In re State Industries Promotion Corporation of Tamilnadu Limited (GST AAR Tamil Nadu)
The State Industries Promotion Corporation of Tamil Nadu Limited (SIPCOT) posed some pertinent questions to the GST Authority for Advance Rulings (AAR) in Tamil Nadu. The queries mostly centered around the taxability under the prevailing GST laws for various services they offer. This article delves deep into each question and the corresponding analysis.
Q1. Whether the Supply of raw water and its incidental charges are liable to be taxed under the prevailing GST Laws. Answer: No, the supply of raw water and its incidental charges such as Interest for delay in payment obligations (Water Charges), Penalty for delay in payment obligations (Water Charges), and Reconnection charges for water supply are not liable to be taxed under the prevailing GST Laws.
Q2. Whether the Maintenance charges for usage of common facilities are liable to be taxed under the prevailing GST Laws. Answer: Yes, the maintenance charges for the usage of common facilities would fall under the category of supply and are thus liable to GST @ 18% under SAC 995429 as per Notification No. 11/2017-Central Tax (Rate), dated 28.06.2017.
Q3. Whether the Participatory Infrastructure Development Scheme (PIDP) charges are liable to be taxed under the prevailing GST Laws. Answer: Yes, the PIDP charges, in the context of infrastructure works, are liable to GST @ 18% under Group 99859 as per Notification No. 11/2017-Central Tax (Rate), dated 28.06.2017.
Q4. Whether the interest collected towards delayed payment for Upfront lease premium and Differential lease premium are liable to be taxed under the prevailing GST Laws. Answer: No, the interest collected towards delayed payment for Upfront lease premium and Differential lease premium is not liable to be taxed under the GST Act since the principal supply itself is exempted.
Q5. Whether the interest for delayed payment of consideration for the points mentioned in Sr.No.01 to 03, as above, are liable to be taxed under the GST Laws. Answer: a) For Sl. No. 1, the interest or penalty for delayed payment of water charges and reconnection charges are not liable to tax. b) For Sl. No. 2 & 3, the interest and penalty collected for delayed payment towards rendering maintenance services and PIDP will form part of the value of supply and are liable to be taxed.
Q6. Whether the Penalty for delay in execution of the project and delay in execution of lease deed are liable to be taxed under the prevailing GST Laws. Answer: No, the penalty for delay in the execution of the project and delay in the execution of the lease deed is not liable to be taxed under the prevailing GST Laws since the main supply (i.e., the upfront fee collected) is exempted.
Conclusion: The GST laws and notifications play a pivotal role in determining the taxability of various services. For organizations like SIPCOT, it’s essential to be clear about these stipulations to ensure compliance and clarity for their allottees. While some services like raw water supply are exempt, others like maintenance charges are taxable, underscoring the need for a comprehensive understanding of the GST landscape.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, TAMIL NADU
1.1 The applicant M/s State Industries Promotion Corporation of Tamilnadu Limited (hereinafter referred to as Applicant) is registered under the GST Act, 2017 with GSTIN 33AAACS4643J1ZF. The Applicant has sought Advance Ruling on the following questions:-
1. Whether the Supply of raw water and its incidental charges are liable to be taxed under the prevailing GST Laws.
2. Whether the Maintenance charges for usage of common facilities are liable to be taxed under the prevailing GST Laws.
3. Whether the Participatory Infrastructure Development Scheme (PIDP) charges are liable to be taxed under the prevailing GST Laws.
4. Whether the interest collected towards delayed payment for Upfront lease premium and Differential lease premium are liable to be taxed under the prevailing GST Laws.
5. Whether the interest for delayed payment of consideration for the points mentioned in Sr.No.01 to 03, as above, are liable to be taxed under the GST Laws.
6. Whether the Penalty for delay in execution of the project and delay in execution of lease deed are liable to be taxed under the prevailing GST Laws.
1.2 The applicant has submitted a copy of challan evidencing payment of application fees of Rs.5,000/- each under sub-rule (1) of Rule 104 of CGST Rules 2017 and SGST Rules 2017.
2.1 The Applicant is an institution formed as a State Industrial Development Corporation (SIDC) by the Government of Tamilnadu. It is providing the assistance to promote the objective of the State by identifying, developing, maintain Industrial area across the State of Tamilnadu and is in the business of developing Industrial Complexes/Industrial Parks/Industrial Growth Centers by acquiring lands across the State under the “Acquisition of Land of the Industrial Purpose Act, 1997/any other act as applicable for land acquisition purpose’. Further, these complexes/Parks are provided with all basic infrastructure facilities such as Road, Street lights, water supply system, arrangement for ready Power Supply, sewerage and Storm water drain, green environment, etc.
2.2 The brief process of on boarding the Allottee(s) into the industrial complexes /parks/growth center is as under:-
a) The Allottees shall submit an application along with pre-determined initial plot deposit amount for Land Allotment through SIPCOT Online Portal with their interest to obtain the land on lease basis along with the basic infrastructure for undertaking their Industrial activities.
b) The Applicant after evaluating the project proposal of the Allottee(s) and availability of land(s) shall approve the application submitted by the Allottee(s) and allot the earmarked area as laid down in the allotment order.
c) The conditions/charges as available in the allotment order are as under:
