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2019 (8) TMI 1217 - AAR - GSTGovernment Entity or not - applicant is formed by Government of Gujarat along with Government of India with a single object to develop Industrial City in Dholera Special Investment Region and Government is having 100% control by way of holding of equity in the company - Whether applicant can claim benefits available to Government Entity? - HELD THAT:- Since the applicant is constituted by the participation share of 51% of State Government and 49% of Central Government, hence being, fully constituted by the share of Government, the applicant is covered under the definition of “Government Entity”. Input tax credit - credit of GST charged by contractors - HELD THAT:- Clause (c) of Section 17(5) of CGST Act, 2017 provides the eligibility of input tax credit in case of works contract service where it is an input service for further supply of works contract service. Considering the extent of business of construction & erection, maintenance, repair to be conducted by the applicant, the eligibility of input tax credit can only be decided after ensuring that the further supply of works contract service is made by the applicant on a case to case basis. Classification of supply - amount recovered from contractors on account of breach of conditions specified in the contract - Liability to to collect GST - HELD THAT:- Clause (e) of Para 5 of Schedule II of the Central Goods and Services Tax Act, 2017 provides the following activity be treated a supply of services - the transaction shall be treated as supply of services. Moreover, as violation charges are payable by the contractors, the same are required to be treated as consideration. Therefore, this transaction is liable to GST. Classification of supply - amount recovered from contractors on account of not achieving milestone - Liability to to collect GST - HELD THAT:- Clause (e) of Para 5 of Schedule II of the Central Goods and Services Tax Act, 2017 provides the following activity be treated a supply of services - the transaction shall be treated as supply of services. Moreover, liquidated damages are payable by the contractors, therefore, the same are to be treated as consideration. Therefore, this transaction is liable to GST. Classification of supply - interest amount received for deferring the liquidated damages recovered from contractors - Liability to to collect GST - HELD THAT:- Clause (e) of Para 5 of Schedule II of the Central Goods and Services Tax Act, 2017 provides the following activity be treated a supply of services - the liquidated damages are liable to tax and interest on liquidated damages is a part of liquidated damages, therefore the interest is also liable to tax.
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