TaxTMI 
TaxTMI 
2022 (3) TMI 851
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....402, 4th Floor, Diamond Tower, Ajmer Road, Jaipur-302021, Rajasthan - (hereinafter the applicant) is fit to pronounce advance ruling as it falls under the ambit of the Section 97(2) (b)&(e) given as under:- (b) applicability of a notification issued under the provisions of this Act. (e) Determination of the liability to pay tax on any goods or services or both. A. SUBMISSION AND INTERPRETATION OF THE APPLICANT: 1. Brief facts of the case : > M/s Lakhlan & Qureshi Construction Co. (hereinafter referred to as "LQCC" or "the Applicant") (a partnership firm) is a civil contractor and is engaged in the business of construction of roads, buildings, civil structures or various other civil works as awarded from various governmental and non-governmental organisations. > M/s Jaipur Smart City Limited (hereinafter referred to as "JSCL"), having their premises at, Pandit Deen Dayal Upadhyay Bhawan, Municipal Corporation Jaipur, Lal kothi, Tonk Road, Jaipur is a Special Purpose Vehicle (SPV) formed on 12.03.2016, to operate as a nodal agency to take up works proposed under the smart city proposal according to Smart City mission launched by the government of India. ....
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....in contractor scope. vi. All drawing design and materials should conform to relevant IS Code. In case IS is not available should confer to ASTM, BS, sound industrials practice in this order. vii. Electricity/ water bill during construction of Project up to Testing and hand over of project to the line agency. viii. Any approval required from any line agency should be taken by the contractor in the name of entities. It is very clear that JSCL can only morally support to the contractor for liaising with respective department. It is very clear that morally support means to officially facilitate contractor to get the approval from concern Govt, department. If the line agency required any changes in technology/terms, the contractor shall change accordingly. No additional cost will be paid by Entity and NOC Charges shall be paid by the contractor and the same will be reimbursed to the contractor on submission of the invoice with the running bill. ix. The bids shall address the complete scope of work. Any bid for part scope of work or related services shall be held non-responsive and shall summarily be rejected. x. All the tests for welding (inc....
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....running bill. xviii. All the relevant certificates of the items procured from manufacturer or any other agency are to be submitted by the contractor. > Further, as per clause no. (viii) of point no. 1 of the general scope of work as mentioned under heading 5.3 of Section V - Procuring Entity's Requirements of RFP is as mentioned below - "viii. Any approval required from any line agency should be taken by the contractor in the name of entities. It is very clear that JSCL can only morally support to the contractor for liaising with respective department. It is very clear that morally support means to officially facilitate contractor to get the approval from concern Govt, department. If the line agency required any changes in technology/terms, the contractor shall change accordingly. No additional cost will be paid by Entity and NOC Charges shall be paid by the contractor and the same will be reimbursed to the contractor on submission of the invoice with the running bill." > In respect of the above-said clause, the applicant is required to obtain NOC from Jaipur Nagar Nigam (JNN) for cutting of roads to install pipelines for firefighting system upon payment....
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....the recommendations of the Council, shall be treated neither as a supply of goods nor a supply of services. > In light of the clause (b) of sub-section (2) of section 7 of CGST Act, 2017, CBIC has notified through notification number 14/2017 of central tax (rate) dated 28th June 2017 which was later amended by notification number 16/2018 dated 26th July 2018, wherein the activities or transactions undertaken by the central government or state government or union territory or any local authority in relation to functions entrusted through article 243G or 243W of the constitution are considered as neither supply of goods nor supply of services. > Considering the fact that the construction services provided by LQCC to JSCL are chargeable to GST, it wishes to understand whether the GST rate according to item number (vi) in Column (3) of serial number 3 of Notification No. 11/2017 as amended by notification number 24/2017 is applicable in relation to transactions with JSCL. > Further, considering the fact that the services provided by Jaipur Nagar Nigam in form of granting approval for road cutting to the applicant are in the capacity of public authority and service is in relati....
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....i) an educational, (ii) a 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 the Schedule III of the Central Goods and Services Tax Act, 2017. 6 - 1.1.2 As per the aforesaid notification, a registered person (registered under CGST Act) shall be entitled to charge CGST at the rate of 6% when providing the abovesaid services to Central Government, State Government, Union Territory, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of civil work or any other work as mentioned in the notification. 1.1.3 The scope of services provided by M/s Lakhlan & Qureshi Construction Co. to Jaipur Smart City Limited fall within the scope of clause (a) of item number (vi) of construction services i.e. services provided to the Central Government, State Government, Union Territory, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, m....
