TMI Blog2021 (7) TMI 1364X X X X Extracts X X X X X X X X Extracts X X X X ..... nt is engaged in is meant for any business or otherwise? - HELD THAT:- The activities of M/s APIIC are business activities and not otherwise. The applicant claims that the works involved in the contract i.e., the RBF sheds are used by none other than the organisation (APIIC) itself. But a detailed examination of the activities of APIIC prove that the organisation runs on a business model as it would pass on any costs involved in its transactions to the end client. This would be sufficient enough to come to a conclusion that the said construction is for use of APIIC for conducting its activities, which are essentially business oriented and hence not eligible for concessional rate of 12% available under Notification No.24/2017 - CT (Rate) dated 21.09.2017. The contract entered by the applicant is classifiable under SAC heading No. 9954 under construction services, with entry no (ii) of serial No.3 of notification no. 11/2017 Central Tax (Rate) dated 28.06.2017 i.e., Composite Supply of Works Contract as defined in clause 119 of Section 2 of Central Goods and Services Act, 2017 and the applicable rate of tax is 18%. - AAR No. 22/AP/GST/2021 - - - Dated:- 23-7-2021 - SRI. D. RA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cant to APIIC, whether the applicant is eligible to avail the concessional rate of GST at 12% as prescribed in SLNo.3(vi) of the Notification no. 11/2017- Central Tax (Rate) dated 28.06.2017, as amended by? 2. If not, what is the appropriate rate and classification of GST to be charged by the applicant? On verification of basic information of the applicant, it is observed that the applicant falls under Centre jurisdiction, i.e. Superintendent, CGST Suryarao pet Range, Vijayawada Division. Accordingly, the application has been forwarded to the jurisdictional officer and a copy marked to the State Tax authorities to offer their remarks as per Sec. 98(1) of CGST /APGST Act 2017. But, no remarks were received from the jurisdictional officer concerned on the issue, for which the Advance Ruling was sought by the applicant. 5. Applicant's Interpretation of Law: The applicant submits that the present work is awarded by APIIC for construction of RBF sheds. The applicant is providing works contract services in the form as defined under Section 2 (119) of the CGST Act, 2017. (119) Works contract means a contract for building, construction, fabrication completion, erec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervices 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] The applicant stated that APIIC would satisfy the definition of Government Authority. [(ix) Governmental Authority means an authority or a board or any other body,- (i) Set up by Act of parliament or a State Legislature; or (ii) Established by any Government, With 90 per cent or more participation by way of equity or control, to carry out any function entrusted to a Municipality under article 243W of the Constitution or a Panchayat under article 243G of the Constitution. In this regard, APIIC exercises/performs the statutory powers/functions of the local bodies with effect from 01.10.1994 onwards in 287 Nos. Industrial Areas (phase wise)/ housing Complexes/Mini Industrial Estates/Commercial Complexes falling under Municipalities, Municipal Corporations and Gram Panchayats in the State, through its officers nominated as Executive Authority under the relevant Acts (AP Panchayti Raj Act, AP Municipality Act etc.,). Therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey have developed more than 300 industrial parks spreading over an extent of about 1,21,655 acres (including allotted area). Besides, APIIC is also developing sector focussed parks like apparel park/food processing parks/leather parks, special Economic Zones in the state. APIIC has also constructed 3500 industrial sheds, 4800 dormitory units, 466 commercial shops. The applicant states that the present contract awarded to them is not a contract to develop industrial park etc., for APIIC but for RBF Sheds for use of APIIC, which as discussed supra is a Governmental Authority. Further, as per the explanation provided in SI.No.3 (vi), this particular contract is not for the business interests or transactions of APIIC but for their own use. Further, the same cannot be treated as business since they function as a Governmental Authority and any activity or transaction entered into by them cannot be held as business. Therefore, there is no commercial activity or business or profession involved in it, but the present contract is for a governmental authority to run its offices. Therefore, the present contract must be allowed for the concessional rate of 12%. In view of the above, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The para 4 of clauses (ix) (x) of Notification No.11/2017 - CT (Rate) dated 28.06.2017 as amended by Notification No.31/2017 - CT (Rate) dated 13.10.2017 is as hereunder; (ix) Governmental Authority means an authority or a board or any other body, - (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 any function entrusted to a municipality under article 243 14/ of the Constitution or to a Panchayat under article 243 G of the Constitution. (x) Governmental 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 a State Legislature; or (ii) established by any Government, with 90% or more participation by way of equity or control, to carry out any function entrusted by the Central Government, State Government, Union Territory or a local authority. Andhra Pradesh Industrial Infrastructure Corporation Ltd. (APIIC) was formed in 1973 by GO No: 831 dated: 10.09.1973 issued by Government of Andhra Pradesh. As seen from the share holding ratios o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rposes foregoing state revenues since APIIC would pass on any costs to the end client . It is evident from the above excerpts, that the activities of M/s APIIC are business activities and not otherwise. The applicant claims that the works involved in the contract i.e., the RBF sheds are used by none other than the organisation (APIIC) itself. But a detailed examination of the activities of APIIC prove that the organisation runs on a business model as it would pass on any costs involved in its transactions to the end client. This would be sufficient enough to come to a conclusion that the said construction is for use of APIIC for conducting its activities, which are essentially business oriented and hence not eligible for concessional rate of 12% (6% CGST + 6% SGST) available under Notification No.24/2017 - CT (Rate) dated 21.09.2017. Hence, the contract entered by the applicant is classifiable under SAC heading No. 9954 under construction services, with entry no (ii) of serial No.3 of notification no. 11/2017 Central Tax (Rate) dated 28.06.2017 i.e., Composite Supply of Works Contract as defined in clause 119 of Section 2 of Central Goods and Services Act, 2017 and the appli ..... X X X X Extracts X X X X X X X X Extracts X X X X
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