In re Suez India Private Limited (AAR Karnataka)
i. Whether the services provided to Bengaluru Water Supply and Sewerage Board would be considered as a service provided to a governmental authority under GST Laws?
The services provided to Bengaluru Water Supply and Sewerage Board (BWSSB) would be considered as a service provided to a Governmental authority under GST.
ii. What is the applicable GST rate on supply of works contracts services in relation to sewage treatment made by the Applicant to Bengaluru Water Supply and Sewerage Board, on or after 1st Jan 2022?
Works contracts services supplied by the Applicant in relation to sewage treatment to Bengaluru Water Supply and Sewerage Board, on or after 1st Jan 2022 is exigible to GST at 18% (CGST @ 9% and SGST@9%).
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, KARNATAKA
M/s. Suez India Private Limited, CSI Compound, 2nd Floor, Mission Road, Bengaluru-560027 (hereinafter referred to as The applicant’), having GSTIN 29AAACD0136D1Z8 have filed an application for Advance Ruling under Section 97 of CGST Act, 2017 read with Rule 104 of CGST Rules, 2017 and Section 97 of KGST Act, 2017 read with Rule 104 of KGST Rules, 2017, in FORM GST ARA-01 discharging the fee of Rs.5,000/- each under the CGST Act and the KGST Act.
2. The Applicant is a Private Limited Company registered under the provisions of Central Goods and Services Tax Act, 2017 as well as Karnataka Goods and Services Tax Act, 2017 (hereinafter referred to as the CGST Act and KGST/SGST Act respectively). The Applicant is a leader in water resource management. The Applicant has stated that he provides works contract services to Bengaluru Water Supply and Sewerage Board.
3. The applicant has sought advance ruling in respect of the following questions:-
i. Whether the services provided to Bengaluru Water Supply and Sewerage Board would be considered as a service provided to a governmental authority under GST Laws?
ii. What is the applicable GST rate on supply of works contracts services in relation to sewage treatment made by the Applicant to Bengaluru Water Supply and Sewerage Board, on or after 1st Jan 2022?
4. Admissibility of the application: The question is about the “determination of the liability to pay tax on any goods or services or both” and hence is admissible under Section 97(2)(e) of the CGST Act 2017.
5. Brief Facts of The Case: The applicant furnishes some facts relevant to the issue:
5.1 The applicant states that it is a Company incorporated and registered under the Companies Act, 1956, and is a leader in water resource management. The applicant has stated that Bengaluru Water Supply and Sewerage Board (“BWSSB”) is an autonomous body formed by the State Legislature under Bangalore Water supply and Sewerage Board Act, 1984. Since its inception in the year 1964, BWSSB has executed several water supply and sewage schemes for the city of Bangalore, including the prestigious Cauvery Water Supply Scheme (CWSS) Stages – I, II, III & Stage IV Phase – I, Phase – II and sewerage system improvement projects concentrating on sewage collection, conveyance and treatment works. BWSSB invited bids for “Work of Design, Upgradation and Rehabilitation of existing 248 MLD capacity Used Water Treatment Plants at K&C Valley, Bengaluru including Commissioning, O&M for a period of 5 years along with O&M during Design, Upgradation and Rehabilitation period”
5.2 The applicant has stated that they have entered into agreements for design, construction, operation and maintenance of various Water Treatment / Sewage Treatment Plants in Bengaluru, with BWSSB. As per the Contract, the applicant had to undertake works including the designing, construction, commissioning and operation and maintenance of the constructed work.
5.3 The applicant has stated that as per Section 2(119) of the Central Goods and Service Tax Act, 2017 (“CGST Act”), “works contract” has been defined to mean 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.
5.4 The applicant has stated that Notification No. 11/2017 Central Tax (Rate) dated June 28, 2017, notified the rate of tax on certain intra-State supply of services. Vide Entry 3 of the said notification, 18% tax rate was prescribed for works contract services. Entry 3 of the Notification No. 11/2017 Central Tax (Rate) dated June 28, 2017,, is as follows:
