In Re: M\/s. Shreeji Infrastructure India (P.) Ltd.,
GST
2018 (11) TMI 58 – AUTHORITY FOR ADVANCE RULING, MADHYA PRADESH – 2018 (19) G. S. T. L. 128 (A. A. R. – GST)
AUTHORITY FOR ADVANCE RULING, MADHYA PRADESH – AAR
Dated:- 18-10-2018
Case Number 18\/2018 and Orders No. 15\/2018, No. 12\/2018\/AAR\/R-28\/39
GST
RAJIV AGRAWAL AND MANOJ KUMAR CHOUBEY, MEMBER
\nPresent for the Behalf of Applicant: Anil Kumar Gupta
\nPROCEEDING
\n1. BRIEF FACTS OF THE CASE:
\n1.1 M\/s. Shreeji Infrastructure Private Limited (herein after referred to as the 'applicant company'), having its registered office at 1180, University Road, South Civil Lines, Jabalpur, (MP) and CIN U45203CT1999PTC020826.
\n1.2 That, the applicant company is engaged in carrying out the 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 n<\/p>\n
= = = = = = = =<\/p>\n
Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n , 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. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n maintenance, renovation or alteration of- = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ification (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 : = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n cribes that, the concessional rate of 12 (6+6)% is applicable on fulfillment of the following: = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n of the CGST Act, 2017, = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ;Government Entity'?; = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n submissions already made in the application. He urged for an early ruling in the matter. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n t 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. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n is 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. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n","protected":false},"excerpt":{"rendered":" In Re: M\/s. Shreeji Infrastructure India (P.) Ltd.,GST2018 (11) TMI 58 – AUTHORITY FOR ADVANCE RULING, MADHYA PRADESH – 2018 (19) G. S. T. L. 128 (A. A. R. – GST)AUTHORITY FOR ADVANCE RULING, MADHYA PRADESH – AARDated:- 18-10-2018Case Number 18\/2018 and Orders No. 15\/2018, No. 12\/2018\/AAR\/R-28\/39 GSTRAJIV AGRAWAL AND MANOJ KUMAR CHOUBEY, MEMBER Present … Continue reading “In Re: M\/s. Shreeji Infrastructure India (P.) Ltd.,”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-14783","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/14783","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=14783"}],"version-history":[{"count":0,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/14783\/revisions"}],"wp:attachment":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=14783"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=14783"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=14783"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
For full text:-Visit the Source <\/a><\/p>\n
\n1.4. 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, in view of Notification no. 11\/2017Central Tax (rate) dated 28.06.2017 Chapter 99 Section 5 Heading 9954- entry 3(ii)
\nS.No.
\nChapter, Section or Heading
\nDescription of Service
\nRate (per cent.)
\nCondition
\n1
\nChapter 99
\nAll Services
\n
\n–
\n2
\nSection 5
\nConstruction Services
\n
\n–
\n3
\nHeading 9954 (Construction services)
\n(ii) composite supply of works contract as defined in clause 119 of section 2 of Central Goods and Services Tax Act, 2017.
\n9
\n–
\n1.5. Whereas, on the other hand, the service recipient, MPPGCL is of the opinion that in the work<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\n(a) ………….
\n(b) ………….
\n(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,
\n6
\nProvided 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.
\n1.6 That, by arguing that the work contract carried out by the applicant company is covered under entry 3(vi)(c) of the notification (supra), MPPGCL released the GST payment only to the extent of 12 (6+6)% as against 18 (9+9)% as claimed by the applicant company in their bills.
\n1.7 In order to claim itself as a 'government entity', MPPGCL submitted its nature of constitution as under:
\na. That, MPPGCL is a wholly owned company of MP Government engaged in generation of electricity in the state of Madhya Prade<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nk. “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 Company Limited as its own business and not as an agent of or on behalf of the Madhya Pradesh State Electricity Board”
\nl. The opening balance sheet of Madhya Pradesh Power Generating Company Limited as on 31.05.2005 has also been notified
\nm. Accordingly, the Company has started functioning independently, from 01-06-2005
\nn. The Corporate Identity Number(CIN) of MPPGCL is U40109MP2001SGC014882
\n1.8. That, as per explanation to the said Notification no. 11\/2017Central Tax (rate) dated 28.06.2017, the term government entity is exp<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\n“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.”
\nMPPGCL 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 allotted to the applicant company.
\n1.11. On the ground as stated supra in para 7, 8 & 9, MPPGCL construed that:
\nThat, MPPGCL is a “government entity”,
\nAnd the service supplied to it is a service procured by it from the state government. Therefore, it is squarely covered under entry 3(vi)(c) Chapter 99, heading 9954 of the Notification no. 11\/2017 dated 28.06.2017 amended from time to time and the applicable rate of GST for such supply made to it is 12% (6+6), and applicant company is not correct<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nProvided 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.”
\n1.13 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 entrusted to it by the MP state government.
\n1.14 The applicant company is of the view that, construction of 599 residential quarters is not a work which has been entrusted by the MP state government to MPPGCL. MPPGCL has carried out the construction activity to facilitate its staff and it is a part of furtherance of its business of generation of electricity.
\n1.15 In view of the applicant company,<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\n2. 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)];
\n3. 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?
\n3. DEAPRTMENT'S VIEW POINT:
\nThe CGST & Central Excise Commisionerate, Jabalpur has furnished its opinion vide letter C.No.GST\/Party\/lsssues\/HQRS-JBP\/2017-18 dtd. 05.09.2018 of the Joint Commissioner, CGST & Central Excise, Jabalpur. It has been opined that MPPGCL fulfils the conditions laid down in the definition of 'Government Entity' as defined in terms of Notification No.31\/20107-Central Tax (Rate) dtd.13.10.2017, and accordingly it would be a 'Government Entity' for the purpose of CGST Act 2017. Howev<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\n5. DISCUSSIONS AND FINDINGS:
\n5.1 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 the law. We therefore admit the application for consideration on merits.
\n5.2. The moot questions to be answered in present application are as under:
\ni. Whether M\/s. Madhya Pradesh Power Generation Company Limited (MPPGCL) is a Government Entity for the purpose of GST law?
\nii. Whether the works contract service of construction of residential quarters provided by t<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\n5.5. 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 brought on record through the present application, we safely conclude that the essential and sole work entrusted to MPPGCL by the Government of Madhya Pradesh is of electricity (power) generation. M\/s.MPPGCL has awarded a works contract for construction of 599 residential quarters at Shri Singaji Thermal Power Project Stage-ll, Near Village Dongalia Distt Khan<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\n5.7. Thus in view of the discussions foregoing, we conclude that 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.
\nRULING
\n6. The Advance Ruling on question posed before the authority is answered as under:
\ni. M\/s. Madhya Pradesh Power Generation Company Limited is a Government Entity as defi<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n