2018 (11) TMI 58 – AUTHORITY FOR ADVANCE RULING, MADHYA PRADESH – 2018 (19) G. S. T. L. 128 (A. A. R. – GST) – Rate of GST – Construction services – works contract in relation to construction of road, bridges, buildings, civil structures of government, semi-government and private undertakings, secured through tenders in the case of government undertakings, and through personal negotiations in case of private undertakings – Scope of 'Government Entity' – N/N. 11/2017Central Tax (rate) dated 28.06.2017 – Concessional rate of GST @12% applicable or tax rate applicable at 18%? – Sr. No.3(vi)(c) of Notification no.11/2017-CT (Rate) dtd.28.06.2017.
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Whether MPPGCL, a Government Entity or not? – Held that:- In the Application itself that MPPGCL has been established by the Government of Madhya Pradesh and the Government of Madhya Pradesh has a 100% shareholding in the company. The State Government is also exercising full control over the activities of the said company. Needless to say th
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under MPGST Act 2017, but extrapolating and extending this concessional rate to any or all activities of MPPGCL will not only be unwarranted but also defeat the very purpose of concessional rate.
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The impugned activity of the applicant would attract GST @18% (9% CGST + 9% SGST) classifiable under SAC 9954 read with Notification No.11/2017-Central Tax (Rate) and corresponding notification under MPGST Act 2017.
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Ruling:- M/s. Madhya Pradesh Power Generation Company Limited is a Government Entity as defined under Notification No.31/2017-Central tax (Rate) for the purpose of GST law.
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The works contract service of construction of 599 residential quarters allotted to the applicant by MPPGCL will merit classification under SAC 9954 and would attract GST @ 18% (9% CGST + 9% SGST). – Case Number 18/2018 and Orders No. 15/2018, No.12/2018/AAR/R-28/39 Dated:- 18-10-2018 – RAJIV AGRAWAL AND MANOJ KUMAR CHOUBEY, MEMBER Present for the Behalf of Applicant: Anil Kumar Gupta PROCEEDIN
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pany filled the tender and the same was allotted to it by MPPGCL, as per the scope of work mentioned below: Scope of Work:- Construction of building and structure for colony at village Siveria on lumpsum turnkey basis, which includes approximately 599 staff quarters for plant personnel, all internal connecting roads and drains, necessary geotechnical investigations, complete site clearance & site developmet work, complete water supply system, overhead tanks & underground sump, complete sanitary & sewage works system including Sewage treatment plant, rain water harvesting system, complete electrification system, etc. The contractor shall carry out all other miscellaneous work that will be necessary for completing this package on turnkey basis. 1.4. That, during the course of carrying out the construction work, the applicant company raised Running Bills (RA bills) for the portion of work completed at a point of time. To MPPGCL by charging CGST and SGST at the rate of 9% each,
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hapter, Section or Heading Description of Service Rate (per cent.) Condition 1 Chapter 99 All Services – 2 Section 5 Construction Services – 3 Heading 9954 (Construction services) (vi) Composite supply of works contract as defined in clause(119) of section 2 of the CGST Act, 2017 provided to the Central government, State government, or a local authority or government authority or a government entity by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation or alteration of- (a) …………. (b) …………. (c) a residential complex predominantly meant for self use or the use of their employees or other persons specified in paragraph III of the CGST Act, 2017, 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 CG, SG or the Union Territory or local authority, as the cas
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Commencement of Business on 16-07-2002. g. The Registered office of the Company is at Shakti-Bhawan, Rampur, Jabalpur h. The Authorized Capital of the Company at present is ₹ 10,000 Cr. (Ten Thousand Crore) divided into 10,000,00,000 Shares of ₹ 100 each. i. The issued, subscribed and paid up capital is ₹ 5325,54,68,800 (Rs. Five Thousand Three Hundred Twenty Five Crores Fifty Four Lacs Sixty Eight Thousand Eight Hundred only) divided into 5,3255,4,688 shares of ₹ 100 each. j. The Govt. of MP vide Gazett Notification (Extraordinary) No. 226 notified order no. 3679/ FRS/ 18/13/2002 Dtd. 31-05-2005 to give effect to the reorganization of the Madhya Pradesh State Electricity Board. The Para2(a) of the said order is reproduced below : k. With effect from 01.06.2005 (the effective date) the function of Generation of electricity as specified in schedule A to the Transfer Scheme Rules, 2003, shall be conducted and shall be carried on by Madhya Pradesh Power Generating
