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2019 (10) TMI 523 - AAR - GSTClassification of services - rate of tax - sub-contract - Construction of residential complex - composite supply - Whether the activity undertaken by the applicant is covered under section 2(119) of the CGST Act, 2018 read with point 6 Schedule II of the CGST Act, 2017 read with the Karnataka GST Act, 2017 and the IGST Act, 2017? - Government authority or not - transaction covered under point 3(ii) or point 3(ix) of the Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017 as amended? - HELD THAT:- Bengaluru Development Authority has issued work orders to main contractor - the control over the entity rests with the Government of Karnataka and hence the Bangalore Development Authority satisfies both the conditions and hence is considered as a Government Entity. The projects of the applicant are involving the supply of both goods and services and is in relation to an immovable property and hence is a “works contract” within the meaning of section 2(119) of CGST Act. This works contract is for a construction of a civil structure and since it is a residential real estate project, the works is predominantly for use other than commerce, industry or any other business or profession and hence it is covered under clause (a) of the entry 3(vi) of the Notification, subject to the conditions. Applicability of clauses (a), (b) or (c) of the entry no.3(vi) of the said Notification - HELD THAT:- The applicant is constructing a Housing Project at two places in around Bangalore on subcontract basis rewarded from M/s. Gowri Infra Engineers Private Limited. The Bangalore Development Authority in its tender has stated that it has taken up construction of housing in and around Bangalore City as designed by the Government of Karnataka. Since this is a residential project for general public, the same is not covered under clause (b) or (c) - The projects of the applicant are involving the supply of both goods and services and is in relation to an immovable property and hence is a “works contract” within the meaning of section 2(119) of CGST Act. This works contract is for a construction of a civil structure and since it is a residential real estate project, the works is predominantly for use other than commerce, industry or any other business or profession and hence it is covered under clause (a) of the entry 3(vi) of the Notification, subject to the conditions. Whether the recipient has procured the said services in relation to a work entrusted to it by the State Government? - HELD THAT:- It is observed that the Bangalore Development Authority Act, which is passed by the State Legislature, has entrusted the activity of development of the City of Bangalore and areas adjacent thereto and for matters connected therewith to the BDA and the Authority has to obtain the sanction of the Government of Karnataka for every scheme they propose to implement. Hence, the condition is also satisfied - thus, the services provided by M/s. Gowri Infra Engineers Private Limited to Bangalore Development Authority in relation to the construction of housing complexes are covered under clause (a) of entry no.3(vi) of the Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017 as amended from time to time. Bengaluru Development Authority is a Government Authority and the main contractor is providing services specified in item (vi) of the Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017 and hence the sub-contract work of works contract provided by the applicant as a sub-contractor to the main contractor is covered under item (ix) of entry 3 of the said Notification as amended by Notification No. 1/2018 - Central Tax (Rate) dated 25.01.2018 and is taxable at 6% under CGST Act, 2017 w.e.f. 25.01.2018. For the period from 01.07.2017 to 24.01.2018, the same is taxable at 9% CGST.
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