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2019 (11) TMI 1145 - AAR - GSTClassification of service - Works contract service or not - setting-up of the data centre facilities - rate of GST - CGST Act - Karnataka GST Act - HELD THAT:- The term Works Contract’ is clearly defined in Section 2(119) of the CGST Act, 2017. The definition is self explanatory and leaves no doubt that it is in relation to an immovable property only. Secondly, in Section 17(5) of the said Act, the term ‘plant and machinery’ is also defined. Here the machinery, apparatus and equipment is secured to the earth by way of a foundation or structural support. This foundation or the structural support is meant to impart stability to the machine while working. It, however, does not impart the machine/equipment the same degree of permanence that a building acquires when built on its foundation. Here the equipment is fitted on the foundation and the same can be removed and relocated without damaging it. The same does not hold true for a building or an immovable property - the inference drawn from the provisions of Section 17(5) are erroneous. The proposed activity of setting-up of the data centre facilities as explained would qualify as ‘works contract’ as per Section 2(119) of the Central Goods and Service Tax Act, 2017 and Section 2 (119) of the Karnataka Goods and Service Tax Act, 2017 Rate of tax applicable on the activities proposed to be undertaken by them - HELD THAT:- The activities proposed to be carried out by the applicant qualify to be treated as works contract the rate of tax applicable would be accordingly applied. Notification 11/2017 - Central Tax (Rate) dated June 28, 2017 provides the rates of GST applicable on intra state supply of goods and services. SI. No.3 of the Notification provides that a composite supply of works contract, as defined in clause 119 of section 2 of Central Goods and Services Tax Act, 2017, is liable to GST @ 18% - Therefore, as the proposed activity falls under the category of the works contract it is liable to tax @18%.
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