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2020 (7) TMI 379 - AAR - GSTGovernmental Authority or not - undertaking drinking water supply projects in Anantapur District, Andhra Pradesh - exemption from the GST by virtue of Entry 3 in Notification 12/2017 (Rate), dt: 28.06.2017 - requirement of remission of GST to its suppliers for any services it procures by virtue of its activities of supplying water for domestic purposes. Governmental Authority or not - HELD THAT:- The applicant is not set up by an Act of Parliament or a State Legislature - applicant is constituted by the Government i.e., the State of Andhra Pradesh under G.O. Ms No. 344 dated: 16.09.1997 - The Board of the applicant i.e., “Sri Satya Sai Water Supply Project Board” consists of 9 Members, out of which 7 are officers /Employees of the Government of Andhra Pradesh that qualifies for 77% of Government control falling short of the designated 90% as required by the Act. Even the cost of the operation and maintenance of the water supply scheme is contributed at a ratio of 70% by the State Government, while 30% of the cost is being borne by the applicant from the water charges collected from the users - In the instant case the applicant falls short of the qualifying mark of 90% in terms of equity or control. Hence the applicant does not fit in the category of “Governmental authority”. Thus availment of exemption for the services received by the applicant by virtue of SI.No. 3 of Notification No 12/2017 - Central Tax (Rate), dt: 28.06.2017 does not arise in this context. Taxability of the services procured by the applicant from its Contractor M/s. Larsen & Toubro Limited, Water Supply & Distribution Business Unit, Water & Effluent Treatment IC - HELD THAT:- The Contractor is responsible for the “Operation and Maintenance” of the plant such as engaging of labour, supervisors to oversee the labour and managers for overall supervision along with amenities, tools & tackles provided for all the above personnel like vehicle, office establishment etc., while the applicant would ensure uninterrupted power supply and supply of material /spares as and when necessitated by the Contractor. Thus the services provided by the Contractor are pure services of “Operation and Maintenance” of plant devoid of any supply of material or goods in the due process. The services under question fall under SI.No. 25, Heading 9987 “Maintenance repair and installation (except construction) Services” attracting tax rate of 18% under Notification 11/2017- Central Tax (Rate) dt: 28.06.2017.
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