TMI Blog2021 (6) TMI 829X X X X Extracts X X X X X X X X Extracts X X X X ..... status of M/s NBCC is therefore not disputed. As per the Contract, the Supply is being made to M/s NBCC which is a body corporate and not to any Government or Government Entity. Admittedly, M/s SAIL, RSP, Rourkela is the ultimate service beneficiary but Entry at SI No.3 (vi) of the notification No. 11/2017 is very specific and it cannot be stretched or construed otherwise. Thus, the commercial Supply by the applicant is not to Government/Government Entity but to M/s NBCC, a separate distinct entity and thereby the second pre-requisite is not fu-filled to merit classification under serial no. 3(vi) (a) or (b) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended from time to time. Whether M/s SAIL, RSP is a Government Entity in terms of explanation 4(x) to the notification? - HELD THAT:- It is clear that SAIL was formed in 1973 pursuant to approval of the parliament to manage 5 integrated steel plants. Thereafter, the SAIL was restructured as an Operating Company by way of Act passed by the Parliament namely 'The Public Sector Iron and Steel Companies (Restructuring) And Miscellaneous Provisions Act, 1978' for carry out function entrusted by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been awarded a contract by M/s NBCC vide letter no. NBCC/CGM (CPG)/2019/122 dated 15-01-2019 for Construction of ISPAT Post Graduate Medical Institute and Super Specialty Hospital at Rourkela Steel Plant for SAIL in Odisha on Design, Engineering, Procurement and Construction (EPC) basis at a total contract value of ₹ 259,60,13,257.00 (Rupee Two Hundred Fifty Nine Crores Sixty Lakhs Thirteen Thousands Two Hundred Fifty Seven only) inclusive of all taxes, duties, cess, statutory levies with a rider that contract Price will be adjusted prospectively for any increase/decrease in GST rate on Works Contract notified by Government of India. 3.3 A Memorandum of Understanding [MoU] was made on 13-08-2018 between Ms. SAIL and Ms. NBCC (India) Limited wherein Ms. NBCC (India) Limited has agreed to work as the Executing Agency for undertaking and completing the work accordingly on behalf of SAIL. 3.4 It was submitted that GST Rate on Works Contract Service is governed by Notification No. 11/2017-Central Tax (Rate) dated 28-06-2017 amended by 24/2017-C.T. (Rate) dated 21-09-2017 amended by 31/2017-C.T. (Rate) dated 13-10-2017 amended by 46/2017-C.T. (Rate) dated 14-11-2017 amended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ST Act, 2017, the captioned contract containing composite supply of goods and services for construction of immovable property undisputedly would fall within the ambit of works contract as defined under Section 2 (119) of the CGST Act, 2017. 3.7 It was submitted that though the services are provided to the Executing Agency of SAIL i.e. Ms. NBCC, in light of judgment of Hon'ble High Court in the case of Shapoorji Pallonji Company Pvt. Ltd Vs. C.C., C. Ex. S.T., Patna [2016 (42) S.T.R. 681 (Pat.)], for the purpose of exemption, the constitution of ultimate Service Recipient has to be considered and not that of the Executing Agency. 3.8 Ms. SAIL would fall within the ambit of 'Government Entity'. The term Governmental Entity is defined in Explanation (x) in para 4 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 as an authority or a board or any other body including a society, trust, corporation,- (i) set up by an Act of Parliament or a State Legislature; OR (ii) established by any Government with 90% or more participation by way of equity or control, to carry out a function entrusted by the Central Government, State Government, Uni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9; of the entity. Therefore the intention of the aforesaid notification is to enlarge the scope of the definition to cover Government Companies incorporated under the Companies Act also within the ambit of the definition of Government entity . Thus, if the criterion is fulfilled, at the time of 'establishment' by way of 90% or more Government participation in the equity or by way of control, the entity would be considered as 'governmental entity', within the meaning assigned under the said amended notification. 3.12 Since, the composite works contract awarded to the applicant is for construction of ISPAT Post Graduate Medical Institute and Super Specialty Hospital, which is a clinical establishment, for a Government Entity, the said contract would be squarely covered within the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 taxable at the concessional rate of GST of 12%. Discussion findings 4.0 We have gone through the advance ruling application along with all the annexure submitted by the applicant the additional written submission of the applicant submitted on 02.03.2020. We find that the questions before us essentially pertain to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or (iii) an art or cultural, establishment; or (c) ................................... Explanation ................................. 