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TMI Blog2022 (9) TMI 417X X X X Extracts X X X X X X X X Extracts X X X X ..... engaged in construction of houses and infrastructure activities to Karnataka Slum Development Board under Pradhan Mantri Awas Yojana (U) -HFA, construction of buildings to Belagavi Smart City Limited under Smart City projects and construction of Police Station under the Karnataka Housing Board, Bangalore. 3. The applicant has sought advance ruling for the clarification on rate of tax on civil works contract/ services executed for as per the Clause (119) of Section 2 of the CGST Act, 2017 on the following works contract services with effect from 01.01.2022- i. Works contract services executed to Karnataka Slum Development Board under the Prime Minister Awaz Yojana, as a main contractor. ii. Works contract services executed to Karnataka Slum Development Board under the Prime Minister Awaz Yojana, as a sub-contractor. iii. Works contract services executed to Belagavi Smart City Limited projects to Belgaum Smart City Corporation Limited, as a main contractor. iv. Works contract services executed to Belagavi Smart City Limited projects to Belgaum. Smart City Corporation Limited, as a sub-contractor. v. Works contract services executed to Karnataka Housing Board, Bangalore wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Union Territory, a local Authority, a Governmental Authority or a Government Entity is - @ SGST 6% and CGS?' 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". 5.3 The applicant states that as per the above Notification, they have discharged GST @ 12% till 31/12/2021.They have sought clarification for the civil works contract to be executed as main contractor and sub-contractor for the construction of houses including infrastructure work in various slums in the State of Karnataka under Pradhan Mantri Awas Yojana (Urban) - HFA and construction services activities to Smart City Projects to Belagavi Smart City Limited, Belagavi with effect from 01/01/2022. 5.4 The Applicant states that as per the new notification No.15/2021 - Central Tax (rate) dated 18/11/2021 it has been amended as - In the said notification, in the TABLE - (i) Against serial number 3 - (1) in column (3), in the heading "Description of Service", in items (iii), (vi), (ix) and (x), for the wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Governmental Authority or a Government Entity" the words "Union territory or a local authority" shall be substituted; (3) in column (5), in the heading "condition", the entries against items (iii), (vi), (vii), (ix) and (x) shall be omitted; Thus, the amending notification No.15/ 2021-Central Tax (Rate) dated 18-11-2021 has replaced the words "Union territory, a local authority, a Governmental Authority or a Government Entity" with the words "Union territory or a local authority" and Governmental Authority or a Government Entity were removed from the notification. Thus the applicability of the notification was confined to "Union territory or a local authority". The term "Union territory or a local authority" Government Authority" "Government Entity" mentioned in the said notification is defined under IGST Act, 2017 and under Notification No.11/ 2017-CT (Rate) as under; "local authority" means- (69) "local authority" means (a) a "Panchayat" as defined in clause (d) of article 243 of the Constitution; (b) a "Municipality" as defined in clause (e) of article 243P of the Constitution; (c) a Municipal Committee, a Zilla Parishad, a District Board, and any other authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es to slum dwellers and to uplift the living conditions of the urban poor and slum dwellers through social awareness and through income generation activities. The Board was redesignated as Karnataka Slum Development Board in 2010. From the above, it is evident that the Karnataka Slum Development Board, is not constituted under Article 371 of the Constitution and hence it does not fall under the definition of "Local Authority". Karnataka Housing Board (KHB) Karnataka Housing Board (KHB) was established under the Karnataka Housing Board Act 1962 with the primary objective of providing housing accommodation to all sections of the society with special emphasis to economically weaker sections. Going through the provisions of the said Act, it is evident that the said Board is virtually under the control of the Government of Karnataka. For, e.g. section 55 of the Act lays down that the accounts of the Board shall be audited by those as directed by the Government. Further, Section 74 ibid, vests only the State Government with the power to make rules. In this backdrop, there can be no denial of the fact that the KHB is a governmental authority. However, the important condition that is l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... local authority. In view of the aforesaid definition of 'local authority', it is obvious that Karnataka Slum Development Board, Karnataka Housing Board and Belagavi Smart City Limited do not constitute "local authority". In view of the foregoing, the activity of the applicant falls under Sl.No.(xii) of Heading 9954 (Construction Services) which reads as "Construction Services other than (i),(ia),(ib),(ic),(id),(ie),(if),(iii),(iv),(v),(va),(vi),(vii),(viii),(ix),(x) and (xi) above, attracting GST of 18% (CGST-9% and SGST-9%), irrespective of the fact that services are provided as 'contractor' or 'sub-contractor'. PERSONAL HEARING / PROCEEDINGS HELD ON 10-02-2022 7. Shri Sri B. Shrinivasa, Chartered Accountant and Duly Authorised Representative appeared for personal hearing proceedings held on 10-02-2022 and reiterated the facts narrated in their application. FINDINGS & DISCUSSION 8. At the outset we would like to make it clear that the provisions of CGST Act, 2017 and the KGST Act, 2017 are in pari-materia and have the same provisions in like matter and differ from each other only on a few specific provisions. Therefore, unless a mention is particula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses including infrastructure works in the slums of Ramanagara city under PMAY (U)-HFA scheme, the same is covered under the above mentioned entry and the same is taxable at 12% GST. 12. Notification No.03/2022-Central Tax (Rate), dated 13.07.2022 was issued to bring amendment to Notification No.11/2017-Central Tax (Rate) dated 28.06.2017 as below: In the said notification, - (A) in the Table, - (I) against serial number 3, in column (3), - (a) items (iii), (iv), (v), (va), (vi) and (ix)and the corresponding entries relating thereto in columns (4) and (5) shall be omitted; (b) against items (vii) and (x), for the entry in column (4), the entry "6" shall be substituted; (c) in item (xii), for the brackets and figures "(iii), (iv), (v), (va), (vi), (vii), (viii), (ix)", the brackets and figures"(vii), (viii)," shall be substituted; since the entry 3(iv) has been deleted vide above mentioned notification, the works contract services supplied to Karnataka Slum Development Board towards the construction of houses including infrastructure work in various slums in the State of Karnataka under Pradhan Mantri Awas Yojana (Urban) will be exigible to CGST at 9% with effect from 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nbsp; 15. The applicant states that it has also entered into a contract agreement with Belagavi Smart City Limited for Development of modern market (Kalamandir)' at Tilakwadi in Belagavi City. Belagavi Smart City Limited (referred as BSCL) is a company incorporated in pursuance of smart city mission statement by Government of Karnataka and the City Corporation, Belagavi as the ULB on 50:50 shareholding basis. The company is a Special Purpose Vehicle created for implementation of smart city project in the city of Belagavi. Hence Belagavi Smart City Limited is neither a Governmental Authority nor a Government Entity as per the explanation mentioned in para 13 supra. In view of the same, the services provided by the applicant to BSCL is liable to CGST at 9% as per the entry 3 (xii) of Notification No.11/2017 - Central Tax (Rate), dated 28.06.2017 further amended vide Notification No.03/2022-Central Tax (Rate) dated: 13.07.2022 and is taxable at 18% mentioned in para 14 supra. 16. The applicant likes to know the rate of GST on the services executed by him, that is, * Services executed to Karnataka Slum Development Board under the Prime Minister Awaz Yojana * services executed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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