9911796707
TMI Blog2023 (8) TMI 1206X X X X Extracts X X X X X X X X Extracts X X X X ..... In terms of Section 104 of the Act, where the Authority finds that advance ruling pronounced by it under sub-section (4) of Section 98 or under sub-section (1) of section 101 has been obtained by the applicant by fraud or suppression of material facts or misrepresentation of facts, it may, by order, declare such ruling to be void ab initio and thereupon all the provisions of this Act or the rules made thereunder shall apply to the applicant as if such ruling had never been made. 5. At the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Service Tax Act would also mean a reference to the same provisions under the Tamil Nadu Goods and Service Tax Act. The applicant M/s Sri Naachimaar Engineering Constructions, having registered premises at No. 7/3, Pudumarappanur, Mohanur, Ariyur Post, Namakkal District, PIN - 637015 (hereinafter referred to as Applicant) is registered under the GST Act 2017 vide GSTIN 33ABHFS4082Q1ZL. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt with request for Advancer Ruling on Tax rate for the period from 01.01.2022 to 18.07.2022 to Tirunelveli Smart City Ltd. under the control of Tirunelveli City Municipal Corporation works. 3.2 After personal hearing, the applicant submitted copies of Work Orders for various construction work issued by M/s Tirunelveli Smart City Limited, copy of Memorandum of Association of M/s Tirunelveli Smart City Limited along with written submissions. 3.3 The details of Work Order with nature of service is listed below; SI.No. Work Order No./Date Nature of Work Contract value (Rs.) 1. 20/2018-19/SCM 27.03.2020 Development of Trade Centre at S.N. High Road in Tirunelveli 55,01,81,898/- 2. 22/2018-19/SCM 08.05.2020 Development of Green Spaces Phase III 11,78,22,643/- 3. 01/2020-21SCM 28.08.2020 Development of Palayamkottai Bus Stand in Tirunelveli City Municipal Corporation 13,27,49,762/- 4. 02/2020-21/SCM 23.11.2020 Improvement of Bose Market in Tirunelveli Corporation 11,40,15,891/- 5. 04/2020-21/SCM 18.01.2021 Construction of Commercial Mall at Corporation land near Palai Bus Stand - Phase I in Tirunelveli Corporation 14,89,71,625/- 6. 04/2020-21/SCM 18.01.2021 C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esigning and installations; (iv) To do any other assignment, acts and deeds, which will be entrusted by Government of Tamil Nadu and/or Tirunelveli City Municipal Corporation, for wellbeing of the citizen of Tirunelveli. 3.4.2 As per the Memorandum of Association of M/s Tirunelveli Smart City Limited, out of 1,00,000 Equity shares, 49,997 shares are subscribed by the Governor of Tamil Nadu through Municipal Administration and Water Supply Department, Government of Tamil Nadu and another 49,997 shares are subscribed by Tirunelveli City Municipal Corporation. 3.5.1 The applicant in the written submission quoted the definitions of 'Government', 'Central Government', 'State Government', provided under CGST Act, 2017 and the General Clauses Act, 1897 and the definitions of 'Government Authority', 'Government Entity' and 'Local Authority' as per CGST Act, 2017 and Notification issued thereunder. 3.5.2 The applicant further mentioned under the caption "Taxability" 'Department Contention' (without mentioning the specific Department) Government or Local Authority -Taxable at 12% Government Authority - Taxable at 18% "Tirunelveli Smart City Limited' is a Government Authority and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... City Corporation also. 4. The applicant is under the administrative control of Centre. The said jurisdictional authority was addressed to report if there are any pending proceedings against the applicant on the issues raised by the applicant in the ARA application and for comments on the issues raised. The said authority vide letter dated 15.06.2022 furnished their comments on the question raised by the applicant and informed that no proceeding against the applicant is pending on the question raised. With regard to the questions raised, they stated that Tamil Nadu Urban Habitat Development Board and Tirunelveli Smart City Limited are completely run by State Government. Hence, comes under the category State Government / Local Authority and they further stated that tax rate (12% or 18%) depends on the type of Composite supply of Works Contract service supplied in Notification No. 11/2017-CT(Rate) dated 28.06.2017, as amended. 