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2022 (8) TMI 1242 - AAR - GSTClassification of services - rate of GST - works contract services or not - Kochi Water Metro Project - scope of exclusion specified for the term 'business' as per the explanation to heading 9954 - applicability of N/N. 11/2017 dated 28th June 2017 - works contract awarded to Kool Home Builders qualifies to tax under CGST Act or not - applicability of N/N. 11/2017 - Central Tax (Rate) dated 28th June 2017 under clause (a) of item number (vi) of serial number 3, under Section 5 of Chapter 99 as amended by Notification No.24/2017 - Central Tax (Rate) dated 21st September 2017 - works contract qualifies to tax under SGST Act or not. HELD THAT:- Section 2(119) of the CGST Act defines a works contract as a contract for building construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract. From this definition it reveals that the term works contract under GST has been restricted to any work undertaken for an “Immovable Property” wherein transfer of property in goods whether as goods or in some other form is involved - the service rendered by the applicant squarely falls under the definition of works contract in Section 2 (119) of the CGST Act. Whether the works contract services rendered by the applicant attract GST at the rate of 12% under SI No. 3 (vi) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017? - HELD THAT:- As per the above entry, the composite supply of works contract as defined in Section 2 (119) of the CGST Act, 2017 provided to a Government by way of construction of a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession attract GST at the rate of 12%. In the instant case though the contract of construction of the terminals and other infrastructural facilities for the integrated water transport project is awarded to the applicant by Kochi Metro Rail Ltd as the executing and operating agency [Project Management Consultants] the contract is awarded on behalf of the Government of Kerala and the transfer of property in goods in the work contract services rendered by the applicant takes place to the Government of Kerala; the de jure owner of the assets of the integrated water transport project, and hence the recipient of the work contract services rendered by the applicant is the Government of Kerala. Whether this project comes under the exclusion from the definition of the term “business” as per explanation to SI.No.3 (vi) of the Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017? - HELD THAT:- As per the explanation to entry at SI No.3(vi) of the Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 the term 'business' shall not include any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities. Undoubtedly, the integrated water transport project is an activity undertaken by the Government of Kerala as a public authority and hence squarely covered by the explanation to entry at SI No. 3 (vi) of the Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 and hence the activity is not a business for the purpose of the above-said entry. Thus, the works contract services performed by the applicant as per the above-mentioned contracts awarded by Kochi Metro Rail Ltd are liable to GST at the rate of 12% as per entry at SI No.3 (vi) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017.
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