TaxTMI 
TaxTMI 
2026 (9) TMI 1568
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....hether there is any GST liability on Centage received by SPV from KIIFB (paid on behalf of Government), if so, what is the rate applicable. 4. Contentions of the Applicant: 4.1 The applicant submits that they were established as a body corporate in 2001 by the Government of Kerala, as a funding agency for providing financial assistance to the transport facility projects in the State. Further the Government selected the applicant as Special Purpose Vehicle (hereinafter referred to as SPV) for implementing KIIFB funded projects. The Kerala Infrastructure Investment Fund Board (hereinafter referred to as "KIIFB") is a body corporate constituted under the Kerala Infrastructure Investment Fund Act, 1999 (amended by KIIF Act, 2016) of Government of Kerala to mobilize and channelize funding for developing major infrastructure projects in Kerala. The Government identifies Projects, and Special Purpose Vehicles (SPVs) for the implementation of these projects and issues Administrative Sanction. 4.2 A Tripartite Agreement is executed between KIIFB (funding agency), SPV (implementing agency) and the Administrative Department of the Government (owner). The obligation of SPV commences f....
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....of the Income-tax Act, 1961 ought to be deducted through the TAN of the concerned Administrative Department. 4.6 The applicant has claimed exemption and placed reliance on SI. No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, which reads as follows: "Pure services provided to the Central Government, State Government or Union territory or local authority or a Governmental Authority by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution." 4.7 The applicant submitted that the functions entrusted under Articles 243G and 243W include "plans for economic development and social justice including those listed in the Eleventh and Twelfth Schedules" and that the expression "plans" is not limited to mere execution of projects, but extends to wholesome planning for proper implementation of the project, including finance and capital. 4.8 Reliance was also placed on Entries 2, 13 and 14 of the Eleventh Schedule to the Constitution, which read as follows: "2. Land improvement, implementation of....
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....on the basis of the submissions made by them in the application and during the personal hearing. 7. Discussion and Conclusion: 7.1 The issues raised and the submissions made by the applicant have been carefully considered. Before proceeding to answer the questions raised in the application, it is necessary to decide the admissibility of the application for Advance ruling. 7.2 Coming to the scope of advance ruling, as per clause (a) of Section 95 of the CGST Act, the term "advance ruling" means a decision provided by this Authority to the applicant on matters or on questions specified in sub-section (2) of Section 97 of the CGST Act in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant; From the above, it is evident that an applicant can seek an advance ruling in relation to supply of goods or services or both undertaken or proposed to be undertaken by them. 7.3 Section 97 of the CGST Act specifies the subjects on which an application for advance ruling can be made. Section 97 of the CGST Act reads as follows:- "(1) An applicant desirous of obtaining an advance ruling under this Chapter may make ....
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....for any service", is prima facie not covered under Section 97(2) of the Act and therefore, not maintainable before this Authority. However, when the question is viewed in context of the other question for which ruling has been sought in the application, the same may become maintainable. It is pertinent to note that invoice should imply GST invoice as per Section 2(66) of the Act which is required to be issued by the supplier to the recipient in terms of Section 31 of the Act provided that the supply in question was taxable under GST. Accordingly, determination of this question would depend on the determination of the second question whether the supply made by the applicant was taxable under GST. Hence, even though the first question, prima facie, seems not covered by Section 97(2), its determination is linked to the determination of the second question. Accordingly, this Authority considers it appropriate to examine Question No. 1 as an ancillary issue necessary for answering Question No. 2 and not as an independent question under Section 97(2). 7.7 The next issue to be decided is the GST liability on centage charges received by the applicant from KIIFB on behalf of Government a....
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....lations indicate that centage charges are akin to consultancy charges and are percentage-based fees applied to development projects based on cost of each project. It has defined the scope of work related to the execution of such projects and had already contemplated application of Service Tax (Order was issued during Service Tax era). Further, vide G.O(P)No.61/2017/Fin dated 09.05.2017, the Centage charges were further revised at fixed percentage of value of works and depending upon the nature of works such Buildings, land Development, Waste & Wastewater supply schemes, Ports Harbours Marine & Waterfront, Inland Navigation, Inland Waterways etc. it further says that the rates were fixed for planning, designing, tendering, supervising and handing over. 7.9 The Tripartite Agreement submitted by the applicant as executed between the applicant as the Special Purpose Vehicle (SPV), the KIIFB and the concerned Govt. department provided the detailed framework under which the specified projects were to be executed by the applicant which apparently had been drafted in consonance with the Govt. of Kerala Orders issued as discussed above. The salient features of the Tripartite Agreem....
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..... 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 as may be necessary to enable them to function as institutions of self-government and such law may contain provisions for the devolution of powers and responsibilities upon Panchayats, at the appropriate level, subject to such conditions as may be specified therein, with respect to- (a) the preparation of plans for economic development and social justice; (b) the implementation of schemes for economic development and social justice as may be entrusted to them including those in relation to the matters listed in the Eleventh Schedule." Entry 13 of the Eleventh Schedule reads as follows: "13. Roads, culverts, bridges, ferries, waterways and other means of communication." Similarly, Article 243W of the Constitution reads as follows: "243W. Powers, authority and responsibilities of Municipalities, etc .- Subject to the provisions of this Constitution, the Legislature of a State may, by law, endow- (a) the Municipalities with such powers and authority....
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.... matter placed on record, prima facie, it appears that the activities undertaken by the applicant in respect of the projects mentioned in the Schedule to the Tripartite are not covered SI. No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 and therefore not exempted. 7.14 Having answered the second question raised by the applicant, we proceed to determine the first issue, i.e., "whether the Special Purpose Vehicle (SPV) is required to issue tax invoices in favor of the respective Administrative Department (AD) of the Government". It is clear from the answer to the first question that the applicant is supplier of the taxable service with Centage Charges as consideration. Now, in order to answer the question in hand, the recipient of service needs to be established. Section 2(93) of the CGST Act, 2017 (and the corresponding provision of the KSGST Act, 2017) provides for the definition of Recipient as under: Section 2(93): "recipient" of supply of goods or services or both, means- (a) where a consideration is payable for the supply of goods or services or both, the person who is liable to pay that consideration; Further, Section 2(31) of the CGST Act, 20....
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....and monitoring of the implementation of the projects apart from funding which itself is mandated by the KIIF Act, 1999. 7.15 The following facts related to payment made to the applicant for their services of execution of the projects may lead to an assumption that KIIFB is the recipient of the applicant's services: (a) KIIFB releases the centage charges to the applicant instead of the concerned govt. department and the source of the consideration being prima facie evidence of being recipient of service may make us believe that it was KIIFB who was liable to pay the consideration and therefore is a recipient of the services provide by the applicant. (b) Under Clause 5.5 of the Tripartite Agreement, the applicant is required to submit its invoices to KIIFB for release of payment. Further, G.O.(P) No. 11/2018 provides that SPVs shall submit claims directly to KIIFB, which shall examine the claims and make payment to the SPVs. Thus, the applicant directly approaches KIIFB for payment. (c) KIIFB scrutinises the claims and sanctions payment before releasing the centage charges, which may indicate that KIIFB undertakes the obligation to pay the consideration.....