TaxTMI 
TaxTMI 
2023 (12) TMI 938
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....e issue raised by M/s. Raghubala Construction co., 797, Dadabadi, Kota, Rajasthan (hereinafter referred to as "applicant"). Applicant is registered and the applicant is engaged in the business of licensed contractor who bids for government and non-government tenders in the name of M/s Raghubala Construction co. The three issues raised by applicant is fit to pronounce advance ruling & it falls under the ambit of the Section 97(2) (b) 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; (g) whether any particular thing done by the applicant with respect to any goods and/or services or both amounts to or results in a supply of goods and/or services or both, within the meaning of that term; A. Submission of The Applicant: (in brief) That the applicant is a partnership firm which is registered assessee under the provisions of Goods & Services Tax (GST) regime having GSTIN as 08AAMFR4564N1ZF. The applicant is engaged in the business of licensed contractor who bids for government and non-government tenders and thereafter, work as per the ....
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....ecretary as executive officer. It consists government officials & nominated public persons as trustees. 1.3. That this learned Authority (Rajasthan AAR) vide ruling dated 27.04.2018 in Advance Rule No. RAJ/AAR/2018-19/01 in Application No. Advance Ruling/CGST & SGST/2017-18/AR/01, has inter alia held that Jaipur Development Authority is a "government entity". 1.4. That in light of the aforesaid reasoning, your esteemed authority is prayed to rule that UIT Kota is a "government entity". 2. Whether constructing a Community Hall by the applicant at Bapu Nagar Residential Scheme, Kota, in accordance of works contract allotted by UIT Kota, is a taxable service under GST law and if yes, then determination of the liability to pay tax after applicable exemption and deductions; 2.1. That UIT Kota vide works contract has entrusted the applicant to construct a community hall at Bapu Nagar Residential Scheme Kota. It is essential to state here that as per submissions with regard to Issue No. 1, UIT Kota is a "government entity". Thus, the work allotted by UIT Kota is government works contract. 2.2. That it is necessary to state here that the purpose of co....
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....he applicant which would severely and adversely affect the business and also cause undue financial hardship to the applicant. 4.5. Therefore, in light of the aforesaid facts and circumstances, your esteemed authority is prayed to rule that the notification pertaining to the increased GST rate shall not be retrospectively applicable to the works contract entered prior to the date of notification. A. That any other submissions or grounds pertaining to the aforesaid issues shall be raised at the time of personal hearing of the present application. B. That the applicant reserves the right to alter or amend, the present application with the permission of your esteemed authority. C. QUESTIONS ON WHICH THE ADVANCE RULING IS SOUGHT: - 1. Whether Urban Improvement Trust (UIT) Kota is "Government Entity"; 2. Whether constructing a Community Hall by the applicant at Bapu Nagar Residential Scheme, Kota, in accordance of works contract allotted by UIT Kota, is a taxable service under GST law and if yes, then determination of the liability to pay tax after applicable exemption and deductions, or 3. If no, then whether the paid tax shall be refunded to the a....
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....2 clause (s) "governmental authority" means a board, or an authority or any other body established with 90% or more participation by way of equity or control by Government and set up by an Act of the Parliament or a State Legislature to carry out any function entrusted to a municipality under article 243W of the Constitution; b. Further Notification No. 31/2017-Central Tax (Rate) dated 13.10.2017 defined "Governmental Authority" and "Government Entity" as follows:- (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 90per cent, or more participation by way of equity or control, to carry out any function entrusted to a Municipality under article 243 W of the Constitution or to a Panchayat under article 243 G of the Constitution. (x) "Government Entity" means an authority or a board or any other body including a society, trust, corporation, i) set up by an Act of Parliament or State Legislature; or ii) established by any Government, with 90per cent, or more participation by way of eq....
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....ment of the State Government is transferred to a corporation, it is a strong factor supporting the inference that such a corporation is an instrumentality or agency of the State The duty to maintain public streets, street lighting, a sewage system are all which activities must be termed as public functions. By virtue of the nature of the functions performed by the Trust, along with the factors of government control and financial assistance, we have no doubt that the Trust is a State Government deportment within the meaning of Section IS of the Act of 1959. The Ld. Rajasthan Authority for Advance Ruling Goods and Services Tax, Jaipur in the matter of Tata Projects Limited -SUCG Consortium Advance Ruling No. Raj/AAR/2018-19/01 Dated 27.04.2018 provided the following finding and held that: 8.1 As per definitions given under notification No. 12/2017-Central Excise (Rate) dated 28.06.2017 as amended vide notification No. 32/2017-Central tax (rate) dated 13.10.2017, (zf) "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....
