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2018 (11) TMI 58 - AAR - GSTRate of GST - Construction services - works contract in relation to construction of road, bridges, buildings, civil structures of government, semi-government and private undertakings, secured through tenders in the case of government undertakings, and through personal negotiations in case of private undertakings - Scope of 'Government Entity' - N/N. 11/2017Central Tax (rate) dated 28.06.2017 - Concessional rate of GST @12% applicable or tax rate applicable at 18%? - Sr. No.3(vi)(c) of Notification no.11/2017-CT (Rate) dtd.28.06.2017. Whether MPPGCL, a Government Entity or not? - Held that:- In the Application itself that MPPGCL has been established by the Government of Madhya Pradesh and the Government of Madhya Pradesh has a 100% shareholding in the company. The State Government is also exercising full control over the activities of the said company. Needless to say that in the given circumstances M/s MPPGCL qualifies to be called and termed as a 'Government Entity' for the purpose of GST law, as it fulfils the necessary and sufficient conditions laid down under notification. Applicable Rate of GST - benefit of concessional rate of GST - Held that:- The civil construction of residential quarters is neither the primary work entrusted to MPPGCL nor it has any bearing on the work i.e. power generation by any means. Accordingly, we fail to understand as to why the benefit of concessional rate @12% GST should be available to this particular works contract awarded to the Applicant? The intention of the legislature has been to concessional rate to such work which has been entrusted to a government entity for public interest in general. Any work having direct involvement in the entrusted work i.e. power generation would merit exemption envisaged under Sr.No.3(vi)(c) of the Notification No.11/2017-CT(Rate) under CGST Act and corresponding notification under MPGST Act 2017, but extrapolating and extending this concessional rate to any or all activities of MPPGCL will not only be unwarranted but also defeat the very purpose of concessional rate. The impugned activity of the applicant would attract GST @18% (9% CGST + 9% SGST) classifiable under SAC 9954 read with Notification No.11/2017-Central Tax (Rate) and corresponding notification under MPGST Act 2017. Ruling:- M/s. Madhya Pradesh Power Generation Company Limited is a Government Entity as defined under Notification No.31/2017-Central tax (Rate) for the purpose of GST law. The works contract service of construction of 599 residential quarters allotted to the applicant by MPPGCL will merit classification under SAC 9954 and would attract GST @ 18% (9% CGST + 9% SGST).
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