AI Drafter 
TaxTMI 
TaxTMI 
2023 (2) TMI 1084
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....ater resource management. The Applicant has stated that he provides works contract services to Bengaluru Water Supply and Sewerage Board. 3. The applicant has sought advance ruling in respect of the following questions:- i. Whether the services provided to Bengaluru Water Supply and Sewerage Board would be considered as a service provided to a governmental authority under GST Laws? ii. What is the applicable GST rate on supply of works contracts services in relation to sewage treatment made by the Applicant to Bengaluru Water Supply and Sewerage Board, on or after 1st Jan 2022? 4. Admissibility of the application: The question is about the "determination of the liability to pay tax on any goods or services or both" and hence is admissible under Section 97(2)(e) of the CGST Act 2017. 5. Brief Facts of The Case: The applicant furnishes some facts relevant to the issue: 5.1 The applicant states that it is a Company incorporated and registered under the Companies Act, 1956, and is a leader in water resource management. The applicant has stated that Bengaluru Water Supply and Sewerage Board ("BWSSB") is an autonomous body formed by the State Legislature und....
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....ons of paragraph 2 of this notification shall apply for valuation of this service) 9 (ii) composite supply of works contract as defined in clause 119 of section 2 of Central Goods and Services Tax Act, 2017. 9 (iii) construction services other than (i) and (ii) above. 9 5.5 The applicant states that the Notification No. 11/2017 Central Tax (Rate) dated June 28, 2017, was amended vide Notification No. 20/2017-Central Tax (Rate) dated August 22, 2017, wherein Entry 3(iii) was substituted with the following: Description of Service Rate (percent) "(iii) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied to the Government, a local authority or a Governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of, - (a) a historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under the Ancient Monuments and Archaeological .Sites and Remains Act, 1958 (24 of 1958); ....
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...., a Governmental Authority or a Government Entity" were substituted with "Union territory or a local authority". Thus, as on date, the amended Entry 3(iii) of the Notification No. 11/2017 reads as follows: Description of Service Rate (percent) "(iii) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied to the Central Government, State Government, Union territory or a local authority, by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of, - (a) a historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under the Ancient Monuments and Archaeological .Sites and Remains Act, 1958 (24 of 1958); (b) canal, dam or other irrigation works; (c) pipeline, conduit or plant for (i) water supply (ii) water treatment, or (iii) sewerage treatment or disposal. 6 5.9 By way of Notification No. 15/2021-Central Tax (Rate) dated November 18, 2021, the lower rate of tax of 12% provided by Entiy 3(iii) of No....
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....s an autonomous body formed by the State legislature under Bangalore Water supply and Sewerage Board Act, 1964 ("BWSSB Act") enacted by the Karnataka Legislature. Thus, the first and foremost requirement of a governmental authority stands fulfilled in the present case. 6.3 The applicant submits that the second requirement to qualify as a governmental authority is that the authority must be established by any Government with 90 per cent or more participation by way of equity or control. BWSSB is a body corporate established by the Government of Karnataka. As per S. 3 of the BWSSB, the authority is established by the State Government. The relevant portion of S. 3 is as follows:- "3. Constitution and composition of the Bangalore Water Supply and Sewerage Board.- (1) The State Government shall as soon as may be after the commencement of this Chapter, constitute by notification in the official Gazette a Board by the name of "The Bangalore Water Supply and Sewerage Board". (2) The Board shall consist of not less than three and not more than nine members appointed by the State Government.]" Thus, from the above, it can be seen that BWSSB is established by ....
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.... (a) a "Panchayat" as defined in clause (d) of article 243 of the Constitution; (b) a "Municipality" as defined in clause (e) of article 243P of the Constitution; (c) a Municipal Committee, a Zilla Parishad, a District Board, and any other authority legally entitled to, or entrusted by the Central Government or any State Government with the control or management of a municipal or local fund; (d) a Cantonment Board as defined in section 3 of the Cantonments Act, 2006; (e) a Regional Council or a District Council constituted under the Sixth Schedule to the Constitution; (f) a Development Board constituted under article 371 [and article 371 J] of the Constitution; or (g) a Regional Council constituted under article 371A of the Constitution;" As can be seen, the term "local authority" has been defined in the CGST Act and covers certain bodies / authorities mentioned in the said definition. That the definition contained in S. 2(69) of the CGST Act, among other authorities, includes within its ambit "any other authority legally entitled to or entrusted by the Central Government or any State Government with the control or manage....
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....improving the existing supply of water in the Bangalore Metropolitan Area and of making adequate provision for the sewerage and the disposal of the sewage in the Bangalore Metropolitan Area. 6.6.6 The fifth requirement to be categorised as a local authority is that the authority must have the power to raise funds for the furtherance of their activities and the fulfilment of their projects by levying taxes, rates, charges, or fees. 6.6.7 As per section 16 of the BWSSB Act, BWSSB has the power to levy rates, fees, rentals, prorata charges, deposits, taxes, and other charges, for carrying out its duties. However, the rates, fees, rentals and other charges recovered by the BWSSB cannot be equated with the collection of taxes and be termed as a "local fund". The amounts referred to in Section 16 of the Act are recoverable only in lieu of the services rendered by BWSSB. Therefore, the requirement that the authority must have the power to raise funds for the furtherance of their activities and the fulfilment of their projects by levying taxes, rates, charges, or fees, has not been fulfilled in the present case. 6.6.8 The authority must be legally entitled to or entrusted by th....
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....ring the time of hearing. 10. The Applicant states that they have entered into a contract agreement with Bengaluru Water Supply and Sewerage Board (BWSSB) on 21.04.2022 for the work of design, upgradation and rehabilitation of existing 248 MLD capacity used water treatment plant at K & C Valley, Bengaluru. 11. The Applicant wants to know whether the services provided to BWSSB would be considered as a service provided to a governmental authority. Now let us examine whether BWSSB is a Governmental Authority or Government Entity. Notification No. 11/2017-Central Tax (Rate), dated: 28.06.2017 as amended vide Notification No.31/2017-CentralTax (Rate), dated: 13.10.2017 defines Governmental Authority and Government Entity in as below:- "(ix) "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 90 percent, or more participation by way of equity or control, to carry out any function entrusted to a Municipality under article 243W of the Constitution or to a Panchayat under article 243 G of the Constitution. (x) "Gove....
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...., conduit or plant for (i) water supply (ii) water treatment, or (iii) sewerage treatment or disposal." 6 Since the Applicant is a Governmental Authority as explained in para 11 supra, who has entered into contract with BWSSB for upgradation and rehabilitation of water treatment plant, the same may be covered under entry 3(iii) mentioned above which is exigible to GST at 12%. 13. Further, Notification No.22/2021-Central Tax (Rate), dated 31.12.2021 was issued in supersession of Notification No. 15/2021-Central Tax (Rate), dated 18.11.2021 which brought amendment to No. 11/2017-Central Tax (Rate) dated 28.06.2017 as below:- In the said notification, in the TABLE, against serial number 3,- 1) in column (3), in the heading "Description of Service", in items (iii),(vi),(ix) and (x), for the words "Union territory, a local authority, a Governmental Authority or a Government Entity" the words "Union territory or a local authority" shall be substituted; 2) --------------------- 3) ---------------------- Since the words 'a Governmental Authority or a Government Entity' were removed from the e....