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....s mentioned at SI. no. 3 (vi) (a) of the notification no. 11/2017 - Central Tax (Rate) dt. 28th June 2017 amended with notification no. 24/2017-Central Tax (Rate) dated 21.09.2017 and further amended vide notification no. 31/2017-Central Tax (Rate) dated 13.10.2017. That in light of the foregoing submissions it is contended that since the Urban Improvement Trust is a government authority, hence services provided to such government authority is exempted from the whole of the service tax leviable in accordance with Mega Exemption Notification No. 25/2012-Service Tax dated 20.06.2012. Para 12 of is extracted and reproduced herein below: 12. Services provided 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 civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession; (b) a historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under the Anci....
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....ing is being used for any other purpose. In that set of facts, the Board Circular No. 80/10/2004-S.T., dated 10-9-2004 is applicable to the facts of this case which clarified as under: "The leviability of Service Tax would depend primarily upon whether the building or civil structure is "used or to be used" for commerce or industry. The information about this has to be gathered from the approved plan of the building or civil construction. Such constructions which are for the use of organizations or institutions being established solely for educational, religious, charitable, health, sanitation or philanthropic purposes and not for the purposes of profit are not taxable being, non-commercial in nature. Generally, Government buildings or civil constructions are used for residential, office purposes or for providing civic amenities. Thus, normally Government constructions would not be taxable. However, if such constructions are for commercial purposes like local Government bodies getting shops constructed for letting them out, such activity would be commercial and builders would be subjected to Service Tax" From the above circular, we find that appellant are not liab....
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....'s contract." Copy of judgment Larsen and Toubro Ltd. Vs. Assistant Commissioner of Service Tax and ors. dated 1.7.2016 is enclosed herewith and marked as Annexure-9. That recently the judgment delivered by the Hon'ble Kerala High court in S.B. Civil Writ Petition No. 12471/2021 on dated 26.7.2023 titled as EKK infrastructure Ltd. Vs. Kerala State Transport Project and ors., while taking into consideration the similar aspect as referred by the applicant has been considered and the judgment held in favour of applicant. Copy of judgment Larsen and Toubro Ltd. Vs. Assistant Commissioner of Service Tax and ors. dated 1.7.2016 is enclosed herewith and marked as Annexure-10. 10. That in the present case the work contract was executed at fixed rate and amount of consideration before the amended change in rate of GST, therefore such amended rate of GST can only be applied prospectively from the date of notification and the same is not applicable in a retrospective manner on an existing and pending work contract. The same copy of Invoices for the work which applicable and the UIT were doing since adequate is enclosed and marked as Annexure-11. 11. That any other submi....
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.... paid tax shall be refunded to the assessee along with appropriate interest. Ans:- As The construction of a Community Hall is a taxable service hence there No question of the refund arises along with appropriate interest. 4. Applicability of change in tax rate during continuing of a works contract, where the works contract has pre-fixed terms and conditions including total tender rate. Ans:- GST is applicable on the supply of Goods and Services and the rate of tax of GST on such supplies are decided by the Government through Act/Rules and notifications. The rate of tax is applicable as notified by the Government through notification which is in effect at the time of such supply. The Government has the power to increase or decrease the rate of tax through Notifications. F. FINDINGS, ANALYSIS & CONCLUSION: At the outset we would like to make it clear that the provisions of CGST Act and RGST Act are in pari materia and have the same provisions in like matter and differ from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act would also mean reference t....
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....a in the State, whether a master plan in respect thereof has or has not been prepared, a Board of Trustees to be called the Improvement Trust of the place where its principal office is situated, hereinafter called 'the Trust'. (2) Every such Trust shall be a body corporate by the aforesaid name having perpetual succession and a common seal with power to acquire, hold and dispose of property both movable and immovable and to contract and shall by the said name sue and be sued. 9. Constitution of Trust.- (1) The Trust shall consist of- (a) a Chairman, (b) two members of the Municipal Board, if any, having authority in the urban area, [(c) such number of other persons, as may be determined by the State Government for each Trust, of whom one shall be a person belonging to scheduled tribe or scheduled caste, if no person of such caste or tribe is represented in the Trust by virtue of clause (a) or clause (b).] (2) The Chairman and the persons referred to in clause (c) of sub-section (1) shall be appointed by the State Government by notification. (3) The members of the Municipal Board referred in clause (b) of sub-sec....