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....he development of Jaipur as smart city as a Special purpose Vehicle (SPV). The SPV will be owned by the state government and the Jaipur Municipal Corporation on 50:50 ratio. The SPV will be governed by a board of directors and is answerable to union and state governments, Jaipur Municipal Corporation and all other stakeholders. The paid-up capital of the Special Purpose of Vehicle will be Rs. 200 crores divided into 20 crores equity shares of Rs. 10/- each. The share holding pattern of Jaipur smart city limited, as received from JSCL is as under: S.No. Name of Shareholders Shareholding (No. of Shares) 1 Secretary to Government, Local Self Government, Rajasthan, Jaipur (Nominee of Government of Rajasthan) 1 2 Commissioner, Jaipur Development Authority, Jaipur (Nominee of Government of Rajasthan) I 3 Commissioner, Municipal Corporation, Jaipur (Nominee of Urban Local Body) 9,99,99,998 (4,998 initially & 9,99,95,000 further allotted) 4 Director and ex-officio Special Secretary, Local Bodies, Rajasthan, Jaipur (Nominee of Government of Rajasthan) 9,99,99,997 (4,997 initially & 9,99,95,000 further allotted) 5 Additional Commissioner ....
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....ees, in this case equity and control both are with state government. The applicant also states that from the above, it is very much clear that, condition of 90% or more participation by way of equity or control is with state government and therefore condition of both Government Authority and Government Entity are satisfied. 1.3.4 The applicant further submits that the findings and decisions taken by Hon'ble AAR in the case of Zigma Global Environ Solutions Private Limited, is squarely applicable to the instant case of Jaipur Smart City Ltd.; that from the above it is understood that Jaipur Smart City Ltd., squarely falls under the definitions of "government authority" as per explanation to clause (16) of Section 2 of the Integrated Goods and Services Tax Act, 2017. " 1.4 Conditions satisfied by the Applicant to apply rate of 6% CGST as mentioned in notification. 1.4.1 Based on the above provisions contained in Notification Number 11/2017 of Central Tax (Rate), it appears that the following conditions have been satisfied by the Applicant to charge CGST at the rate of 6% on the transactions with Jaipur Smart City Limited:- a. The Applicant is registered under th....
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....or obtaining NOC. Hence, the services provided by JNN to LQCC are covered under clause (b) of sub section (2) of section 7 of CGST Act, 2017 and the said transaction is neither supply of goods nor supply of services. Therefore, GST is not applicable on the said transactions. 2.1.5 Since the abovesaid transactions are itself out from the ambit of the definition of supply as defined under section 7 of CGST Act, 2017, Hence, applicant is also not liable to pay GST under RCM on the said transactions with JNN. 3. REIMBURSEMENT BY JSCL OF AMOUNT PAID BY APPLICANT TO JNN FOR OBTAINING NOC IS NOT LIABLE TO GST. 3.1.1 Applicant submits that if the service from JNN to LQCC is not liable to tax, then the reimbursement of the same from JSCL to LQCC will also not attract GST as the primary service is out of the ambit of supply as per section 7 of CGST Act, 2017 and therefore its reimbursement from JSCL is also not taxable under GST. 3.1.2 Further, applicant submits that as per serial number 3 of notification no. 12/2017 of central tax (rate) dated 28th June 2017 as amended by notification no. 02/2018 of central tax (rate) dated 25th January 2018, pure services provided to the centra....
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.... of applicant appeared for PH. During the PH, he reiterated the submissions already made in the written application. He requested for early disposal of the application. D. COMMENTS OF THE JURISDICTIONAL OFFICER Comments received from the Assistant Commissioner, CGST Div-G, Vidhyadhar Nagar, Jaipur vide letter dated 09.11.2021 are as under: - 1. In this regard, as per the conditions laid down in the sec 2(16) of the IGST Act, 2017 for an entity to be considered as government authority : (16) "non-taxable online recipient" means any Government, local authority, governmental authority, an individual or any other person not registered and receiving online information and database access or retrieval services in relation to any purpose other than commerce, industry or any other business or profession, located in taxable territory. Explanation.-For the purposes of this clause, the expression "governmental authority" means an authority or a board or any other body,- (i) set up by an Act of Parliament or a State Legislature; or (ii) established by any Government, with ninety per cent, or more participation by way of equity or control, to c....
