AI Drafter 
TaxTMI 
TaxTMI 
2019 (10) TMI 523
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....en by the applicant is covered under section 2(119) of the CGST Act, 2018 read with point 6 Schedule II of the CGST Act, 2017 read with the Karnataka GST Act, 2017 and the IGST Act, 2017? b) Whether Bangalore Development Authority is a Government Authority as per the provisions of GST Law? c) Whether the transaction covered under point 3(ii) of the Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017 as amended? d) Whether the transaction covered under point 3(ix) of the Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017 as amended? 3. The applicant furnishes some facts relevant to the stated activity: a. The applicant states that he is engaged in the business of Civil Construction and Works Contract Services. The applicant has furnished an agreement on 06-06-2014 to undertake the sub-contract work of civil construction of residential complexes/ row of residential houses in turn has been allotted to Gowri Infra Engineers Private Limited ("GIPL") through tender by the Bengaluru Development Authority as under. Sl. No. Location Address Nature of Work Minimum Carpet Area of the Individual Unit 1. Sy No. 101/....
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....eneral, when more than one supply of goods or services or both are involved one of such supply of goods or services or both may act as an ancillary activity. In such cases, the provision of GST considers such activity as 'composite supply' and tax liability will be discharged based on the nature of the principal activity of such composite supply. 4.1 The applicant highlights that in the given case, the activity of construction of residential complex / residential houses undertaking on behalf of BDA (The applicant is undertaking sub-contract work on behalf of main contractor GIPL, who is entrusted to construct the residential complexes / residential houses), which is 'Government Authority'. The Bangalore Development Authority was established by the BDA Act, 1976, which was passed by Government of Karnataka with effect from 6th January 1976. In the given case, the recipient of service from the main contractor is "Government Authority" as per the para 4 of the Notification No. 11/2017 - Central Tax (Rate) as amended. 4.2 On combined reading of Section 2(119), Section 2(90), Section 7 and 8 and Point 6 of Schedule II of the CGST Act, 2017, it is submitted by the applicant that th....
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....e rate of GST for different categories of supply of services. In the said notification, the Chapter Heading 9954 notifies the rate of GST on Construction Services. The three rates of GST are applicable, i.e. 2.5%, 6% and 9%. Sl. No. Rate of GST Nature of Activities Recipient of Supply 1 2 3 4 1. 9% (covered in 3(ii) of Notification Composite supply of works contract as defined in clause (119) of section 2 of the CGST Act, 2017 Any Person 2. 6% (covered in 3(vi) of Notification Works Contract of -Construction - Erection - Commissioning - Installation -Renovation - - Completion - Fitting out - Repair - maintenance - Alteration Concessional GST Rate is restricted to: • Civil Structure /original works meant predominantly for use other than for commerce, industry or any other business or profession; • A structure meant predominantly for use as (i) an educational, (ii) a clinical, or (iii) an or cultural establishment • A residential complex predominantly meant for self-use or the use of their employees or other persons specified in paragraph 3 o....
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....structure or any other original work: In the given case, the activity undertaken by GIPL is construction of residential complexes and residential houses, which is a civil structure; (c) Such original work/ civil structure for use other than for commerce, industry or any other business or profession: In this regard, the applicant states that BDA is a Government Authority as per the GST Law and the object of formation of BDA is to provide high quality infrastructure, better quality of life and provide the affordable houses to public at large of Bengaluru City. There is no profit motive involved in the activity undertaken by the BDA authority. Section 40 of the Bangalore Development Authority Act, 1976 (Annexure V) specifically mentions that all the earnings of BDA should be credited to the fund called 'the Bangalore Development Fund'. Further, the applicant states that the said earnings are meant only to achieve the objects entrusted to BDA by the BDA Act, 1976, which is sovereign activity. This is clearly stated in the Section 41 of the BDA Act which reads as under: "41. Application of the Bangalore Development Fund:- (1) The said fund shall be held by the Authorit....
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....ons under the KGST Act. 11.3 The transaction of the applicant is verified where in applicant got work orders from the Principal contractor M/S Gowri Infra Engineers Private Limited for the construction of 2 and 3 BHK Housing projects Sy No. 101/ 2B and 71/2, Gnanabharathi Layout, 1st Block, Kengeri Hobli, Bangalore South and in Sy.No.114 & 115 of Alur Phase - II, Dasanapura Hobli, Bangalore North, Bangalore on behalf of Bangalore Development Authority vide order Ref : GIEPL/2014-15/WO/ALUR/01 dated 29-072014. Further on verification of the records it is observed that Bengaluru Development Authority has issued work orders to main contractor M/s. Gowri Infra Engineers Private Limited vide No BDA/EE/ (HPD1)/TEN/W.O/T-08/2014-15 dated 18-07-2014 and one more order vide No.BDA/EE/(HPD)/TEN/W.O./T-07/2014-15 dated 18-07-2014 for construction of 3-BHK Housing Project, Sy No. 101/ 2B and 71/2, Gnanabharathi Layout, 1 st Block, Kengeri Hobli, Bangalore and to construct 2 and 3-BHK Housing Project at Sy.No.114 & 115 of Alur Phase - II, Dasanapura Hobli, Bangalore North, Bangalore South on Lump sum turnkey basis based on Tender's Own design under Two cover System". 11.4 The mai....
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....ernment, State Government, Union Territory or a local authority. " 11.7 For a works contract to be covered under this entry, the following conditions needs to be satisfied: (a) The recipient of services must be a Government Entity and in this case, Bangalore Development Authority; (b) The works contract services supplied by the main contractor must be in relation to the works covered under (a), (b) or (c); (c) The recipient of such services must have procured these services in relation to a work entrusted to it by the Central Government, State Government, Union Territory or local authority 11.8 Regarding the first question, Bangalore Development Authority is an authority established by the State Government under the Bangalore Development Authority Act, 1976 and it is entrusted with the activity of development of the City of Bangalore and areas adjacent thereto and for matters connected therewith. Section 3(3) of the BDA Act states as under: "(3) The Authority shall consist of the following members, namely:(a) the Chairman ; (b) one person to be called the Finance Member possessing qualifications in accounts and audit; ....
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....ing Project at two places in around Bangalore on subcontract basis rewarded from M/s. Gowri Infra Engineers Private Limited. The Bangalore Development Authority in its tender has stated that it has taken up construction of housing in and around Bangalore City as designed by the Government of Karnataka. Since this is a residential project for general public, the same is not covered under clause (b) or (c). 11.10.2 Conjoint reading of the entry with reference to the applicability of clause (a) of the said entry reads as under: "Composite supply of works contract as defined in clause (119) of section 2 of the CGST Act provided to the Government Entity by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession, Provided that where the services are supplied tb 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,....