TaxTMI 
TaxTMI 
2018 (12) TMI 591
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....suance of Notification No. 24/2017 - Central Tax (Rate) dated 21 September 2017 read with Notification No. 31/2017 - Central Tax (Rate) dated 13 October 2017? At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / MGST Act would be mentioned as being under the "GST Act". 02. FACTS AND CONTENTION - AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus- Statement of relevant facts having a bearing on the question(s) raised 1. The Applicant, M/s. Leena Powertech Engineers Private Limited (hereinafter referred to as the 'Applicant' or Company') is a company engaged in the business of Electrification projects, undertaking development of power supply infrastructure with various Government Entities. 2. City and Industrial Development Corporatio....
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....r the definition of the term Government Entity. 2. The term Government Entity is defined in the Notification No. 31/2017 - Central Tax (Rate) dated 13 October 2017. The relevant portion of the definition is reproduced below: "Government Entity" means an authority or a board or any other body including a society, trust, corporation, V set up by an Act of Parliament or State Legislature; or i) established by any Government, with 90 per cent. or more participation by way of equity or control, to carry out a function entrusted by the Central Government, State Government, Union Territory or a local authority." 3. CIDCO is - a. Established by Govt. of Maharashtra b. With 100% Participation by way of equity and control c. CIDCO is carrying out the function entrusted by Govt. of Maharashtra 4. The relevant extract of resolutions by the State Government of Maharashtra for establishing CIDCO is reproduced below: a. Govt. of Maharashtra Resolution dt. 18.3.1970, reproduced verbatim : "Government has had under consideration the development of the trans-Thana and trans-Harbour areas in uran, Panvel and Thana Tehsils as a new township or new Metro centre with a view....
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....ill work under the control and supervision of the State Government in the General Administration Department. By and order and in the name of the Governor of Maharashtra." b. Govt. of Maharashtra Notification dt. 20.3.1971, reproduced verbatim : URBAN DEVELOPMENT. PUBLIC HEALTH AND HOUSING DEPARTMENT Sachivalaya. Bombay, 20the March 1971 Maharashtra Regional Planning and Planning Act, 1966 No. RPB. 1171-18124-1-W- Whereas, the State Government is satisfied that it is expedient in public interest that the said area should be developed as a site for the proposed new town: Now, therefore, in exercise of the powers conferred by sub-section (1) of section 113 of the said Act, the Government of Maharashtra hereby designates the said area as the site for the proposed new town, which shall be known by the name of "New Bombay". And, whereas, having regard to the complexity and magnitude of the work involved in developing the area comprised in the site of the new town aforesaid the time which may be required for setting up new machinery for undertaking and completing such work of development and the comparative speed with which such work can be undertaken and completed....
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....nd acquired for the Project. 2) From the proceeds collected out of such disposals, the Corporation should recoup the expenditure it incurs on the items referred to in sub-para(1) above, inclusive of administrative expenses thereon, plus agency remuneration at Rs, 3.00 lacs, for the year ended 31st March, 1971 to be increased each year by Rs. 1.00 lacs, subject to a maximum of Rs. 5.00 lacs for any one year, before remitting the remained to the Government. 3) The expenditure incurred by the Government on the acquisition of such lands should be treated as Government's own capital outlay and debited to the appropriate head of account and such lands on acquisition shall vest in the Corporation establishing New Bombay. 4) The Corporation may make "On Account Advance Payment" to Government from the proceeds of land disposal to meet Government expenditure on capital outlayon account of payment of compensation for land acquisition for New Bombay. 5) Such "On Account Advance Payment" made by the Corporation should be adjusted in due course. This Resolution issues with concurrence of the Finance Department vide its unofficial reference No.; 145/72....
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.... 7. It is evident from the above resolutions and the functioning of CIDCO that CIDCO is entirely owned and established by the State Government and performs the functions entrusted to it by the State Government. Accordingly, CIDCO is covered by the definition of Government Entity as per Notification No. 31/2017-Central (Rate) dated 13 October 2017. B. To Contract undertaken by the Applicant is eligible for 12% GST rate as per Notification No. 24/2017-Central Tax (Rate) dated 21 September 2017 read with Notification No. 31/2017 -Central Tax (Rate) dated 13 October 2017. 1. Without prejudice to the facts of the case, it is submitted that the contract undertaken by the applicant for CIDCO is eligible for 12% GST (CGST 6% + SGST 6%). 2. The relevant extract of the notification no. 31/2017 is reproduced below: Particulars Rate of Tax Conditions vi) Services provided to the Central Government, State Government, Union Territory, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of- (a) a civil structure or any other original works mea....