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....ivil contractor which awarded the work of installation of "Fire fighting system with pump house in ABD Area & Purohit ji ka Katia, including 5 years Operation &Maintenance" in Jaipur city by the M/s Jaipur Smart City Limited ("JSCL"). As per Notice to proceed (NOP), the project commencement and completion dates are 08.03.2021 and 07.02.2022 respectively. The project would involve design, erection, installation, operation and maintenance of the Fire Fighting system. 3. The applicant in their written submission wants to seek clarity on questions as mentioned in aforesaid point B of this order. 4. Before we delve deep to decide the case, it would be proper in the fitment of justice to discuss the relevant provisions of the statute which are as under- 4.1 Governmental Authority has been defined through item No. ix (of paragraph 4) of an explanation to Notification No 11/2017-CT(R) dated 28.06.2017. The same has been reproduced below - "Governmental authority " means an authority or a board or any other body,- (i) set up by an Act of Parliament or a State Legislature; or (ii) established by any Government, with ninety per cent or more partici....
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....e entries relating thereto, in columns (3), (4) and (5), the following shall be substituted, namely:- SI.No. Chapter, Section or Heading Description of Service Rate (per cent.) Condition (1) (2) (3) (4) (5) 3 Heading 9954 (Construction services) "(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 or 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) a structure meant predominantly for use as (i) an educational, (ii) a clinical, or(iii) an art or cultural establishment; or (c) a residential complex predominantly meant for selfuse or the use of their employees or other persons specif....
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....s provided by the Central Government, State Government, Union territory or a local authority, the exemption shall apply only where the consideration charged for such service does not exceed five thousand rupees in a financial year. NIL NIL 4.4 Section 9(3) of the CGST Act, 2017 (RCM) SECTION 9. Levy and collection.- (3) The Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both. 4.5 Notification No. 13/2017-Central Tax (Rate) dated 28.06.2017: The supply of services mentioned in column (2) of the Table below, supplied by a person as specified in column (3) of the said Table, the whole of central tax leviable under section 9 of the said Central Goods and Services Tax Act, shall be paid on reverse charge basis by the recipient of the such services as specified in column (4) of the said Table:- SI.No....
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....as a pure agent of the recipient of supply are in addition to the services he supplies on his own account. Explanation.- For the purposes of this rule, the expression- pure agent means a person who- (a) enters into a contractual agreement with the recipient of supply to act as his pure agent to incur expenditure or costs in the course of supply of goods or services or both; (b) neither intends to hold nor holds any title to the goods or services or both so procured or supplied as pure agent of the recipient of supply; (c) does not use for his own interest such goods or services so procured; and (d) receives only the actual amount incurred to procure such goods or services in addition to the amount received for supply he provides on his own account. 5. In the present case, as far as the question whether the service recipient i.e. M/s. Jaipur Smart City Limited is a "Governmental Authority" as defined in item No. ix (of paragraph 4) of an explanation to Notification No 11/2017CT(R) dated 28.06.2017 is concerned, on gone through the facts submitted by the applicant and relevant legal provisions, we are of the view that Jaipur Smart City ....
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....r Nagar Nigam (JNN) on behalf of M/s. Jaipur Smart City Limited in relation to such contract is concerned, let's examine the issue in the light of legal provisions and facts of the case, we find that the Executive Engineer, Jaipur Nagar Nigam (JNN) i.e. municipality vide demand note dated 26.03.2021 (as provided by the applicant) raised a demand to the applicant for road cutting charges in respect of Fire Fighting pipeline. Further, as per clause no. (viii) of point no. 1 of the general scope of work as mentioned under heading 5.3 of Section V - Procuring Entity's Requirements of RFP, any approval required from any line agency should be taken by the contractor in the name of entities. No additional cost will be paid by Entity and NOC Charges shall be paid by the contractor and the same will be reimbursed to the contractor on submission of the invoice with the running bill. In the instant case road cutting charges are to be deposited by the applicant to the Jaipur Nagar Nigam (JNN) i.e. Local Authority and the same will be reimbursed by the JSCL on submission of running bill. Further, as per item No. 5 of the Notification No. 13/2017-CT(R) dated 28.06.2017, central tax le....
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....atisfy the following conditions for the exclusion from the value of supply:- (i) the supplier acts as a pure agent of the recipient of the supply, when he makes the payment to the third party on authorisation by such recipient; (ii) the payment made by the pure agent on behalf of the recipient of supply has been separately indicated in the invoice issued by the pure agent to the recipient of service; and (iii) the supplies procured by the pure agent from the third party as a pure agent of the recipient of supply are in addition to the services he supplies on his own account. Explanation.- For the purposes of this rule, the expression -pure agent means a person who- (a) enters into a contractual agreement with the recipient of supply to act as his pure agent to incur expenditure or costs in the course of supply of goods or services or both; (b) neither intends to hold nor holds any title to the goods or services or both so procured or supplied as pure agent of the recipient of supply; (c) does not use for his own interest such goods or services so procured; and (d) receives only the actual amount incurred to pro....