6 Provided that where the services are Supplied to a Government Entity, they should have been procured by the said entity in relation to a work entrusted to it by the Central Government, State Government, Union territory or local authority, as the case may be 4.3 On plain reading of the entry, it is clear that following pre-requisites are to be satisfied in order for the supply to qualify for the notified exemption. (i) Supply must be Composite Supply of Works Contract Service provided or to be provided by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of,- (a) civil structure or any other original works meant predominantly for use other than for commerce, 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 of cultural, establishment; (ii) Services are provided to Central Government, State Gover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. We examined the relevant documents submitted by the applicant and found that work order has been issued by M/s NBCC (India) Ltd vide their letter ref no. NBCC/CGM(CPG)2019/122 dated 15.01.2019 for 'construction of Ispat Post Graduate Medical Institute and Super Specialty Hospital at Rourkela Steel Plant for SAIL'. The project consists of (i) Hospital Block (Basement+G+4 Floors) 31909 sqm (ii) Service Block (G+4 Floors) 4417 sqm and (iii)Academic-cum Auditorium Block ( G+01 Floor) 4653sqm. We see that the scope of work includes supply of all goods and services required for completion of the contract. Further, the said contract is for construction of immovable property (i.e. construction of building) wherein transfer of property in goods is involved in the execution of such contract which would fall within the ambit of works contracts as defined under Section 2(119) of the CGST Act, 2017. Since the scope of work includes construction of medical institute and super specialty hospital, such work would certainly com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contract is made between M/s NBCC and M/s URC Construction (P) Ltd (the applicant), it is necessary for us to see the legal status of M/s NBCC. From the contract/agreement deed, it is obvious that M/s NBCC is a public limited company incorporated and registered under the Companies Act, 1956 and having its registered office at NBCC Bhawan, Lodhi Road, New Delhi-110003. Thus M/s NBCC is a company and not State Government/Central Government or Union Territory or any Government Entity. The status of M/s NBCC is therefore not disputed. Further, we also see that M/s NBCC had invited a tender for construction of Ispat Post Graduate Medical Institute and Super Specialty Hospital at Rourkela Steel Plant for SAIL and the applicant had been selected in the tender and awarded the contract by M/s NBCC. Thus, as per the Contract, the Supply is being made to M/s NBCC which is a body corporate and not to any Government or Government Entity. Admittedly, M/s SAIL, RSP, Rourkela is the ultimate service beneficiary but Entry at SI No.3 (vi) of the notification No. 11/2017 is very specific and it cannot be stretched or construed otherwise. Thus, the commercial Supply by the applicant is not to Governme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perating company . 4.10 From the above, it is clear that SAIL was formed in 1973 pursuant to approval of the parliament to manage 5 integrated steel plants. Thereafter, the SAIL was restructured as an Operating Company by way of Act passed by the Parliament namely 'The Public Sector Iron and Steel Companies (Restructuring) And Miscellaneous Provisions Act, 1978' for carry out function entrusted by the Central Government. Further, Serial No. 3(ix) of Notification No. 11/2017 as amended by Notification No. 1/2018 provides a concessional rate of GST @ 12% subject to condition provided under Column (5) of the said table, which reads as under; 'Provided that where the services are supplied to a Government Entity, they should have been procured by the said entity in relation to a work entrusted to it by the Central Government, State Government, Union Territory or local Authority, as the case may be'. 4.11 With regard to services supplied to M/s SAIL, Rourkela, the applicant stated that construction of medical institute and super specialty hospital is undertaken on account of the Central Government's initiative and is completely a central government funded proje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.0 RULING Question : What is the applicable rate of Goods and Service Tax [GST] on the Contract awarded by Ms. NBCC (INDIA) LIMITED , an Executing Agency of behalf of Ms. SAIL, for construction of ISPAT Post graduate Medical Institute and super specialty Hospital at Rourkela Steel Plant for SAIL in the State of Odisha on Design, Engineering, Procurement and Construction (EPC) basis. Answer :- The rate of GST on supply of works contract service which is being supplied to M/s SAIL, Rkl for construction of ISPAT Post Graduate Medical Institute and Super Specialty Hospital would merit entitlement for concessional rate of GST @ 12% [CGST @ 6% + SGST @ 6%] in terms of Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017 (and as amended). 6.0 This ruling is valid subject to the provisions under Section 103(2) until and unless declared void under Section 104(1) of the GST Act. 7.0 The applicant or jurisdictional officer, if aggrieved by the ruling given above, may appeal to the Odisha State Appellate Authority for advance ruling under Section 100 of the CGST/OGST Act, 2017 within 30 days from the date of receipt of the advance ruling. - - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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