In Re : A2Z Infra Engineering Ltd.
GST
2018 (11) TMI 1505 – AUTHORITY FOR ADVANCE RULING – CHHATTISGARH – 2018 (18) G. S. T. L 760 (A. A. R. GST)
AUTHORITY FOR ADVANCE RULING – CHHATTISGARH – AAR
Dated:- 19-7-2018
STC/AAR/03/2018
GST
Shri S.K. Buxy, Member (State Tax) and Rajesh Kumar Singh, Member (Central Tax)
ORDER
Proceedings : The applicant M/s. A2Z Infra Engineering Ltd., B-18, Amrapali Society Raipur, GSTIN 22AAECA1203A1ZX has filed the application U/s 97 of the Chhattisgarh Goods & Services Tax Act, 2017 requesting advance ruling as regards levy of CGST & SGST @ 6% each instead of 9% each on the composite supply of work contract services provided to Chhattisgarh State Power Distribution Company Ltd. (CSPDCL) by A2Z Infra Engineering Ltd., Raipur.
2. Facts of the case :-
I. M/s. A2Z Infra Engineering Ltd., Raipur (hereinafter referred to as 'A2Z' or the company') is a fully integrated Electrical Business Group in India engaged in providing m
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arh.
IV. CSPDCL had floated a tender to award the aforesaid specified scope of work and after successful bidding M/s. A2Z has been awarded the work contract services from CSPDCL.
3. Contention of the Applicant :
(i) that, since the services provided by it are in the nature of composite supply of work contract involving supply of goods and services therefore the services provided will be subjected to GST @ 12% instead of 18% in terms of Notification No. 24/2017-Central Tax (Rate), dated 13-10-2017. This Notification provides that the services provided to the Central Government, State Government, Union Territory, a local authority, a Government Authority or a Government Entity by way of construction, erection, commissioning, installation completion, fitting out, repair, maintenance, renovation, or alteration of a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession will be subje
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ity, 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.
(iii) that, CSPDCL is a Government entity which came into existence w.e.f. 1-1-2009 as one of the company when erstwhile Chhattisgarh State Electricity Board (CSEB) was reorganized into 5 companies by Government of Chhattisgarh in accordance with the provisions contained in Sections 131-134 of Electricity Act, 2003. CSPDCL is the electricity generation company of Government of Chhattisgarh in India and was formed by issuance of notification in official gazette dated 31-12-2008, Thus, condition No. 1 is satisfied that CSPDCL is a Government entity. Further 100% holding is of Chhattisgarh Sate Government.
(iv) that, CSPDCL is implementing this work on behalf of Government of Chhattisgarh. This IPDS scheme has been sanctioned by Ministry of po
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rning any profit or gain but for the benefit of India as a whole so that electricity reaches each and every corner of India.
(vi) Thus on the basis of above, the Applicant contends that the said work contract services involving the supply of goods and services to CSPDCL is liable for GST @ reduced rate of 12% instead of 18%.
4. Personal Hearing :-
In keeping with the established principles of natural justice, personal hearing in the matter was extended to the authorized person of the Applicant and accordingly, Shri Malvinder Singh Bhatia (Advocate) along with Shri Mohit Gupta (CA Intern), appeared before us for hearing on 22-6-2018 and reiterated their contention. They also furnished a written submission dated 22-6-2018, which has been taken on record.
5. Thus we find that A2Z, the Applicant is seeking clarity as regards the applicable rates for payment of GST on the aforesaid services rendered by them to CSPDCL„ viz. whether the appl
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lation to a work entrusted to it by the Central Government, State Government, Union territory or local authority, as the case may be.
The Applicant is thus seeking advance ruling on the issue, as according to them the services provided by them are in the nature of composite supply involving supply of goods and services, therefore, they should charge GST at the reduced rate of 12% instead of 18% as per provisions of Notification No. 24/2017-CentraI Tax (Rate), dated 21-9-2017 and Notification No. 31/2017-Central Tax (Rate), dated 13-10-2017.
