In re Kerala Land Development Corporation Limited (GST AAR Kerala)
The Authority for Advance Ruling (AAR) Kerala issued a significant ruling concerning the applicable GST rate on works executed by the Kerala Land Development Corporation Limited (KLDC) for the period from January 1, 2022, to July 17, 2022. The ruling clarified that the applicable GST rate for these works is 18%, contrary to the 12% rate claimed by KLDC.
Background
The Kerala Land Development Corporation Limited (KLDC) is a government entity established under the administrative control of the Agriculture Department of Kerala. KLDC’s primary function is to promote and execute land development and allied schemes for the integral development of agriculture in the state. The corporation operates under significant government control, with over 95% of its shares held by the State Government.
KLDC’s Request for Clarification
KLDC sought clarification on whether the GST rate of 12% was applicable for works executed by the company from January 1, 2022, to July 17, 2022, as per a notification from the State Goods and Services Tax Department, Government of Kerala (Circular No. 01/2022, No. CT/3/2021-C1 dated January 19, 2022).
KLDC’s Contentions
KLDC argued that it is a government entity, thus eligible for the reduced GST rate of 12% for works contract services. The corporation emphasized its role as a pure agent for the Government of Kerala, executing works funded by the government. KLDC highlighted that all funds for these projects are allotted by the government, and the corporation only receives centage charges for implementation.