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adhya Pradesh government, and 100% shareholding and control is being carried out by the MP state government. Further, this company has been exclusively formed to carry out the work of power generation. Therefore, it is an entity unequivocally covered under the purview of Government Entity . 1.10. That, MPPGCL further claimed that, the construction of 599 residential quarters for its staff is also covered under the condition prescribed under entry 3(vi)(c) of the notification (supra). The condition prescribes that, the concessional rate of 12 (6+6)% is applicable on fulfillment of the following: 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 CG, SG or the Union Territory or local authority, as the case may be. MPPGCL stated that construction of 599 residential quarters for its staff is the work procured by it from the MP state government, whose work contract for construction was then
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overnment, State government; or a local authority or government authority or a government entity by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation or alteration of- (a) to (b) ** ** ** (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 CGST 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 CG, SG or the Union Territory or local authority, as the case may be. 1.13 That, in view of the above facts and circumstances, even if we consider MPPGCL to be a Government Entity , then also the moot question remains as to whether the construction work of 599 residential quarters as allotted to the applicant company by MPPGCL is the service which has been procured by MPPGCL entity in relation to a work
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t which thereafter allotted the same to the applicant company. Therefore the riddle of the proviso clause has remained intact. And thus, the work contract does not become entitled to the concessional rate of 12(6+6)%. 2. QUESTIONS RAISED BEFORE THE AUTHORITY: The following questions have been posted before the Authority 1. Whether Madhya Pradesh Power Generation Company Limited is a 'Government Entity'?; 2. If yes, whether the work contract service of construction of 599 residential quarters allotted to the Applicant company under the tender, will be charged under the GST rate of 12% (6+6) [as per entry 3(vi)(c)] or 18% (9+9) [under entry 3(ii)]; 3. Or otherwise if the works contract service is not covered under entry 3(vi)(c), in the facts and circumstances of the Applicant company, then what is the applicable rate of GST? 3. DEAPRTMENT'S VIEW POINT: The CGST & Central Excise Commisionerate, Jabalpur has furnished its opinion vide letter C.No.GST/Party/lsssues/HQRS-JBP
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d by the said entity in relation to a work entrusted to it by the Central Government, State Government, UT or local authority as the case may be (which is a condition for concessional rate of 6%). 4. RECORD OF PERSONAL HEARING: 4.1. Shri Anil Kumar Gupta, C.A. Authorised Representative, appeared on behalf of the applicant for Personal Hearing on 11.10.2018 and he reiterated the submissions already made in the application. He urged for an early ruling in the matter. 5. DISCUSSIONS AND FINDINGS: 5.1 We have carefully considered the submissions made by the applicant in the application, the pleadings on behalf of the Applicant made during the course of personal hearing. At the outset, we find that the issue raised in the Application is squarely covered under Section 97(2)(b) of the CGST Act 2017 and MPGST Act 2017 being a matter related to applicability of exemption notification, and the applicant have complied with the all the requirements for filing this application as laid down under th
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slature; or ii) established by any Government, with 90per cent, or more participation by way of eguity or control, to carry out a function entrusted by the Central Government, State Government, Union Territory or a local authority. 5.4. We find in the Application itself that MPPGCL has been established by the Government of Madhya Pradesh and the Government of Madhya Pradesh has a 100% shareholding in the company. The State Government is also exercising full control over the activities of the said company. Needless to say that in the given circumstances M/s MPPGCL qualifies to be called and termed as a 'Government Entity' for the purpose of GST law, as it fulfils the necessary and sufficient conditions laid down under notification supra. 5.5. Now, the said Government Entity i.e. MPPGCL has been entrusted with the work of power generation in the State of Madhya Pradesh. Though we do not have details of work entrusted by the State Government to MPPGCL, on the basis of facts brough
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3(vi)(c) of the Notification No.11/2017-CT(Rate) under CGST Act and corresponding notification under MPGST Act 2017, but extrapolating and extending this concessional rate to any or all activities of MPPGCL will not only be unwarranted but also defeat the very purpose of concessional rate. 5.6. We also take a note of the departmental opinion given in this matter by the Joint Commissioner, CGST & Central Excise, Jabalpur, as discussed in foregoing paras, and we express our agreement with the same. The activity in question definitely does not have any relation to the principal work of power generation entrusted by the state government to MPPGCL, and therefore the works contract service of construction of residential quarters would attract GST @18% (9% CGST + 9% SGST) in terms of Notification No.11/2017-CT Rate dtd.28.06.2017 and corresponding notification under MPGST Act 2017. 5.7. Thus in view of the discussions foregoing, we conclude that the impugned activity of the applicant woul
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