TaxTMI 
TaxTMI 
2020 (8) TMI 681
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....roject is partly funded by Government of Kerala and partly out of a loan taken by Government of India from a German agency, M/s.Kreditanstalt fur Wiederaufbau (KEW). A tripartite project agreement has also been entered between KFW, Govt. of Kerala and KMRL. Accordingly, Government of Kerala had issued consequential orders vide G.O.(Ms)No.44/2016/Taxes dtd. 13-06-2016. 2. KMRL, the applicant has requested advance ruling on the following: 1. Since the Govt. of Kerala is the de jure owner of the assets of the water metro project and the works contracts are performed by contractors with whom agreements are entered into by KMRL on behalf of Govt. of Kerala. a) Whether KMRL has any liability to pay GST on the funds received from Govt. of Kerala for paying the cost of the water metro project? b) Whether a GST invoice is to be raised on Govt. of Kerala for transferring the value of assets on a back to back basis after completion of the works? c) In the above cases, if liable, how will the ITC be claimed against (a) 2. Notwithstanding the above, whether KMRL can be treated as a Governmental Authority as per the IGST Act for the purpose of claiming exemption under item no.4 of Notifi....
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....xes. This project cost consists of the cost of contract works entrusted to various contractors by KMRL and cost incurred by KMRL on personnel recruited specifically for this project and whose costs reimbursed from the funds allocated to the project and other indirect overhead expenses. 6. Accordingly the applicant is of the view that the Government of Kerala is the de jure owner of the assets constructed as part of the water metro project. The funds for the project are provided by Government of Kerala by way of their contribution and by way of loan from KFW which is primarily repayable by Government of Kerala. As per law GST has to be levied by the supplier of goods or services in respect of the water metro project. Even though the contracts for construction of the water metro are entered into by KMRL on behalf of the Government, there is no supply of goods or service to Government of Kerala by KMRL in respect of such contracts. Government of Kerala is the de jure owner of all the facilities and there is no deemed supply by KMRL to Government of Kerala. As such no GST needs to be charged by KMRL on the funds received from Government of Kerala. 7. KMRL is an entity whose equity sh....
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....dly and sustainable integrated water transport system for greater Kochi through KMRL in the State of Kerala. The project is funded through loan amounting to Euro 85,000,000.00 with interest rate subsidies on the basis of the agreement entered into between "Kreditanstalt fur Wiederaufbau (KFW) and the Government of India. The loan agreement mandates for a project agreement to be concluded between the KFW, State of Kerala and KMRL in the capacity as the Project Executing Agency. The borrower (Government of India) shall channel the loan according to the terms and conditions to the KMRL through the State of Kerala which shall only be used exclusively to finance goods and services to set up the system. It is also a condition precedent that the KMRL shall determine the details of the Project as well as the goods and services to be financed from the loan in a separate agreement (Article 1.2 of the Loan Agreement). The Government of India shall ensure that the KMRL executes the project in compliance with the provisions of the project agreement. (Article 6.2(a) & 6.3 of the LA). It was also agreed upon by the Government of India that the KFW shall be entitled without having to resort to any....
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.... Kochi Metro Rail Limited is a Special Purpose Vehicle (SPV) formed for the implementation of Kochi Metro Rail Project in the city of Kochi, its operation, maintenance and allied activities. The revenue streams of the company include fare collection from the passengers by way of sale of tickets and other indirect collections. KMRL is incorporated under the Companies Act, 1956 as a Government Company within the meaning of Section 2(45) of the Companies Act, 2013. The Company is a Joint venture between Government of India and State of Kerala, with equal equity participation. 13. The proposed Kochi Water Metro Project (KWMP) involves development of boat terminals, provision of boats, boatyard, dredging, systems and access infrastructure at Kochi. The invoices are raised in the name of KMRL. The points for consideration are: 1. Whether there is any supply by the applicant to the Government of Kerala? 2. Whether the services rendered by the applicant to the Government of Kerala can be considered as pure services falling under Service Classification Code 998339 Project management services for construction projects? 3. Whether the applicant can be considered as governmental authori....
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....'s businesses; (ii) such persons are legally recognised partners in business; (iii) such persons are employer and employee; (iv) any person directly or indirectly owns, controls or holds twenty-five per cent. or more of the outstanding voting stock or shares of both of them; (v) one of them directly or indirectly controls the other; (vi) both of them are directly or indirectly controlled by a third person; (vii) together they directly or indirectly control a third person; or (viii) they are members of the same family; Since the applicant is a joint venture with equal equity participation of the Government of Kerala and the Government of India, the applicant falls within item (iv) of explanation to sub section (5) of Section 15 and hence the applicant and Government of Kerala are related persons and consequently the services rendered by the applicant to the Government of Kerala without consideration will also fall under the definition of supply. In view of the above discussion it is evident that the services rendered by the applicant to the Government of Kerala as executing and operating agency of the Kochi Water Metro Project with or without consideration falls ....
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....lic conveniences'. Moreover, the functions entrusted to a Panchayat under the Eleventh Schedule to Article 243G of the Constitution includes Roads, culverts, bridges, ferries, waterways and other means of communication. In view of the conclusion above that the services rendered by the applicant to the Government of Kerala as executing and operating agency of the integrated water transport project is classifiable as pure services falling under service classification code 998339; the services are exempted from payment of goods and services tax by virtue of the entry at Sl No. 3 of Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017. 22. The next issue to be considered is whether the applicant falls within the definition of 'Governmental Authority' in Para 2 (zf) of Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017: "Government authority" means an authority or a board or any other body; (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 any function entrusted to Municipality under Article 243W of the Constitution or to a Pa....