TMI Blog2018 (11) TMI 1505X X X X Extracts X X X X X X X X Extracts X X X X ..... xemption Notification No. 24/2017State Tax (Rate), dated 23-9-2017, the pre-condition is that the services being provided by the Applicant to CSPDCL by way of construction erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation or alteration of a civil structure or any other original works must predominantly be for use other than for commerce, industry, or any other business or profession. This effectively means that for availing the aforesaid benefit of reduced tax rate, it is of paramount importance that the services under taken/work done by the Applicant for CSPDCL must necessarily for use which is non-commercial in nature. Whether the constitution of CSPDCL has been incorporated for commercial aim or otherwise? - Held that:- It is seen that CSPDCL is a company incorporated under the Companies Act 1956, earlier known as Mahanadi Power Development Company Limited (Company Registration No. 1015822, dated 19-5-2003) and is a company limited by share. Further it is also in public domain that the main Objects of CSPDCL - on going through the main/ancillary objectives as enumerated in Memorandum of Association of CSPDCL, there hardly remain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;CSPDCL') have been entrusted to execute the Project i.e. Implementation of IPDS scheme for a. Strengthening and augmentation for sub-transmission distribution infrastructure and b. Electrification Work in 15 Circles (through eight packages) in Chhattisgarh State on behalf of Government of Chhattisgarh. IV. CSPDCL had floated a tender to award the aforesaid specified scope of work and after successful bidding M/s. A2Z has been awarded the work contract services from CSPDCL. 3. Contention of the Applicant : (i) that, since the services provided by it are in the nature of composite supply of work contract involving supply of goods and services therefore the services provided will be subjected to GST @ 12% instead of 18% in terms of Notification No. 24/2017-Central Tax (Rate), dated 13-10-2017. This Notification provides that the services provided to the Central Government, State Government, Union Territory, a local authority, a Government Authority or a Government Entity by way of construction, erection, commissioning, installation completion, fitting out, repair, maintenance, renovation, or alteration of a civil structure or any other original work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stry, or any other business or profession. The IPDS scheme has been formulated to keep pace with the increase demand of electricity as electricity is the most important factor in the economic growth of any country and the most critical segment of power sector chain including Generation, Transmission and Distribution, is the Distribution Sector. The funds for IPDS scheme are provided by Central Government to Chhattisgarh Government in the form Of subsidy and by Chhattisgarh Government by arranging loan from FIs/ Bank. Further, that even after completion of this project no recovery will be made from any consumer as this IPDS scheme is not for earning any profit or gain but for the benefit of India as a whole so that electricity reaches each and every corner of India. (vi) Thus on the basis of above, the Applicant contends that the said work contract services involving the supply of goods and services to CSPDCL is liable for GST @ reduced rate of 12% instead of 18%. 4. Personal Hearing :- In keeping with the established principles of natural justice, personal hearing in the matter was extended to the authorized person of the Applicant and accordingly, Shri Malvind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... advance ruling sought by the applicant M/s. A2Z Infra Engineering Ltd., Raipur revolves around two vital aspects, namely : (a) whether, CSPDCL is a Government authority /Government entity ? and, if so (b) whether, the works contract services provided by M/s. A2Z Infra Engineering Ltd. Raipur to CSPDCL qualifies being the work predominantly for use other than for commerce, industry or any other business of profession. 6.3 Close scrutiny of the balance sheet of CSPDCL reveals that 100% equity of CSPDCL as held by CSPDHL (Chhattisgarh State Power Distribution Holding Company Limited) and 100% of equity of CSPDHL is being held by Government of Chhattisgarh as is evident from the balance sheet of CSPDHL as on 31st March, 2016. This being the case, there is no ambiguity as regards CSPDCL, being a Government entity in view of the definition of 'Government Authority' as stipulated under Notification No. 31 /2017-Central Tax (Rate), dated 13-10-2017. 6.4 Now, moving on to the second aspect regarding the nature of activities being under taken by the applicant i.e. whether the same can be treated as the work predominantly for use other than for commerce, indus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merce, industry, or any other business or profession : (b) a structure meant predominantly for use as (i) an educational, (ii) a clinical, or (iii) an art or cultural establishment; or (c) a residential complex predominantly meant for selfuse or the use of their employees or other persons specified in paragraph 3 of the Schedule Ill of the Central Goods and Services Tax Act, 2017 - 6 - (vii) Construction services other than (i), (ii), (iii), (iv), (v) and (vi) above. 9 - 2. This notification shall be deemed to have come into force with effect from 21-9-2017. (iii) Similarly the principal Notification No. 11/2017-Central Tax (Rate), dated 28th June, 2017 was amended vide Notification No. 24/2017-Central Tax (Rate), dated 23rd September, 2017, which was further amended vide Notification No. 31/2017-Central Tax (Rate), dated 13th October, 2017. (iv) Thus for availing the benefit of exemption Notification No. 24/2017State Tax (Rate), dated 23-9-2017, the pre-condition is that the services being provided by the Applicant to CSPDCL by way of construction erection, com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and co-ordinate with other companies - To carry on the business of purchasing, selling, importing, exporting, wheeling and trading of power including finalization of tariff, billing and collection thereof. - To execute Power Purchase Agreements with Transmission Companies, Generating Companies, Central and State generating stations. Regional Electricity Boards, other State, Companies and Persons. - To execute agreements for sale of Power of other distribution or trading companies and other persons and to coordinate, aid and advise on the activities of other companies and concerns, including subsidiaries, associates and affiliates engaged in generation, transmission, distribution, supply and wheeling of electrical energy. B. Objects incidental or ancillary to the attainment of the main objects : 4. Borrowing power Subjects to the provision of Section 58A of the Companies Act, 1956 and the rules framed thereunder to borrow money or to receive money or deposits for the purpose of financing the business off the Company as may be thought fit, including by the issue of Debentures perpetual o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of capital funds obtained from Central Government for installation and erection of infrastructure under IPDS scheme, whereas the role of M/s. A2Z Infra Engineering Ltd., Raipur is completion of the work of installation and erection of infrastructure including supply of materials like substation, conductor, meters, other structure ete. to be used predominantly for commercial purpose, at concessional and reasonable rates as per the awarded contract. Thus the nature of activities of CSPDCL being principally and predominantly, being commercial in nature, as per their (CSPDCLs) Memorandum of Association itself, we come to the considered conclusion that the works contract services provided by the applicant M/s. A2Z Infra Engineering Ltd., Raipur to CSPDCL is liable for CGST and SGST @ 9% each. 7. In view of the deliberations and discussions as above, we pass the following order : ORDER 8. In view of the discussions held above, the ruling sought by the Applicant is answered as under :- 9. In the light of Notification No. 11/2017-State Tax (Rate), dated 28-6-2017 read with amendment Notification No. 24/2017-State Tax (Rate), dated 23-9-2017 and as the nature of work ..... X X X X Extracts X X X X X X X X Extracts X X X X
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