In re Leena Power Tech Engineers Pvt Ltd (GST AAR Maharashtra)
Question 1:- Whether CIDCO is covered under the definition of the term ‘Government Entity’ as per Notification No. 31/2017 – Central Tax (Rate) dated 13 October 2017?
Answer:– Answered in the affirmative.
Question 2:- If CIDCO falls under the definition of Government Entity, Then Kindly also Clarify Whether the tax rate of 12% (CGST 6% + SGST 6%) is applicable to the contract entered into by the Applicant with CIDCO, in pursuance of Notification No. 24/2017 – Central Tax (Rate) dated 21 September 2017 read with Notification No. 31/2017 – Central Tax (Rate) dated 13 October 2017?
Answer:- Concessional rate of tax @ 12% would be applicable in respect of supply of goods/services, after coming into effect of notification No. 31/2017 CT (Rate) dated 13.10.2017.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING MAHARASHTRA
PROCEEDINGS
(Under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017)
The present application has been filed under section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as “the CGST Act and MGST Act”] by LEENA POWER TECH ENGINEERS PVT LTD, the applicant, seeking an advance ruling in respect of the following ISSUE.
1. Whether CIDCO is covered under the definition of the term ‘Government Entity’ as per Notification No. 31/2017 – Central Tax (Rate) dated 13 October 2017?
2. If CIDCO falls under the definition of Government Entity, Then Kindly also Clarify Whether the tax rate of 12% (CGST 6% + SGST 6%) is applicable to the contract entered into by the Applicant with CIDCO, in pursuance of Notification No. 24/2017 – Central Tax (Rate) dated 21 September 2017 read with Notification No. 31/2017 – Central Tax (Rate) dated 13 October 2017?
At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / MGST Act would be mentioned as being under the “GST Act”.
2. FACTS AND CONTENTION – AS PER THE APPLICANT
The submissions, as reproduced verbatim, could be seen thus-
Statement of relevant facts having a bearing on the question(s) raised
1. The Applicant, M/s Leena Powertech Engineers Private Limited (hereinafter referred to as the ‘Applicant’ or ‘Company’) is a company engaged in the business of Electrification projects, undertaking development of power supply infrastructure with various Government Entities.
2. City and Industrial Development Corporation of Maharashtra Limited (‘CIDCO’), a 100% Government of Maharashtra owned Public sector Undertaking, is incorporated on 17th March 1970 under company’s act 1956 as a Company having CIN – U9999MH1970SGC014574, registered Company limited by shares and as a State Government Company. Copy of the document from the Ministry of Corporate Affairs mentioning details about CIDCO is attached herewith for your reference.
3. CIDCO had invited a bid / tender for Power Supply Infrastructure Development work at various places in Navi Mumbai, including Ulwe. The contract involves composite activities of supply of material, laying of power cables, erection of the equipments and civil constructions associated with such erection.
4. The Applicant upon successful bid have been awarded the following contracts
a. Power supply Infrastructure Development work at R & R (Rehabilitation & Resettlement) Pockets under NMIA(Navi Mumbai International Airport) Projects, Navi Mumbai (Work Order No. CIDCO/EE(Elect-AP)/ AP-001/2017/172 dated 21 June 2017] – for the Project Affected People of the Navi Mumbai International Airport Project.
b. Development of power supply infrastructure distribution network including construction of 33KV substation equipment & construction of 11/0.4 KV HT substation & allied electrical works in Ulwe Node, Navi Mumbai (Phase-1) Priority – I & II [Work order No. CIDCO/EE(Elect-ll)/E-1419/2013/109 dated 11 January 2013
5. The work envisages supply and laying of power cables, erection of Transformers, essentially leading to setting up of power supply networks in the Residential area demarcated by CIDCO. attachment in GST portal under supporting documents section.
Statement containing the applicant’s interpretation of law and/or facts, as the case may be, in respect of the foresaid question(s) (i.e. applicant’s view point and submissions on issues on which the advance ruling is sought), Statement containing the applicant’s interpretation of law and/or facts, as the case may be, in respect of the aforesaid question(s) (i.e. applicant’s view point and submissions on issues on which the advance ruling is sought), A. CIDCO is covered under the definition of “Government Entity” vide Notification No.31/2017 – Central Tax (Rate) 13 October 2017
1. Without prejudice to the facts of the case, it is submitted that CIDCO shall be covered under the definition of the term Government Entity.
2. The term Government Entity is defined in the Notification No. 31/2017- Central Tax (Rate) dated 13 October 2017. The relevant portion of the definition is reproduced below:
‘Government Entity” means an authority or a board or any other body including a society, trust, corporation, V set up by an Act of Parliament or State Legislature; or i) established by any Government, With 90 per cent, or more participation by way of equity or control, to carry out a function entrusted by the Central Government, State Government, Union Territory or a local authority.”
3. CIDCO is –
a. Established by Govt. OF Maharashtra
b. With 100% Participation by way of equity and control
c. CIDCO is carrying out the function entrusted by Govt. of Maharashtra
4. The relevant extract of resolutions by the State Government of Maharashtra for establishing CIDCO is reproduced below:
a. Govt, of Maharashtra Resolution dt. 18.3.1970, reproduced verbatim :
“Government has had under consideration the development of the trans-Thana and trans-Harbour areas in Uran, Panvel and Thana Telisils as a new township or new Metro centre with a view to decongesting industrial and other concentrations in Bombay and with a view generally to resolve the problems of urban congestion in Bombay City. The development of these areas will also have to be integrated with the development of an industrial base in Maharashtra for exporting industries. With the growing support that the Central Government is giving to export oriented industries, the contemplated new town development in the above area will not only provide relief to Bombay City but will also accelerate the promotion of industries in the State and open out and speed up industrial development of the Konkan Region. Decongestion of industrial and office concentration in Bombay has now become an urgent problem and the proposed development of the above new township, if undertaken quickly, could save the situation even now from getting out of control. The projects is of such a character that involves planning and development of all sectors including commerce, trade, housing, etc. to combine into a well-balanced and well-planned township.
