AI Drafter 
TaxTMI 
TaxTMI 
2019 (10) TMI 524
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....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(iv) of the Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017 as amended? e) Whether transaction covered under point 3(v) of the Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017 as amended? f) Whether transaction covered under point 3(vi) 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 applied for the civil construction work tender with Bangalore Development Authority (BDA) with respect to construction of residential complexes / row of reside....
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....f both goods and services, which cannot be bifurcated/ indivisible from each other due to nature of work / contract. In general, 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, 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 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....
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....ion, 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(iv) of Notification Works Contract of - Construction - Erection - Commissioning - Installation - Renovation - Completion - Fitting out - Repair - maintenance - Alternation Concessional GST Rate is restricted to: • A road, bridge, tunnel, or terminal for road transportation for use by general public; • A civil structure or any other original works pertaining to a scheme under Jawaharlal Nehru National Urban Renewal Mission or Rajiv Awas Yojana; • A civil structure or any other original works pertaining to the "in-situ redevelopment of existing slums using land as a resource, under the housing for All (Urban) Mission/ Pradhan Mantri Awas Yojana (Urban) • A civil structure or any other ....
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....et area of 60 square meters per house in an affordable housing project which has been given infrastructure status vide notification of Government of India, Ministry of Finance, Department of Economic Affairs vide F.No.13/6/ 2009-INF, dated 30th March, 2017 • Post-harvest storage infrastructure for agricultural produce including a cold storage for such purposes; • Mechanised food grain handling system, machinery or equipment for units processing agricultural produce as food stuff excluding alcoholic beverages; Any Person 4. 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 • 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 ....
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....nnexure 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. The applicant states that in the back drop of the above submissions, and in the absence of profit motive in the transaction undertaken by BDA, the sale of construction of residential complexes and residential houses are not meant for commerce, industry, or any other business or profession but it is a sovereign function, Therefore, the activ....
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....other than for commerce, industry, or any other business or profession; (b) a structure meant predominantly for use as (i) an educational, (ii) 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 Schedule 111 of the Central Goods and Services Tax Act, 2017." and the condition stated in the Column (5) of the Notification is "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." 10.5 The Government Entity is defined in clause (zfa) of paragraph 2 of the Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017 (as amended) and the same is as under: "(zfa) "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 par....
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....y the councillors of the Bangalore City Corporation from among themselves in the prescribed manner: Provided that during the period of supersession of the Corporation or where any Administrator has been appointed, the two persons shall be nominated by the Administrator from among the officers of the Corporations. (m) the Commissioner, ex-officio; (n) the Secretary of the Authority, who shall be an ex-officio member. (4) The persons referred to in clauses (a) to (e) and (ff) to (h) of subsection (3) (both inclusive) shall be appointed by the Government and the persons referred to in clauses (i), (j) and (k) thereof shall be nominated by the respective bodies:" 10.8 It is very clear from the above that the control over the entity rests with the Government of Karnataka and hence the Bangalore Development Authority satisfies both the conditions and hence is considered as a Government Entity within the meaning of the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. 10.9 Regarding the second question, whether the services provided by the applicant are covered under clauses (a), (b) or (c) of the entry no.3(vi) of the said Notificatio....