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....blishing power supply networks by CIDCO is for creation of a new town for rehabilitation and resettlement of project affected people. 9. The Hon'ble Income Tax Appellate Tribunal in case of ACIT vs. CIDCO (ITA No. 1234/Mum/2016] = 2018 (1) TMI 668 - ITAT MUMBAI has recently held that CIDCO is an agent of the State Government of Maharashtra and that the income earned by CIDCO belongs to the State and thus is not taxable. The relevant portion of the judgement is reproduced below: This observation read together with section 113(3A) of MR & TP Act, 1966, shall emerge that the activity so performed by the assessee is nothing but an act of State without any profit or commercial motive attached with it. The only clause left for our consideration then would be clause (3), which shall come into play once clause (2) is disbanded and as soon as it become disbanded, clause (3) come to life, which operates only if, "Parliament may by Law declare to be incidental to the ordinary functions of Government". Here, in the instant case, we have to read "Parliament" as "State Government" because in the instant case, it is the State Government which has authorized the assessee to perform the devel....
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....shows that the assessee is acting totally on behalf of the Government. Another distinguishing feature that can be seen in that as soon as the "Project" is complete, the project gets handed back to the State, i.e. when there is a development project, as per phases, and in the case of local authority, as and when the authorizing committee is satisfied, the reins are transferred to the municipal boards, from whom, the project was taken over, as we have seen from Resolution no. 10375 dated 06/08/2010. 43. In tune with these observations, read with sections 113 & 113A of MR&TP Act along with Articles 289(1) & 289(3) and holding that the assessee corporation is not doing any trade activity on its own accord, we hold, relying on the decision of the Hon'ble Bombay High Court in the assessee's own case, in the Writ Petition, following the decision Percival case (2009 (11) TMI 889 - BOMBAY HIGH COURT), wherein it has been held, that CIDCO, the assessee herein, is an agent of the State Government of Maharashtra. We, therefore, respectfully follow the Hon'ble jurisdictional High Court of Bombay, as held in the case of Percival (2009 (11) TMI 889 - BOMBAY HIGH COURT), and hold, the assessee ....
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....ication No. 31/2017 - Central Tax (Rate) dated 13 October 2017 Query 2. If CIDCO falls under the definition of Government Entity, Then Kindly also Clarify Whether the tax rate of 12% (CGST 6% + SGST 6%) is applicable to the contract entered into by the Applicant with CIDCO, in pursuance of Notification No. 24/2017 - Central Tax (Rate) dated 21 September 2017 read with Notification No. 31/2017 - Central Tax (Rate) dated 13 October 2017? Response Yes, the contracts undertaken by the Applicant shall be covered by the notification no. 31/2017 for reasons elaborated above. 03. CONTENTION - AS PER THE CONCERNED OFFICER The submission, as reproduced verbatim, could be Seen thus- As required the details with respect to applicant M/s. Leena Powertech Engineers Pvt. Ltd. (the appellant for short) and comments on the application filed by them for advance ruling are submitted as under: (a) Classification of Service/Services as applicable. i. Works contract service. ii. Election Commissioning and Installation Service. iii. Rent a Cab service (Under RCM) iv. Security / detective agency service (Under RCM) v. Legal Consultancy S....
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....ntral Tax (Rate) dated 28.06.2017 as amended vide Notification No.24/2017-Central Tax (Rate) dated reads as under: Sl.No. Chapter, Section or Heading Description of Service Rate (per cent.) Condition (1) (2) (3) (4) (5) 1 Chapter 99 All Services 2 Section 5 Construction Services (i) Construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier, (Provisions of paragraph 2 of this notification shall apply for valuation of this service) 9 - (ii) composite supply of works contract as defined in clause 119 of section 2 of Central Goods and Services Tax Act, 2017. 9 - (iii) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied to the Governmental Authority or a Government Entity by way of c....
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....rpet area of 60 square metres per house in a housing project approved by the competent authority under- (1) the "Affordable Housing in Partnership" component of the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana; (2) any housing scheme of a State Government; (e) post harvest storage infrastructure for agricultural produce including a cold storage for such purposes; or (f) mechanised food grain handling system, machinery or equipment for units processing agricultural produce as food stuff excluding alcoholic beverages. 6 (vi) Services provided to the Central 6 Government, State Government, Union Territory, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of - (a) a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession; (b) a structure meant predominantly for use as (i) an educational, (ii) a clinical, or(iii) an art or cultural establishment; or (c) a residential complex predominantly meant for self-use or the use of their....
