2019 (1) TMI 485 – AUTHORITY FOR ADVANCE RULING, WEST BENGAL – TMI – Works contract service – construction of a multi-modal IWT terminal at Haldia on EPC basis – applicability of Notification No. 24/2017-CT (Rate) dated 21/09/2017 and 31/2017 – CT (Rate) dated 13/10/2017 – rate of GST – Held that:- The IWAI is clearly not the Government of India, but a Government Entity having no sovereign authority to collect Government revenue. Moreover, contrary to what the Applicant claims, the user fees that IWAI collects is not credited to the Consolidated Fund of India and is, therefore, not revenue but proceeds from business as defined under section 2(17) of the GST Act.
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The Applicant is supplying works contract service for an original work that is meant for commerce and business. It does not, therefore, satisfy the conditions laid down under Serial No. 3(vi)(a) of the Rate Notification – The Applicant’s supply of works contract service for construction of the Multi-modal IWT Terminal at
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y of Notification No. 24/2017-CT (Rate) dated 21/09/2017 and 31/2017 – CT (Rate) dated 13/10/2017. More specifically, he wants a ruling on what should be the rate at which GST should be charged on the works contract service to be supplied for construction of the above terminal. The question is admissible under section 97(2)(b) of the CGST / WBGST Act, 2017 (hereinafter collectively referred to as the GST Act ). The concerned officer has raised no objection to admissibility of the Application. The Application is admitted. 2. Notification No. 24/2017 – CT (Rate) dated 21/09/2017 and 31/2017 – CT (Rate) dated 13/10/2017 have amended Notification No. 11/2017 – CT (Rate) dated 28/06/2017 (hereinafter the Rate Notification). As a result, Serial No. 3(vi) of the Rate Notification, post such amendments, stands as below. Sl.No. Heading Description of the service Rate Condition (1) (2) (3) (4) (5) 3. 9954 (vi) Composite supply of works contract as defined in clause (119) of section 2 of the Cent
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on territory or local authority, as the case may be. Notification No. 17/2018 – CT (Rate) dated 26/07/2018 appends an Explanation to the above entry. It clarifies that for purposes of the above entry, 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. This Explanation does not include within it ambit a Governmental Authority or a Government Entity. 3. The Applicant submits that construction of the Multi-modal IWT Terminal amounts to composite supply of works contract service. The contractee is a Government Entity, being a statutory body established under the Inland Waterways Authority of India Act, 1985 (hereinafter the IWAI Act, 1985), and functions under the administrative control of the Ministry of Shipping, Government of India. The supply is, therefore taxable @ 12% under the GST Act in terms of Serial No. 3(vi) of the Rate Notification, as m
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hority, however, is established to carry out functions entrusted to a Municipality or Panchayat under Art 243 W or 243 G of the Constitution respectively: whereas, a Government Entity is set up to carry out any function entrusted by the Central Government, State Government, Union Territory or local authority. According to the objects and reasons of the IWAI Act, 1985, the IWAI is an Authority set up for the regulation and development of inland waterways for the purpose of shipping and navigation and for matters connected therewith or incidental thereto. The Central Government appoints and removes members of the IWAI, provides grants and loans, sanctions projects, gives directions, makes rules, and can supersede the Authority if required. The IWAI is thus a statutory authority under direct control of the Central Government. It is, therefore, a Government Entity in terms of para 4(x) of Notification No. 31/2017 – CT (Rate) dated 13/10/2017. Letter of the GST Council highlights this statu
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Central Government unless the amount involved is below a threshold [2nd proviso to section 13 and section 14(4) of the IWAI Act, 1985]. Therefore, construction of multi-modal IWT Terminal, involving ₹ 517.36 crore, if lawfully contracted, is a project undertaken within the functional authority entrusted to IWAI and with Govt sanction, satisfying the condition under column (5) of the Serial No. 3(vi) of the Rate Notification. 7. The scope of the work includes design and construction of berths and related fixtures, approach trestles, conveyor trestles, terminal administration building, workers amenity building, electrical sub-station building, security office, weigh bridge building, compressor house, storage shed, internal roads and pathways, water supply works, storm water drainage works, sewerage system, gate house complex, emergency gates, culverts, diversion of existing roads, silos, conveyor system, fixed barge loaders, road weigh bridge, stockyard development, electrical wor
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clearly establishes that the fees so collected are not proceeds from business. All revenues received by the Govt of India, all loans it raises by issue of treasury bills, or ways and means advances and all moneys received by it in repayment of that loans form, under Art 266(1) of the Constitution, the Consolidated Fund of India. The Applicant s argument, therefore, implies that the user fees collected by IWAI are not proceeds from business but revenues collected by the Government of India. 8. Section 10 of the IWAI Act, 1985 mandates it to act on business principles while discharging its functions. Section 14(1)(k) even allows IWAI to set up joint ventures with equity participation for the purpose of inland shipping. Therefore, unless proceeds from such activities, including user fees and charges, are credited to the Consolidated Fund of India, they must be construed as proceeds from commerce and business. Section 17(1) of the IWAI Act, 1985 empowers IWAI to collect user fees with prev
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