondent directed to pay the differential tax amount to the petitioner within two months.

5. The court disposed of the Writ Petition, affirming the 1st respondent's order for the tax period in question. The 4th respondent was instructed to clear the differential tax payment to the petitioner promptly. Any interest for late payment would be borne by the 4th respondent. No costs were awarded, and pending interlocutory applications were closed as a result of the judgment.

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