AI Drafter 
TaxTMI 
TaxTMI 
2021 (8) TMI 531
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....Act and APGST Act respectively) by M/s. Shaooorji Pallonji & Company Private Limited (hereinafter referred to as applicant), registered under the AP Goods & Services Tax Act, 2017. 3. Brief Facts of the case: The applicant, M/s. Shapoorji Pallonji and Company Private Limited are primarily engaged in the construction business and provide works contracts services to various customers including the Government, public Sector undertakings. Government Entities and Private sector entities. The applicant is registered under GST bearing Registration No.37AAACS6994C1Z4 3.1. The applicant entered into a contractual arrangement with Greater Visakhapatnam Smart City Corporation Limited ("GVSCCL"). "GVSCCL" was constituted by Greater Visakhapatnam Municipal Corporation ("GVMC") on 11.03.2016. It is a limited company incorporated under the Companies Act, 2013 at the city level, in which the state and the urban local body (GVMC) are the promoters with 50:50 equity share holding as per G.O.MS.No.43 3.2 In June 2015, the Government of India ("GOI") initiated "Smart City Mission", as a part of which Special Purpose Vehicles ("SPV") are created. The SPVs will Plan, appraise, approve, release ....
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....nting soil mix, shrubs, trees for planting and rainwater harvesting; • Supply and installation of stainless-steel roadside pole; • Supply and installation of SS Bollard; • Supply and installation of Rock Bench; • Supply and installation of Manhole covers; • Providing and applying Dashes, Arrows, Letters, Bus stop, Cycle Mark, Kerb Stone; • Painting two coats on new concrete surfaces; • Supply and installation of stainless-steel tree grate; • Providing and installation of rubber speed breaker; • Providing and fixing of signal, street, tourism, school, hospital sign boards; • Supply and fixing of retro reflective landmark sign boards; • Supplying of solar raised pavement markers; • Providing fixing of median marker; • Providing and fixing of vertical delineator; • Supply and fixing of AFP Sheeting, flexible prismatic sheeting; • Providing of touchscreen systems with projected capacitive touchscreen; • Installation and commissioning of Smart Variable Message (VMS) sign boards; ....
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....sted to it by the Central Government, State Government, Union territory or local authority, as the case may be It provides that works contract services provided to Central Government, State Government, Union Territory, a Local Authority, a Governmental Authority or a Government Entity, shall be taxable at the rate of 12%. In view of the afore-mentioned background and facts, the applicant approached the Authority for Advance Ruling on the questions listed. 4 Questions raised before the authority: 1) Whether the Services provided by the applicant is a composite supply of works contract as per clause (30) and (119) of section 2 of the CGST Act, 2017? 2) Whether the same would be taxable at the rate of 12% as prescribed under entry 3(vi)(a) of Notification No. 11/2017 - Central Tax (Rate), dated 28.06.2017? 3) What is the applicable GST Rate and SAC/HSN? If it is not covered by entry 3(vi)(a) of Notification No.11/2017 - Central Tax (Rate), dated 28.06.2017? On Verification of basic information of the applicant, it is observed that the is under State jurisdiction, i.e. Assistant Commissioner (ST) Chirala Nellore Division. Accordingly, the application has been forwa....
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.... Schedule II 6. Composite supply The following composite supplies shall be treated as a supply of supply of services, namely:- (a) Works contract as defined in clause (119) of section 2 and (b) (......... )" A5. In view of the aforementioned, the applicant submits that the supply provided by it under the scope of agreement constitutes "composite supply of works contract as defined under Section 2(119) of CGST Act, 2017 B. The Services provided by the applicant fall under the ambit of Entry 3(vi) (a) of the Notification B1. Under GST law, Notification no.11/2017 Central Tax (Rate) dated 28.06.2017 specifies the rate of GST applicable on provision of construction services. Entry 3(vi)(a) of the notification provides that works contract services provided to Central Government, State Government, Union Territory, a Local Authority, a Governmental Authority or a Government Entity shall be taxable at the rate of 12%. B2. With reference to the said entry, the applicant submits that for any activity to fall under the ambit of Entry 3(vi)(a) of Notification, following conditions must be satisfied: (a) There must be a 'composite supply' of 'works ....
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.... Established by any Government, With 90 per cent or more participation by way of equity or control to carry out any function entrusted to a municipality under article 243w of the constitution panchayat under article 243G of the Constitution. Basis the aforementioned, for a body to qualify as "Governmental Authority" it shall fulfil all the above conditions: In respect of condition (a), in the instant case, GVSCCL is a Special Purpose vehicle (SPV) established by the Government of Andhra Pradesh ("GoAP") vide G.O.Ms. 43, Municipal Administration & Urban Development dated 17.02.2016. Thus, it satisfies the first condition. In respect of condition (b) GVSCCL is a limited company incorporated under the Companies Act 2013 in which the Andhra Pradesh State Government and Greater Visakhapatnam Municipal Corporation are the promoters having 50:50 equity share holding, which substantiates more than 90% of participation of the Government. Furthermore, G.O. Ms. No.43 provides the list of all the shareholders of GVSCCL as mentioned under: • Governor of Andhra Pradesh represented by Principal secretary, MA & UD, GoAP • Commissioner and Director of Municipal....
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....ransaction in connection with or incidental or ancillary to subclause (a); c. Any activity or transaction in the nature of sub- clause (a), whether or not there is volume, frequency, continuity or regularity of such transaction d- (.. .) e. (...) f- (...) g. (...) h. (...) And i. 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 afore-mentioned definition provides a very wide scope to the term "business" to include any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity. The primary objective to undertake any business activity is different. In common parlance, when someone starts his own business, he doesn't start the business with the objective to fulfil his responsibilities. If someone is fulfilling the responsibilities bestowed upon him, it cannot be considered as a situation where that person is doing business. ii. In the present factual scenario, the situation is different as GVSCCL has been established with a very specific objective. The said ob....
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....ccordingly, the last condition is also satisfied. Therefore, on the basis of the foregoing, the applicant submitted that services provided by them are taxable at the rate of 12 per cent as they fall under the ambit of Entry 3(vi) (a) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2020. 6. Virtual Hearing: The proceedings of Hearing were conducted through video conference on 21st December, 2020, for which the authorized representatives attended and reiterated the submissions already made. 7. Discussion and Findings: We have examined the issues raised in the application. The taxability and the applicable rate of tax for the goods and services supplied or to be supplied, as governed under the provisions of respective GST Acts are examined. The applicant is providing the following supplies to the GVSCCL: a) Construction of the project b) Development of the project including plantation, landscaping, Street lighting etc., c) Maintenance of the project. The clause (119) of the section (2) of the CGST Act defines 'works Contract' as "a contract for building, construction, fabrication, completion, erection, installation,....