6. The legal position, Analysis and Discussion :-
6.1 The provisions for implementing the CGST Act and CGGST Act 2017 are similar. Now we sequentially discuss the provisions that are applicable in the present case.
6.2 The primary issue that needs decision here so as to arrive at applicability or otherwise of the benefit of the conditional exemption Notification referred to above, in the context of the advance
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3-10-2017.
6.4 Now, moving on to the second aspect regarding the nature of activities being under taken by the applicant i.e. whether the same can be treated as the work predominantly for use other than for commerce, industry or any other business of profession or not, it is seen that :
(i) As per, Section 2(119) of Chhattisgarh Goods and Services Tax Act 2017, Work Contract means a contract for building, construction fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract.
(ii) Notification No. 24/2017-State Tax (Rate), dated 23-9-2017 and thereafter Notification No. 31/2017-State Tax (Rate), dated 13-10-2017 amended Notification No. 11/2017-State Tax (Rate), dated the 28th June, 2017, Of Chhattisgarh St
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fication, in the Table, against serial number 3, for item (vi) in column (3) and the entries relating thereto, in columns (3), (4) and (5), the following shall be substituted namely :-
(3)
4
5
“(vi) Services provided to the 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 :
(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 selfuse or the use of their employees or other persons specified in paragraph 3 of the Schedule Ill of the Central Goods and Services Tax Act, 2017 –
6
–
(vii) Construction services other tha
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duced tax rate, it is of paramount importance that the services under taken/work done by the Applicant for CSPDCL must necessarily for use which is non-commercial in nature.
(v) Now to ascertain the constitution of CSPDCL i.e. whether it has been incorporated for commercial aim or otherwise, it is seen that CSPDCL is a company incorporated under the Companies Act 1956, earlier known as Mahanadi Power Development Company Limited (Company Registration No. 1015822, dated 19-5-2003) and is a company limited by share. Further it is also in public domain that the main Objects of CSPDCL, as enumerated in its Memorandum of Association are as under : –
MEMORANDUM OF ASSOCIATION OF CHHAITISGARH STATE POWER DISTRIBUTION COMPANY LIMITED
MAIN OBJECTS
A. Main Objects to be pursued by the company on its incorporation
2. Manufacture, trading, coordination
To carry on the business of purchasing, importing, exporting, producing, trading, manufacturing or otherwise dealing in Ele
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companies
– To carry on the business of purchasing, selling, importing, exporting, wheeling and trading of power including finalization of tariff, billing and collection thereof.
– To execute Power Purchase Agreements with Transmission Companies, Generating Companies, Central and State generating stations. Regional Electricity Boards, other State, Companies and Persons.
– To execute agreements for sale of Power of other distribution or trading companies and other persons and to coordinate, aid and advise on the activities of other companies and concerns, including subsidiaries, associates and affiliates engaged in generation, transmission, distribution, supply and wheeling of electrical energy.
B. Objects incidental or ancillary to the attainment of the main objects :
4. Borrowing power
Subjects to the provision of Section 58A of the Companies Act, 1956 and the rules framed thereunder to borrow money or to receive money or deposits for the purpose of financing the bu
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f electrical and electronic equipment's etc.
To carry on the business of manufacturing, assembling, repairing, servicing, selling, purchasing importing, exporting, of electrical and electronics equipments like, transformers, motors, switch gears, pumps, threshers, starters, electric fans coolers, air conditioners, televisions, telephones, epabx, audio and video equipments used in factories, homes, mills, workshop business offices, hotels, and other type of electrical, electronics, solar equipments and machineries of Domestics, Industrial, Communication. Defence, Research applications. To carry on the business of repairing, renovating, conditioning, altering, of the above machineries and equipments on Job-work basis.
(vi) Thus on going through the main/ancillary objectives as enumerated in Memorandum of Association of CSPDCL, there hardly remains any doubt regarding the principal/primary and foremost aim of CSPDCL being predominantly commercial in nature and tha
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