In re GDCL – EMIT JV (GST AAR Uttarakhand)
i) Outward supply of Operation & Maintenance of sewerage treatment plant of 26 MLD capacity at LakkarGhat, Rishikesh, Dehradun, State of Uttarakhand to Uttarakhand PeyJal Nigam is not exempted under notification no. 2/2018-Central Tax (Rate) dated 25.01.2018 and 2/2018 – Integrated Tax (Rate) dated 25.01.2018 and 138/2018/18(20)/XXVII(8)/2017/CTR-2, Dehradun dated 06.02.2018.
ii) Inward supplies directly received for the above supply of services are also not exempted.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, UTTARAKHAND
1. This is an application under Sub-Section (1) of Section 97 of the CGST/SGST Act, 2017 (herein after referred to as Act) and the rules made thereunder filed by M/s. GDCL – EMIT JV, Gali No.6, Nirmal Bagh-B, Vishthapit Colony, Pashulok, District- Dehradun, Uttarakhand there in after referred to as ‘the applicant’) is registered with the GSTN having Registration No. 05AAEAG3088P1Z9and seeking advance ruling on the following question:-
i) ” Whether the outward supply for operation and maintenance of sewage treatment plant of 26 MLD capacity at LakkarGhat, Rishikesh, Dehradun, State of Uttarakhand, India to Uttarakhand Pay Jal Nigam (an entity working under the Ministry of Drinking Water & Sanitation, Govt, of Uttarakhand as an undertaking of Uttarakhand Government) is exempt from CGST/SGST and IGST as per notification no. 2/2018-Central Tax (Rate) dated 25.01.2018, 2/2018-Integrated Tax (Rate) dated 25.01.2018 and 138/2018/18(20)/ XXVH(8)/ 2017/ CTR-2, Dehradun dated 06.02.2018? “.
ii) Whether the inward supplies directly received for above services by the applicant are also exempt from GST?
2. Advance Ruling under GST means a decision provided by the authority or the appellate authority to an applicant on matters or on questions specified in sub section (2) of section 97 or sub section (1) of section 100 in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant.
3. As per the said subsection (2) of Section 97 of the Act advance ruling can be sought by an applicant in respect of:-
(a) Classification of any goods or services or both
(b) Applicability of a notification issued under the provisions of this Act,
(c) Determination of time and value of supply of goods or services or both,
(d) Admissibility of input tax credit of tax paid or deemed to have been paid
(e) Determination of the liability to pay tax on any goods or services or both
(f) Whether the applicant is required to be registered
(g) Whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both within the meaning of that term
4. Since applicant has sought advance ruling on applicability of notifications & determination of tax liability, therefore, in terms of said Section 97(2)(b) 8s (e) of the Act, the application filed by the applicant has been admitted. Accordingly hearing was fixed on 28,01.2021 which was attended by the Shri Rahul Bansal, Chartered Accountant on behalf of the applicant and he reiterated the submissions given with the application. Later on he has also submitted copy of complete contract of the work in question. During the course of hearing Mrs. Preeti Manral (DC), concerned officer of SGST-Uttarakhand was also present and requested the authority to decide the application on merits.
5. On perusal of records submitted by the applicant, we find that the applicant is registered in Uttarakhand having GSTIN bearing no. 05AAEAG3088P1Z9, On going through the “Letter of Acceptance” dated 04.05.2018 issued by Uttarakhand PeyJal Nigam (hereinafter referred to as UPJN) and “Contract Agreement/ Form of Contract” dated 24.05.2018 signed by UPJN and the applicant, we find that the agreement has been done for the following works:-
A) Survey, review the design, redesign where necessary and build new/replace outfall/interceptor sewer line of about 15 km length including survey, design and construction of 03 nos. new sewage pumping stations, upgradation/ rehabilitation of 02 no. existing sewage pumping station and all appurtenant structures and operation and maintenance of outfall/interceptor sewer line and pumping stations for a period of 01 year in Rishikesh, State of Uttarakhand, India.