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....alteration of, -a) a historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under the Ancient Monuments and Archaeological Sites and Remains Act, 1958 (24 of 1958);(b) canal, dam or Other irrigation works; (c) pipeline, conduit or plant for (1) water supply (ii) water treatment, or (iii) sewerage treatment or disposal 6 Provided that where the services are supplied to Government Entity, they should have been procured by the said entity in relation to a work entrusted to it by the Central Government, State Government, Union territory or local authority, as the case may be (iv) Composite supply of works contract as 6 defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of; (a) a rood, bridge, tunnel, or terminal for road transportation for use by general public; (b) a civil structure or any other original works pertaining to a scheme under Jawaharlal Nehru National Urban Renewal Mission or Rajiv Awaas Yoja....
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....other original works meant predominantly for use other than for commerce, industry, or any other business or profession; (b) a structure meant predominantly for use as (i) an educational; (ii) a clinical, or(iii) an art or cultural establishment; or (c) a residential complex predominantly meant for self-use or the use of their employees or other persons specified in paragraph 3 of the Schedule III of the Central Goods and Services Tax Act, 2017 6 Provided that where the services are supplied To a Government Entity, they should have been procured by the said entity in relation to a work entrusted to it by the Central Government, State Government, Union territory or local authority, as the case may be (vii) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, involving predominantly earth work (that is, constituting more than 75 per cent of the value of the work contract) provided to the Central Government, State Government, Union territory, local authority; a Governmental Authority or a Government Entity. 2.5 Provided that where the services are supplied to a Government En....
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....of developing the trans-Thana and trans-Harbour areas in the Thana and Kolaba districts as a twin city to provide relief to Bombay City and also to ensure its integrated development with the industrial development of this region and the State. The Land proposed to be acquired by Government in trans-Thana and trans-Harbour areas should be entrusted to the subsidiary company, which would act as an agent of Government for the development of the areas with a view to secure the above objectives. The subsidiary company will in due course be notified as New Town Development Authority under the Maharashtra Regional and Town Planning Act. The subsidiary company will work under the control and supervision of the State Government in the General Administration Department. b. Govt. of Maharashtra Notification dt 20.3.1971 : And whereas, the City and Industrial Development Corporation of Maharashtra Limited, registered under the Companies Act, 1956 (1 of 1956), a subsidiary company of the State Industrial and Investment Corporation of Maharashtra, a company owned and controlled by the State is at present equipped with the machinery for undertaking and completing the work involved speedily ....
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....by the Corporation should be adjusted in due course. (ix) In view of the foregoing, it is observed that CIDCO is established by State Government who holds 100% control. Therefore CIDCO appears to be a 'Government Entity' in terms of Explanation (x) to Notification No. 11/2017-Central Tax (Rate)as amended. (x) The other question is as to whether the tax rate of 12% (CGST 6% + SGST 6%) is applicable to the contract entered into by the assessee with CIDCO, in terms of Notification No. 11/2017-Central Tax (Rate) as amended by Notification No. 24/2017- Central Tax (Rate) dated 21.09.2017 read with Notification N031/2017 - Central Tax (Rate) dated 13.10.2017. The assessee in the application for advance ruling has stated that their services are covered by item (vi) (a) at Sr. NO. 3 Of Table to Notification No. 11/2017-Central Tax (Rate) as amended by Notification No. 24/2017 - Central Tax (Rate) attracting Central Tax @6% as below: Sl.No. Chapter, Section or Heading Description of Service Rate (per cent.) Condition (1) (2) (3) (4) (5) 1. Chapter 99 All Services 2. Section 5 Construction services ....
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..... 5 of the table in their application for advance ruling. For availing concessional rate of Central Tax @6% in terms of Notification No. 11/2017-Central Tax (Rate) as amended by Notification No. 24/ 2017 - Central Tax (Rate), the condition is where the services are supplied to a Government Entity, they should have been procured by the said entity in relation to a work entrusted to it by the Central Government, State Government, Union territory or local authority, as the case may be. The application does not have any explanation/evidence to substantiate the fulfillment of this condition. However in terms of paras 3 & 4 of Govt. of Maharashtra Resolution dated 25.06.2014, the work of rehabilitation and resettlement with respect to Navi Mumbai International Airport has been given to M/s. CIDCO. As such condition in Column 5 of the Table is fulfilled as far as the first contract (work order) dated 2106.2017 is concerned. As regards other contract (work order) dated 11.01.2013, the same is to be completed in Ulwe Node. As per Notification dated 20,03.1971 issued by Government of Maharashtra Ulwe is notified as a site for development. In this case also, the condition in Column 5 of the T....
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....E).- In exercise of the powers conferred by sub-section (1) of section 9, sub-section (1) of section 11, sub-section (5) of section 15 and sub-section (1) of section 16 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, and on being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India, in the Ministry of Finance (Department of Revenue) No.11/2017- Central Tax (Rate), dated the 28th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 690(E), dated the 28th June, 2017, namely:- In the said notification, (i) in the Table, - (a) against serial number 3, - A. in item (iii), in column (3), for the words "Government, a local authority or a Governmental authority", the words "Central Government, State Government, Union territory, a local authority, a Governmental Authority or a Government Entity" shall be substituted; B. in item (vi), in column (3), for the words "a local authority or a Governmental authority" the words "a ....
