TMI Blog2022 (7) TMI 562X X X X Extracts X X X X X X X X Extracts X X X X ..... business or otherwise? - HELD THAT:- The applicant rather emphatically claimed that the work is meant for the use of Minister for Industries, which is essentially meant for promotion of Business and Industry. Moreover, the recipient of the services, APIIC is basically engaged in business activities and even a close observation of the modus operandi of the organisation prove the same. This would be sufficient enough to come to a conclusion that the said construction is for conducting promotional activities, which are essentially business oriented and hence not eligible for concessional rate of 12% (6% CGST 4- 6% SGST) 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 dose observation of the modus operandi of the organisation prove the same. This would be sufficient enough to come to a conclusion that the said construction is for conducting promotional activities, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al building. They had entered into an agreement bond No.04/CE-II/APIIC/2020-21 dt: 23.02.2021 with the Chief Engineer of APIIC for the above works. In view of the above facts, the applicant had filed an application in form GST ARA-01 dated 19.07.2021 by paying required amount of fee for seeking Advance Ruling on the following issues, as mentioned below: 4. Questions raised before the authority: The applicant seeks advance ruling on the following: 1. In view of the services provided by the applicant to APIIC, is the applicant eligible to avail the concessional rate of GST at 12% as prescribed in S.No.3 (vi) of the Notification No.11/2017- Central Tax (Rate) dt: 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 is under Centre jurisdiction, i.e. Superintendent of Central Tax (CT) Yerraguntla Range, Kadapa 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 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se 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 Central Government, a State Government or any local authority in which they are engaged as public authorities. 14 [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] It is submitted that APIIC will 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 objective of providing industrial infrastructure through the development of industrial areas and they 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 further submits that present contract is not a contract to develop indus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 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. a) Initially we examine whether M/s. APIIC is a Government Authority/Entity or otherwise. 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 Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal activities, which are essentially business oriented and hence not eligible for concessional rate of 12% (6% CGST 4- 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 dose observation of the modus operandi of the organisation prove the same. This would be sufficient enough to come to a conclusion that the said construction is for conducting promotional 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 Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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