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.... officers' subordinate to him in accordance with the Constitution. Further, in terms of Article 77 of the Constitution, all executive actions of the Government of India shall be expressed to be taken in the name of the President. Therefore, the Central Government means the President and the officers subordinate to him while exercising the executive powers of the Union vested in the President and in the name of the President. Similarly, as per clause (60) of section 3 of the General Clauses Act, 1897, the 'State Government', as respects anything done after the commencement of the Constitution, shall be in a State the Governor, and in a Union Territory the Central Government. As per Article 154 of the Constitution, the executive power of the State shall be vested in the Governor and shall be exercised by him either directly or indirectly through officers' subordinate to him in accordance with the Constitution. Further, as per article 166 of the Constitution, all executive actions of the Government of State shall be expressed to be taken in the name of Governor. Therefore, State Government means the Governor or the officers subordinate to him who exercise the executive....
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....ity or control, to carry out a function entrusted by the Central Government, State Government, Union Territory or a local authority. 5. We held that UIT Kota is established by Govt, of Rajasthan (State Legislature) in 1970 under The Rajasthan Urban improvement Act 1959 and it is established by Govt, of Rajasthan with 90% or more participation by way of equity or control to carry out a function entrusted by the State Government. Thus UIT Kota falls under the category of "Government Entity". 5.1 Now we come on second question i.e "Whether constructing a Community Hall by the applicant at Bapu Nagar Residential Scheme, Kota, in accordance of works contract allotted by UIT Kota, is a taxable service under GST law and if yes, then determination of the liability to pay tax after applicable exemption and deductions. We held that construction of a Community Hall fails under the definition of Civil Work under HSN Code 9954 and taxable in light of Notification No. 22/2021-Central Tax (Rate) New Delhi, 31st December, 2021. G.S.R.....(E).- which is hereby reproduced as under-ln exercise of the powers conferred by sub-section (1), subsection (3) and sub-section (4) of se....
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....ks contract has pre-fixed terms and conditions including total tender rate. We find from the contract letter under which conditions mentioned by UIT Kota in respect of supply of subject service that the work was to be started on 11.06.2022 and to be completed prior to 10.12.2022. We observe that The amendment came into force on 01.01.2022. The benefit of the reduced tax rate, i.e., 12% instead of 18% on works contract supplied to a Governmental Authority or a Government Entity regarding the works contract services mentioned in the corresponding entry, stands discontinued with effect from 01.01.2022. Further, we would like to mention here the relevant section of Act for clarification of applicant,- (i) As per Section 2(33) of CGST Act, "Continuous supply of services" means a supply of services which is provided, or agreed to be provided, continuously or on recurrent basis, under a contract, for a period exceeding 3 months with periodic payment obligations and includes supply of such services as the Government may, subject to such conditions, as it may, by notification, specify. (ii) As per sec 13(2) of CGST Act the time of supply of service for continuous sup....
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....ays from the date of change in the rote of tax. Explanation.- For the purposes of this section, "the date of receipt of payment" shall be the date on which the payment is entered in the books of account of the supplier or the date on which the payment is credited to his bank account, whichever is earlier. In light of above provisions of Act and Notification we held that the amendment came into force on 01.01.2022. The benefit of the reduced tax rate, i.e., 12% instead of 18% on works contract supplied to a Governmental Authority or a Government Entity regarding the works contract services mentioned in the corresponding entry, stands discontinued with effect from 01.01.2022. The revised rate applicable for the said supply is 18%. The revised rate is applicable from the 01st day of January, 2022. In case, where the time of supply of the work completed is on or before 31st December, 2021, GST at pre-revised rate is applicable and in case where the time of supply of the work completed is on or after, 01st day of January, 2022, GST at the revised rate is applicable. 6) We have gone through the judicial pronouncements of various judicial authority and also gone through the....