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.... 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 690(E), dated the 28thJune, 2017, namely:- In the said notification, in the Table, against serial number 3, for item (vi) in column (3) and the entries relating thereto, in columns (3), (4) and (5), the following shall be substituted, namely:- (3) (4) (5) "(vi)Services provided to the Central Government, State Government, Union Territory, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of - (a) a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession; (b) a structure meant predominantly for use as (i) an educational, (ii) a clinical, or(iii) an art or cultural establishment; or (c) a residential complex predominantly meant for self-use or the use of their employees or other persons specified in paragraph 3 of the Schedule III of the Central Goods and Services Tax Act, 2017. 6 (vii) Construction services other than ....
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.... Government, Union territory, local authority; a Governmental Authority or a Government Entity. 2.5 Provided that where the services are supplied to a Government Entity, they should have been procured by the said entity in relation to a... ... ... (ix) Construction services other than Ii), (ii), (iii), (iv), (v), (vi), (vii)and (viii) above. 9 In view of the above factual position, we are required to ascertain whether 'CIDCO' would be covered under the definition of 'Government Entity' as given in Notification No. 31/2017 dated 13.10.2017 referred above. We find that the definition of 'Government Entity' as given in this Notification is as under:- "Government Entity" means an authority or a board or any other body including a society, trust, corporation, i) set up by an Act of Parliament or State Legislature; or ii) established by any Government, With 90 per cent. or more participation by way of equity or control, to carry out a function entrusted by the Central Government, State Government, Union Territory or a local authority." From the detailed submissions in respect of the constitution and coming into ex....
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....dustrial development of this region and the State. The Land proposed to be acquired by Government in trans-Thana and trans-Harbour areas should be entrusted to the subsidiary company, which would act as an agent of Government for the development of the areas with a view to secure the above objectives. The subsidiary company will in due course be notified as New Town Development Authority under the Maharashtra Regional and Town Planning Act. The subsidiary company will work under the control and supervision of the State Government in the General Administration Department. (II) Thereafter we find that the Government of Maharashtra vide Notification dated 20.03.1971 and vide Resolution dated 24.01.1972 constituted CIDCO as a company fully controlled by the State Government of Maharashtra with 100% shareholding by the State Government by was of Equity and Control which would be clear from the Notification and Resolution as under:- Govt. of Maharashtra Notification dt. 20.3.1971. reproduced verbatim : URBAN DEVELOPMENT. PUBLIC HEALTH AND HOUSING DEPARTMENT Sachivalaya. Bombay, 20the March. 1971 Maharashtra Regional Planning and Town Planning Act, 1966 No. RPB. 1171-....
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....City in Thana, Panvel and uran tahsils of Thana and Kolaba districts, and to acquire the privately owned land in that area for that project. The question of financing the development work of City and Industrial Development Corporation of Maharashtra Limited has been under consideration for some time. Government is now pleased to issue the following instructions: 1) The Corporation should undertake all the development work, provide the social and physical infrastructure to attain the objectives laid down in the Government resolution, Industries and Labour Department No. IDL-5770/IND-I, dated 18th March, 1970, on behalf of the Government and to dispose of land to the extent appropriate. It should also rehabilitate the persons displace from the land acquired for the Project. 2) From the proceeds collected out of such disposals, the Corporation should recoup the expenditure it incurs on the items referred to in sub-para(1) above, inclusive of administrative expenses thereon, plus agency remuneration at Rs. 3.00 lacs, for the year ended 31st March, 1971 to be increased each year by Rs. 1.00 Iacs, subject to a maximum of Rs. 5.00 lacs for any one year, before remitting ....
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....e, renovation or alteration of (a) any other original works meant predominantly for use other than for commerce, industry, or any other business or profession Further they are claiming that they are fulfilling this condition also which is as under:- "Provided that where the services are supplied to a Government Entity, they should have been procured by the said entity in relation to a work entrusted to it by the Central Government, State Government, Union territory or local authority, as the case may be" From the detailed submissions made by the applicant as well as the jurisdictional officer we find that there is no doubt that CIDCO is a Government Entity. Now we examine their second claim if they are providing services by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintainance, renovation or alteration of any other original works, apart from a civil structure, meant predominantly for use other than for commerce, industry, or any other business or profession. With regard to the above we find that:- (a) applicant in their application for advance ruling has stated that the contracts undertaken by them are origina....