5. The concerned State Tax Officer vide letter Roc. No. 711/2022/Al dated 06.06.2022 stated that no proceeding is pending against the applicant in the assessment circle regarding the issue raised in the application. 6.1 We have carefully considered the questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the projects specified at para 3.3. Likewise, the Applicant was addressed letter by State Authorities on 11.04.2023, calling for Copy of Agreement with Tirunelveli Smart City Limited along with Letter of Acceptance issued by Tirunelveli Smart City Limited, for the projects mentioned at para 3.3. However, no reply has been received from Tirunelveli Smart City Limited as well as the Applicant. 7.1 It is seen from the submissions and documents that the applicant is a contractor rendering various works contract services to Tirunelveli Smart City Limited as listed in para 3.3 supra. 7.2 The applicant pleads that Tirunelveli Smart City Limited should be considered as 'Local Authority' and GST tax rate of 12% is applicable on the works contract services provided by them. As per Notification No. 11/2017-C.T (Rates) dt. 28.06.2017, as amended, provides different GST rates on the basis of legal status of the service recipients for the works contract service provided. Hence, ascertaining the legal status of the said service recipients gains paramount importance. 8.1 The statutory provisions relevant to the above contentions of the applicant are discussed as under: Section 2(119) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther 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. 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. 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. 8.2.3 The terms 'Government Authority' & 'Government entity' were inserted by Notification No. 31/2017-Central Tax (Rate) dated 13.10.2017 in Notification No. 11/2017 as clauses (ix) & (x) of explanation in Para 4 as follows:- (ix) Governmental Authority means an authority or a board or a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h effect from 18.07.2022. 8.3 Perusal of the Agreement dated 18.01.2021, between Managing Director, Tirunelveli Smart City Limited, and its annexure indicate that Tirunelveli Smart City Limited procure the works contract service from the applicant on principal to principal basis. Tirunelveli Smart City Limited has not acted as an intermediary between the applicant and Tirunelveli Corporation. 8.4.1 It is seen from the website of Ministry of Urban Development, Government of India, that Smart Cities Mission was launched on 25 June, 2015. The main objective of the Mission is to promote cities that provide core infrastructure, clean and sustainable environment and give a decent quality of life to their citizens through the application of 'smart solutions'. Also, as per Smart Cities Mission Statement & Guidelines issued by Ministry of Urban Development, Government of India, in June 2015, states that the implementation of the Mission at the City level will be done by a Special Purpose Vehicle (SPV) created for the purpose. The SPV will plan, appraise, approve, release funds, implement, manage, operate, monitor and evaluate the Smart City development projects. Each Smart City will have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l or local fund as stipulated in the definition of local authority in S.No. 2(69)(c) of the CGST Act, 2017. 8.4.7 In view of the above provisions, it is clear that Tirunelveli Smart City Limited has been constituted with a different purpose to implement certain functions and it cannot be equated to a local body and hence it can be concluded that Tirunelveli Smart City Limited is not a Local Authority. 8.5 Accordingly, the effective rate of duty on work executed for Tirunelveli Smart City Limited, which is a 'Government Authority' and the nature of service provided by the applicant, narrated under para 7.1 supra, is covered under entry in serial number 3(vi) of Notification No. 11/2017-C.T (Rate) dated 28.06.2017 till 31.12.2021. However, after omission of 'Government Entity' from the description of service under the said entry vide Notification No. 15/2021-C.T (Rate) dated 18.11.2021 read with Notification No. 22/2021-C.T (Rate) dated 31.12.2021 with effect from 01.01.2022, the services of the applicant are covered under serial number 3 (xii) of Notification No. 11/2017-C.T (Rate) dated 28.06.2017 and attract CGST of 9%. 9. In view of the above, we rule as under: RULING 1. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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