TaxTMI 
TaxTMI 
TaxTMI 
2019 (10) TMI 523
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....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. 101/2B and 71/2, Gnanabharathi Layout, 1st Block, Kengeri Hobli, Bangalore South Construc....
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....r 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 their activity of construction of residential house and residential complex with respect to following BDA projects (to Gove....
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....s. 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 of the Schedule III of the Central Goods and Services Tax Act, 2017, i.e. MPs, MIAs, etc. Central Government, State Government, Union Territory, Local Authority, Government Authority and Government Entity 3. 6% (covered in 3(ix) of Notification The following s....
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....nt 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 Authority in trust and shall be applied by it, subject to the general or special orders of the Government, in payment of the charges incidental to the carrying out of the purposes of this Act including the cost of maintaining, keeping in repair, lighting and cleansing of streets and the cost of maintaining drainage and sanitary arrangement and water supply, under section 28A." 8. ....
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....alore 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 main issue is the rate of tax applicable to the transaction of the applicant and more so whether the transactions are covered under entry 3(vi) of the Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017 (as amended). The applicant himself has clearly stated that his transactions are not covered under entry no.3(ii) of the said notification and hence they are not considered as the sam....
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....rvices 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; (c) an engineer who shall be an officer of the Karnataka Engineering Service or an officer employed in any undertaking owned or controlled by the State Government not below the rank of a Chief Engineer; (d) a town planner who shall be a person with experience in town planning ; (e) a person with experience in architecture; (f) the Commissioner, Corporation of the City of Bangalore, ex-officio; (ff) an officer of the Secretariat Department incharge of urban development, not below ....
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....on 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, as the case may be." The projects of the applicant are involving the supply of both goods and services and is in relation to an immovable property and hence is a "works contract" within the meaning of section 2(119) of CGST Act. This works contract is for a construction of a civil structure and since it is a residential real estate project, the works is predominantly for use other than commerce, industry or any other business or profession and hence it is covered under clause (a) of the entry 3(vi) of the Notification, subject to the conditions. 11.10.3 Regarding the issue as to whether the recipient has procur....