TaxTMI 
TaxTMI 
2021 (1) TMI 801
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....RG Electricals Pvt. Ltd. 125 Pratap Nagar, Dungarpur Rajasthan,-314001 (hereinafter also referred to as 'the Appellant') against the Advance Ruling No. RAJ/AAR/2020-21/04, dated 18.05.2020 = 2020 (6) TMI 489 - AUTHORITY FOR ADVANCE RULING, RAJASTHAN. Brief Facts of the case 3.1 The appellant is engaged in business of supply of material and services of erection, testing & commissioning of supplied material in relation to electric infrastructure. The appellant is having business place at 125, Pratap Nagar, Dungarpur, Rajasthan-314001 and registered with GSTIN 08AAKCA4364N1Z6. 3.2 The Ajmer Vidyut Vitran Nigam Limited (hereinafter called as AVVNL) had invited bids for providing of Rural Electricity Infrastructure for Household electrification in selected blocks of Dungarpur District of Ajmer DISCOM under Rajiv Gandhi Grameen Vidhyutikaran Yojana scheme on turnkey basis for erection of 11KV & LT Single Phase lines, erection of single phase 11KV Sub-station and release of BPL domestic connections under RGGVY/TN-13&TN-14.The appellant being the lowest bidder had been awarded the above work. After accepting the work, the AVVNL had distributed the above work in two work orders, on....
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....with observation made by AAR in respect of question no. 1 that the supply rendered by them to AVVNL are in nature of Composite Supply. However, they are aggrieved with Ruling given in respect of question no. 2 that their instant supply is not covered under Entry No. 3 (vi)(a) of Notification No. 11/2017-Central Tax(Rate) dated 28.06.2017(as amended) as consequentially are not eligible to be taxed at lower rate of 12%(SGST 6% + CGST 6%) and hence are liable to be taxed @ 18%(CGST 9% + SGST 9%). Hence, the present appeal has been filed before this forum. GROUNDS OF APPEAL 4. The appellant in its Appeal has, inter-alia, mentioned the following grounds of Appeal: 4.1 That the Order passed by the learned AA being arbitrary, capricious, against the taw and facts of the case, as such per se illegal, hence deserves to be set aside. 4.2 That the impugned order passed by the AA is based merely on his presumptions, surmises and conjectures hence, deserves to be set aside. 4.3 Not Adhering the Natural Justice: That the impugned order is passed without providing reasonable opportunity of being heard. In the lockdown period all over the Country due to pandemic COVID -19, the ap....
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....de additional time to submit reply in view of lockdown, the authority arbitrarily decided the issues without considering appellant submission to submit clarification in respect to points asked during personal hearing on 19.03.2020. Nobody was aware about the facts that when lockdown will over and movement will start. The authority taking premise of appellant mail to seek time and altogether ignoring the situation and the principle of natural justice decided the ruling. 4.7 ON MERITS: The appellant is in agreement with observation made by AAR in respect of Query raised at S.No.1 that the Services rendered by him to AVVNL are in nature of Composite supply of works contract. The appellant is in disagreement with ruling made by the AAR for query No.2 that the concessional rate of 12% is not applicable to the appellant supply. The AAR relied on the Explanation clause inserted vide Notification No. 17/2018-CT dated 26.07.2018, which reads as under- "For the purpose of this item, the term 'business' shall not include any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities.....
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....ally Sponsored Scheme of Govt. of India to provide rural electricity Infrastructure and household electrification for attaining the goal of providing access to electricity to all households in the country. Under this scheme 90% of fund is provided as grant by Govt. of India and 10% as loan by Rural Electrification Corporation (REC) to the state government. The RGGVY was launched during 10th five year plan vide Ministry of Power order of 18th March 2005 and continued in 11^th plan vide MoP order of Feb 2008. The RGGVY aims at: 1. Electrifying all villages and habitation as per revised definition. 2. Providing access to electricity to all rural households. 3. Providing electricity connection to Below Poverty Line (BPL) households free of cost of service connection with single light point. Article 243G of the Constitution of India 1949 Powers, authority and responsibilities of Panchayats Subject to the provisions of this Constitution the Legislature of a State may, by law, endow the Panchayats with such powers and authority and may be necessary to enable them to function as institutions of self-government and such law may contain provisions for the dev....
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....tion is entry is clarifying the position that Activity or transaction that are undertaken by the Central Government, a State government and any local authority in which they are engaged as Public Authorities. Here the meaning of the word Undertaken may be directly (by the Central Government, State Government or Local Authority) or Indirect (through Governmental Authority or Governmental Entity). 4.9 Further from above discussion it is amply clear the dominant purpose of the project is public welfare at large and provides Rural Infrastructure for electric distribution. Further the same is also clarified by the explanation that being a duty entrusted through Constitution on Local authority therefore work undertaken cannot be regarded as business. Furthermore there is specific condition in the notification for Governmental entity that the work must be entrusted by Central Government, State Government or Local Authority, which is also meet the appellant case. In the view of above discussion, the appellant is of strong view that the rate of 12% is applicable to the Supply. 4.10 That impugned order being a pre-determined and prejudicial order as such being arbitrary and illegal hen....
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....roviding rural electricity infrastructure made to AVVNL would be taxable at the rate of 12% in terms of Sr. no 3 (vi)of Notification no. 11/2017- C.T.(Rate) as amended w.e.f. 25.01.2018. 6.2 For the sake of brevity, Entry No. 3 (vi)(a) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended is reproduced below: SI.No. Chapter, Section or Heading Description of Service Rate (percent) Condition 3 Heading 9954 (Construction Service) "(vi) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, other than that covered by items (i), (ia), (ib), (ic), (id), (ie) and (if) above, provided to the Central Government, State Government, Union Territory, a local authority, a Governmental Authority or a Government Entity 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).............................. (c)..................
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....ectricity to the consumers and are collecting consideration in lieu of the said supply. The 'Electricity' as per GST is classified under the category of 'goods' and thus M/s AVVNL is supplying goods to consumers and is receiving consideration against the same. Further, the Explanation Clause inserted vide Notification No. 17/2018-CT dated 26.07.2018 reads as under: "For the purposes of this item, the term 'business' shall not include any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities." The above said explanation clause is not applicable in the instant case as activities discussed above are not undertaken by the Central government or State Government or any local authority as public authorities. We find that from definition of business, it is clear that any activity of trade, commerce or manufacture etc. or any other similar activity is included in the definition of business and it is immaterial whether it is done for a pecuniary benefit, and any activity done in connection with or incidental or ancillary to such activity is also included in th....
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....vernment of India and 10% as loan by Rural Electrification Corporation (REC) to the State Governments. The RGGVY was launched during 10th five year plan vide Ministry of Power order of 18th March 2005 and continued in 11th plan vide Ministry of Power order of Feb 2008.Under XII plan, only those villages & habitations having population 100 and above are eligible to be covered. 6.6 From the above, we find that the scheme is aimed at electrifying all villages and habitation as per revised definition; providing access to electricity to all rural households; providing electricity connection to Below Poverty Line (BPL) households free of cost of service connection with single light point. However, from the Evaluation Report on RGGVY of Planning "Commission, we note that only the connection was free and the consumption of the electricity by the beneficiaries of the Yojna was chargeable, 6.7 From the above it emerges that though the beneficiaries of RGGVY are getting free electricity connection but they will have to pay for the consumption of electricity to AVVNL. In other terms, the work being undertaken by the Appellant will ultimately increase the consumer base of AVVNL resulting ....