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2020 (8) TMI 681 - AAR - GSTSupply or not - Liability of GST - Funds received from Govt. of Kerala for paying the cost of the water metro project - requirement of GST invoice to be raised on Govt. of Kerala for transferring the value of assets on a back to back basis after completion of the works - input tax credit - Governmental Authority or not - exemption under N/N. 12/2017 dated 28-06-2017 - KMRL is a body established by the Government with ninety percent or more participation by way of equity to carry out function entrusted to a municipality under Article 243W of the Constitution - services rendered by KMRL as an executing agency to Govt. of Kerala - pure service as per Entry 3 of the Notification no. 12/2017 dtd.28-06-2017 or not. Whether there is any supply by the applicant to the Government of Kerala? - HELD THAT:- Even though, consideration is an essential element of supply, as per Section 7 (1) (c) of the CGST Act, 2017, the activities specified in Schedule I, made or agreed to be made without a consideration is also supply. As per Sl.No. 2 of Schedule I; supply of goods or services or both between related persons or between distinct persons as specified in section 25, when made in the course or furtherance of business is an activity to be treated as supply even if made without consideration - Since the applicant is a joint venture with equal equity participation of the Government of Kerala and the Government of India, the applicant falls within item (iv) of explanation to sub section (5) of Section 15 and hence the applicant and Government of Kerala are related persons and consequently the services rendered by the applicant to the Government of Kerala without consideration will also fall under the definition of supply. Thus, the services rendered by the applicant to the Government of Kerala as executing and operating agency of the Kochi Water Metro Project with or without consideration falls under the definition of supply under CGST Act, 2017. Whether the services rendered by the applicant to the Government of Kerala can be considered as pure services falling under Service Classification Code 998339 Project management services for construction projects? - HELD THAT:- It is evident from the G.O (Ms) No.44/2016/Trans Dt.13.06.2016 that the State of Kerala is the dejure owner of the water ways, the boat jetties, the boats and all other infrastructure created for the project. The status of the applicant is that of an agency that is executing the integrated water transport project on behalf of Government of Kerala - The services rendered by the applicant to the Government of Kerala as executing and operating agency of the integrated water transport project is rightly classifiable under the Service Classification Code 998339 Project management services for construction projects. The services rendered by the applicant are squarely covered by the above explanatory notes and hence are pure services falling under Service Classification Code 998339. Therefore, the applicant as the agency for executing the integrated water transport project in Kochi is rendering pure services to the Government of Kerala. Thus, the services rendered by the applicant to the Government of Kerala as executing and operating agency of the integrated water transport project is classifiable as pure services falling under service classification code 998339; the services are exempted from payment of goods and services tax by virtue of the entry at Sl No. 3 of Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017. Whether the applicant can be considered as governmental authority as per Para 2 (zf) of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017? - HELD THAT:- The applicant is established by government with 90 percent or more equity participation and is entrusted with the functions which are entrusted to Municipality under Article 243W of the Constitution or to a Panchayath under Article 243G of the Constitution. Hence, the applicant squarely falls under the definition of “Governmental Authority” under Para 2 (zf) of Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017.
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