B) Design build operate and transfer of sewage treatment plant of 26 MLD capacity including 15 years O&M at LakkarGhat, Rishikesh, Dehradun, State of Uttarakhand, India.
The total contract price for the aforesaid works is Rs. 126,37,46,020/-with design build cost of Rs.72,42,94,625/- and operation and maintenance cost of Rs.53,94,51,394.98.
6. In the present case we are restricting our conclusion to the facts and circumstances which was filed for our consideration in the application. Now we proceed to decide the issue in hand:-
i) Whether the notification no. 2/2018-Central Tax (Rate) dated 25.01.2018, 2/2018-Integrated Tax (Rate) dated 25.01.2018 and 138/2018/18(20)/XXVIl(8)/2017/CTR-2, Dehradun dated 06.02.2018 are applicable to the outward supply provided by the applicant ?
ii) Whether the inward supplies directly received for above services by the applicant are also exempt from GST?
7. In the instant case we find that the work is allotted to the applicant by UPJN is related to (i) Survey, review the design, redesign where necessary and build new /replace outfall/interceptor sewer line of about 15 km length, (ii) survey, design and construction of 03 nos. new sewage pumping stations, (iii) upgradation/rehabilitation of 02 no. existing sewage pumping station and all appurtenant structures, (iv) operation and maintenance of outfall/interceptor sewer line and pumping stations for a period of 01 year in Rishikesh, State of Uttarakhand and (v) Design build operate and transfer of sewage treatment plant of 26 MLD capacity including 15 years O&M at Lakkar Ghat, Rishikesh, Dehradun.
8. The applicant in their application dated 23.11.2020 has sought advance ruling as to whether their outward supply for operation and maintenance of sewage treatment plant of 26 MLD capacity at Lakkar Ghat, Rishikesh to UPJN is exempt from payment of GST in view of notification no. 2/2018-Central Tax (Rate) dated 25.01.2018, 2/2018-Integrated Tax (Rate) dated 25.01.2018 and 138/2018/18(20)/XXVII(8)/2017/CTR-2, Dehradun dated 06.02.2018 on. On this issue we have the same views and are discussed as under:
As per new entry 3A inserted after entry no. 3 of notification no. 2/2018-Central Tax (Rate) dated 25.01.2018, 2/2018-Integrated Tax (Rate) dated 25.01.2018 and new entry 3A inserted after entry no. 3 of notification no.9/2017- Integrated Tax (Rates) dated 28 June 2017 vide notification no. 02/2018-Integrated Tax (Rates) dated 25 January 2018, we find that following are the 3 foremost conditions to be qualified for exemption:-
i .Nature of supply- Composite supply of goods and services in which the value of supply of goods constitutes not more than 25 per cent of the value of the said composite supply;
ii. Recipient of services- Central Government, State Government, Local Authority, Union Territory, Governmental Authority or a Government entity;
iii. Category of services-any activity in relation to any function entrusted to a Panchayat under Article 243G of the constitution of India or in relation to any function entrusted to a Municipality under Article 243W of the constitution”
For any exemption, all the three conditions should be satisfied simultaneously.
Relevant portions of the said notifications arc reproduced as under:
notification no. 02/2018-Integrated Tax (Rates) dated 25 January 2018:
G.S.R….(E).- In exercise of the powers conferred by sub-section (1) of section 11 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on being satisfied that it is necessary in the public interest so to do, on the recommendations of the Council, hereby makes the following further amendments in the notification of the Government of India, in the Ministry of Finance (Department of Revenue), No. 12/2017- Central Tax (Rate), dated the 28th June, 2017, published in the Gazette of India, Extraordinary, Part U, Section 3, Sub-section (i), vide number G.S.R. 691(E), dated the 28th June, 2017, namely:-
In the said notification, in the Table,-
(a) against serial number 3, in the entry in column (3), after the words “a Governmental Authority” the words ‘or a Government Entity” shall be inserted;
(b) after serial number 3 and the entries relating thereto, the following serial number and entries shall be inserted, namely:-
