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TMI Blog2021 (7) TMI 1364X X X X Extracts X X X X X X X X Extracts X X X X ..... under the AP Goods & Services Tax Act, 2017. 3. Brief Facts of the case: The applicant, M/s. KPC Projects Limited entered into a contract with Andhra Pradesh Industrial Infrastructure Corporation Ltd., (APIIC) for supply of works contract services. APIIC, a Government of Andhra Pradesh undertaking had floated online global open e-tenders for construction of ready built factory ("RBF") sheds 1, 2, 3 & 4 at YSR Electronic Manufacturing cluster, Kopparthy, YSR Kadapa District, Andhra Pradesh. The applicant, being the successful bidder, had entered into a contract with APIIC vide agreement No.XXXXXXX dated 03.12.2020 with the Chief Engineer of APIIC for providing the following work, "Construction of RBF 1, 2, 3 & 4 at YSR Electronic Manufacturing cluster at kopparthy, YSR Kadapa District, "Andhra Pradesh". It is the applicant's interpretation that the rate of tax is 12% for the above works with reference to Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017, as amended by Notification No.24/2017- Central Tax (Rate) dated 21.09.2017. The applicant had filed an application in form GST ARA-01 dated 13.03.2021 by paying required amount of fee for seeking Advance Ruling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority or Governmental Entity is eligible for the concessional rate of 6%. 11[(vi) 36[Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, 84[other than that covered by items (i), (ia) (ib) (ic) (id) (ie) and (if) above] provided to the Central Government, State Government, Union Territory, 13[a local authority, a Governmental Authority or a Government Entity] by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of - a) 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 or cultural establishment; or c) A residential complex predominantly meant for self- use or the use of their employees or other persons specified in paragraph 3 of the schedule III of the Central Goods and Services Tax Act, 2017 59[Explanation- for the purposes of this item, the term 'business' shall not include any activity or transaction undertaken by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... desh had also held that APIIC will qualify as a Governmental Entity. In this regard, it is respectfully submitted that the reduced rate of 6% CGST under entry 3(vi) would apply only in respect of three types of works mentioned in sub clauses (a) (b) and (c) of clause (vi) of S.No.3, out of which clause (b) is not relevant for the present purpose. Sub clause (a) reads as, "a civil structure or any other original works meant predominantly for use other than for commerce, industry or any other business or profession". The explanation to the SI.No 3 (vi) to Notification No. 11/2017 was added vide Notification No.17/2018- Central Tax (Rate) dated 26.07.2018 which is reproduced hereunder: "Explanation - For the purposes of this item, 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." In view of the above, it is submitted that the activities undertaken by APIIC for the present projects are not in the form of business, rather, they are offices for development of trade and industry in Andhra Pradesh. APIIC is vested with the objecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te) dated 28.06.2017, as amended from time to time. The Government of India, vide notification No. 11/2017 - Central Tax (Rate), dated - 28th June 2017 notified the rate of GST applicable on supply of services. The said notification has been amended from time to time. Vide Notification No. 24/2017 - Central Tax (Rate), Dated: 21.09.2017, Government of India by inserting entry No. (vi) notified, "Concessional GST rate of 6% for the construction services provided to Central Government, State Government, Union Territory, a local authority or a Governmental Authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of - a) a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession." This context necessitates the examination of two issues: a) Primarily, whether APIIC which awarded construction work to the applicant would qualify for a Governmental Authority/entity or not. b) Consequently whether the construction work taken up by the applicant is meant for business or otherwise. Initially we examine whether M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operand! of the organisation prove the same. Even though APIIC is a Government entity, the sustenance of the organisation is derived from its activities of sale of sheds, land, houses on outright sale or hire purchase etc, as mentioned in pg. No.5 of DIRECTORS' REPORT TO THE SHAREHOLDERS FOR THE YEAR 2013-2014, as presented below: "The difference between the sale price and cost price of the assets sold was taken to Profit & Loss Account. In certain Industrial Parks where substantial developmental works are to be taken up, the cost of constructive obligation was kept under the head of account "Provision for Contractual Obligations". During the year, Profit/Loss is recognized on sale of sheds, land, houses on outright sale or hire purchase and the difference between sale price and cost price of the assets sold is taken to Profit & Loss Account." In this context, it is worthwhile to make a reference to an aspect in page no. 25 of the above mentioned Annual Report regarding "Land Conversion Charges". "The State Investment Promotion Committee (SIPC) in its meeting held on 26.04.2013, decided not to provide exemption to the corporation from payment of land conversion fee for no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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