TMI Blog2021 (4) TMI 880X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the related services, thereby is a composite supply of works contract. Further the works entrusted involves construction, fitting out, improvement etc of NPKRR Maaligai, the immovable property and there exists transfer of property in goods in the execution of the work. Therefore, it is observed that the works undertaken by the applicant are Works contract service as per Section 2 (119) of CGST Act 2017 and the supply is a composite supply, thereby condition at 8.1 (a) above is satisfied. Government entity or not - HELD THAT:- TANGEDCO is a Public Limited Company established by Government of Tamilnadu with more than 90 percent control for the purposes of generation and distribution of electricity. Hence, TANGEDCO Ltd is a Government Entity. It is further pertinent to note that the Authority for Advance Ruling in the case of Tamil Nadu Generation and Distribution Corporation Limited vide TN/ 14/AAR/2020 dt. 20.04.2020 has viewed that TANGEDCO is a Government Entity. As per the definition of Business, any trade, commerce or similar activity whether or not it is for pecuniary benefit itself is termed as business. TANGEDCO is involved in generation and distribution of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is engaged in construction activities including retro fitting, restoration etc. of civil structures predominantly for Government, Public Sector Undertakings and Government entities. They have sought Advance Ruling on the following questions: 1. What is the rate of GST to be charged on providing works contract services to TANGEDCO for carrying out retrofitting work for strengthening the NPKRR Maaligai against seismic and wind effect and modification of elevation in TNEB headquarters building at Chennai. 2. Whether the entry in Sl.No.3 item (vi) of the Notification no.11/2017-Central Tax (Rate) dated 28.06.2017 as amended is applicable to the applicant in instant case. The Applicant has submitted the copy of application in Form GST ARA - 01 and also submitted a copy of Challan evidencing payment of application fees of ₹ 5,000/- each under sub-rule (1) of Rule 104 of CGST rules 2017 and SGST Rules 2017. 2.1 The Applicant has stated that they have been awarded the contract to carry out Retrofitting works for strengthening the NPKRR Maaligai against Seismic wind effect and Modification of Elevation of the said building in TNEB Headquarters complex, Chennai-6000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a civil structure or any other original works meant predominantly for use other than for commerce, industry or any other business or profession. 2.4 They have stated that TANGEDCO is a Government entity; that as per the said notification Government Entity means an authority or a board or any other body including a society, trust, corporation i) Set up by an Act of Parliament or State Legislature; or ii) Established by any Government, with 90per cent or more participation by way of equity or control, to carry out a function entrusted by the Central Government, State Government, Union Territory or a local authority; that TANGEDCO was formed as a company by the Government of Tamilnadu wholly owned by the Government through its holding company TNEB limited to carry out functions entrusted by the State Government; that the board of Directors are also appointed by the Government of Tamilnadu thereby exercising total control over the entity; that hence it qualifies as a Government Entity. Further, they have stated that TANGEDCO is a public utility company operating without any commercial basis. The functions of TANGEDCO in general is duty of promoting the coordinated d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hearing was held on 13.08.2020. The authorised representative participated in the hearing. He stated that the applicant seeks ruling with respect of the works contract undertaken for TANGEDCO. The applicant was asked to furnish a write up on entire activities of works contract with relevant supporting documents as in the bid/agreement documents. The central tax officer also appeared for the hearing and stated that they have furnished a written submission. 3.2 The applicant vide their letter dated 24.08.2020 received on 11.09.2020/15.09.2020, submitted the following documents: (i.) Letter Lr. No. CE/ CD/ SE/ C/ Distn/ E2 /A1/ F. Retro / Acceptance No.28/D.48/2017 dated 28.02.2017 Award of work/acceptance- for carrying out Retrofitting works for Strengthening the NPKRR Maaligai against Seismic Wind effect and Modification of Elevation of NPKRR Maaligai in TNEB Headquarters Complex, Chennai - 2 (only the first page). (ii) Letter Lr.No.CE/CD/SE/C/Dist./EE2/Al/F.Retro/D.259/2019 dated 24.06.2019 amending the awarded rates consequent to the implementation of GST. (iii) Letter Lr.No.CE/CD/SE/C/Dist./EE2/Al/F.Retro/D.371/2019 dated 10.10.2019 enhancing the Face Value of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te). TNEB, which came in to existence from 1st July 1957 was reorganized into TNEB Limited as holding company and TANTRANSCO and TANGEDCO as subsidiary companies. TANTRANSCO was incorporated on 15.06.2009 with an authorized share capital of ₹ 5.00 Crores. TANGEDCO and TNEB Limited were incorporated on 01.12.2009 with an authorized share capital of ₹ 5.00 Crores and paid-up capital of ₹ 5.00 lakhs each for TANGEDCO and TNEB Limited. From the above it is clear that TANGEDCO is a profit-Making company and the contention of the applicant that TANGEDCO is a State Government entity is not correct. TANGEDCO (Accounts Branch) has issued a GST Circular Lr. No. CFC / GL/ FC /ACCTS/ DFC/ AO/ TAX/F. GST-7 / D.No.65/ 2017 dated 07.07.2017. In page 5, point no.3 of the circular with regard to works contract the following is mentioned: Works Contract: Clause (119) of Section 2 of CGST defines a works contract as a contract of building, construction, fabrication, completion, erection, maintenance, installation, fitting out, improvement, modification, repair, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CO for the levy of liquidated damages.The applicant has sought ruling on the following questions: 1. What is the rate of GST to be charged on providing works contract services to TANGEDCO for carrying out retrofitting work for strengthening the NPKRR Maaligai against seismic and wind effect and modification of elevation in TNEB headquarters building at Chennai. 2. Whether the entry in SI.No.3 item (vi) of the Notification no. 11/2017-Central Tax (Rate) dated 28.06.2017 as amended is applicable to the applicant in instant case. 8.1 On the applicability of GST at 12% as per entry in Sl.No. 3(vi) of Notification No. 11 /2017-C.T.(Rate) dated 28.06.2017 (as amended) effective from 21.09.2017, the relevant extract of the said entry is as follows: SI.No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (per cent.) Condition 3 Heading 9954 (Construction services) (vi) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be. The fact whether the above conditions are satisfied are analysed as under. 8.2 The definition of works contract under Section 2(119) of CGST Act, 2017 is as follows: works contract means 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; As per the scope of the contract it is seen that the work covered in the contract envisages detailed engineering, soil investigation and testing, preparation of design, drawing submission to TANGEDCO for the approval and carrying out execution of foundation, structure, superstructure works for retrofitting strengthening of structural members of NPKRR Maaligai against seismic, wind effect and modification of elevation of NPKRR Maaligai in TNEB Headquarters Complex including provision of glass cladding and aluminium composite panel works including all civil works viz. pile foundation, pile cap, columns, walls, beams, slab, shear wall etc. by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n . It is imperative to refer to the definition of business under Section 2 (17) of the CGST Act, which is as follows: business includes -- (a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit; (h) any activity or transaction in connection with or incidental or ancillary to sub-clause (a); (c) any activity or transaction in the nature of sub-clause (a), whether or not there is volume, frequency, continuity or regularity of such transaction; (d) ..h; and (i) any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities As per the above definition, any trade, commerce or similar activity whether or not it is for pecuniary benefit itself is termed as business. TANGEDCO is involved in generation and distribution of electricity for which revenue is collected for the Energy consumed by the consumers. Revenue collection is based on tariff charged to different category of consumers. TANGEDCO as a state generation and distribution utility and deemed licensee is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lectricity Act, 2003 regarding tariff regulation and determination of tariff. Therefore, the supply of works contract services as per the above work order cannot be considered as meant predominantly for use other than for commerce, industry, or any other business or profession. 8.5 With respect to the condition prescribed in proviso that the supplies should have been procured by the said Government entity in relation to a work entrusted to it by the Central Government, State Government, Union territory or local authority, it is observed that TANGEDCO, is a Government entity entrusted with the work of generation and distribution of electricity. In the case at hand, the work undertaken by the applicant is that of retrofitting for strengthening of the NPKKR Maaligai, against seismic wind effect; Modification of elevation of TNEB Headquarters Building at Chennai. The said works are not of generation and distribution of electricity which is the entrusted work on TANGEDCO and therefore the applicant fails to satisfy the said condition. 8.6 Based on the above discussion, as the Applicant has not fulfilled the conditions at (c ) and (d) of para 8.1 above, the entry 3(vi) of Notifi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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