After careful consideration of the relevant factors, and particularly, in view of the tremendous impact this project will have on the industrial development of Maharashtra, Government has come to the conclusion that a subsidiary company of the State Industrial and Investment Corporation of Maharashtra, Bombay, would be a appropriate agency which would be entrusted with the present project. Government is accordingly pleased to allow the State Industrial and Investment Corporation of Maharashtra Limited, as required under Article 75 of the its Memorandum and Articles of Association, with the object of developing the trans-Thana and capital of Rs. 5 crores, with object of developing the trans-Thana and trans-Harbour areas in the Thana and Kolaba districts as a twin city to provide relief to Bombay City and also to ensure its integrated development with the industrial development of this region and the State. The Land proposed to be acquired by Government in trans-Thana and trans-Harbour areas should be entrusted to the subsidiary company, which would act as an agent of Government for the development of the areas with a view to secure the above objectives.
The subsidiary company will in due course be notified as New Town Development Authority under the Maharashtra Regional and Town Planning Act.
The subsidiary company will work under the control and supervision of the State Government in the General Administration Department.
By and order and in the name of the Governor of Maharashtra.
b. Govt. of Maharashtra Notification dt. 20.3.1971. reproduced verbatim :
URBAN DEVELOPMENT. PUBLIC HEALTH AND HOUSING DEPARTMENT Sachivalaua, Bombay, 20 the March, 1971
Maharashtra Regional Planning and Town Planning Act, 1966
No. RPB. 1171-18124-1-W-
Whereas, the State Government is satisfied that it is expedient in public interest that the said area should be developed as a site for the proposed new town:
Now, therefore, in exercise of the powers conferred by sub-section(1) of section 113 of the said Act, the Government of Maharashtra hereby designates the said area as the site for the proposed new town, which shall be known by the name of “New Bombay”.
And, whereas, having regard to the complexity and magnitude of the work involved in developing the area comprised in the site of the new town aforesaid the time which may be required for setting up new machinery for undertaking and completing such work of development and the comparative speed with which such work can be undertaken and completed in the public interest, if the work is done through the agency of a corporation or a company owned or controlled by the State or a subsidiary company thereof: the State Government is of opinion that such work of development of the area comprised in the site of New Bombay should be entrusted to subsidiary company mentioned hereinafter:
And whereas, the City and Industrial Development Corporation of Maharashtra Limited, registered under the Companies Act, 1956 ( 1 of 1956), a subsidiary company of the State Industrial and Investment Corporation of Maharashtra, a company owned and controlled by the State is at present equipped with the machinery for undertaking and completing the work involved speedily in developing any area as a new town.
Now, therefore in exercise of the power conferred by the sub-section(3A) of section 113 of Maharashtra Regional and Town Planning Act, 1966 (Mah. XXXVII of 1966), the Government of Maharashtra hereby declares the said subsidiary company to be the New Town Development Authority for the area comprised in the site of New Bombay,
By order and in the name of the Governor of Maharashtra. “
Govt. of Maharashtra Resolution dt. 24.1.1972, reproduced verbatim :
General Administration Department
Sachivalaya, Bombay, 24th January, 1972
Resolution No. CID-2072-U
Read: Government Resolution, Industries and Labour Department No. IDL-5770/IND-I, Dated 18th March, 1970
RESOLUTION:
Government has decided to entrust to the City and Industrial Development Corporation of Maharashtra Limited, as New Town Development Authority, the task of development of the New City in Thana, Panvel and Uran tahsils of Tharui and Kolaba districts, and to acquire the privately owned land in that area for that project. The question of financing the development work of City and Industrial Development Corporation of Maharashtra Limited has been under consideration for some time. Government is now pleased to issue the following instructions:
1) The Corporation should undertake all the development work, provide the social and physical infrastructure to attain the objectives laid down in the Government resolution, Industries and Labour Department No. IDL-5770/IND-l, dated 18th March, 1970, on behalf of the Government and to dispose of land to the extent appropriate. It should also rehabilitate the persons displace from the land acquired for the Project.
2) From the proceeds collected out of such disposals, the Corporation should recoup the expenditure it incurs on the items referred to in sub-para(1) above, inclusive of administrative expenses thereon, plus agency remuneration at Rs. 3.00 lacs, for the year ended 31st March, 1971 to be increased each year by Rs. 1.00 lacs, subject to a maximum of Rs.5.00 lacs for any one year, before remitting the remained to the Government.
3) The expenditure incurred by the Government on the acquisition of such lands should be treated as Governments’s own capital outlay and debited to the appropriate head of account and such lands on acquisition shall vest in the Corporation eastablishing New Bombay.
4) The Corporation may make “On Account Advance Payment” to Government from the proceeds of land disposal to meet Government expenditure on capital outlayon account of payment of compensation for land acquisition for New Bombay.
5) Such “On Account Advance Payment” made by the Corporation should be adjusted in due course.
This Resolution issues with concurrence of the Finance Department vide its unofficial reference No.; 145/72/F-12 dated 24th January, 1972.
5. Further, the Company is fully controlled by the State Government of Maharashtra with 100% shareholding by the State Government by way of equity and control. The list of shareholders of CIDCO are as follows:
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