In re Suez India Private Limited (GST AAR Uttar Pradesh)
Question-1 Whether the services provided as a Uttar Pradesh Jal Nigam would be considered as a service provided to a governmental authority under GST Laws?
Answer-1- Replied in affirmative.
by way of Notification No. 15/2021-Central Tax (Rate) dated November 18, 2021, the lower rate of tax of 12% provided by Entry 3(iii) of Notification No. 11/2017- Central Tax (Rate) dated June 28, 2017, was restricted to works contract supplied to Central Government, State Government, Union territory and a local authority only. As the UPJN does not qualify as a ‘local authority’ and it qualifies as a governmental authority, tax rate of 18% is applicable on the works contract services provided to UPJN by way of Entry 3(xii) of Notification No. 11/2017- Central Tax (Rate) dated June 28, 2017.
Question-2 What is the applicable GST rate on supply of works contracts services in relation to sewage treatment plant made by the Applicant to Uttar Pradesh Jal Nigam, on or after 1st Jan 2022? Answer-2- 18%(CGST 9% + SGST 9%)
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, UTTAR PRADESH
1. M/s Suez India Private Limited, C-103, Eldorado Apartment, Premises No. 7/88, Tilak Nagar, Kanpur – 208002 (here in after referred to as the applicant) is a registered assessee under GST having GSTN: 09AAACD0136D1ZA.
2. The Applicant has submitted application for Advance Ruling dated 31-03-2022 enclosing duly filled Form ARA-01 (the application form for Advance Ruling) along with certain annexure and attachments.
3. The Applicant in his application sought Advance Ruling as follows:-
(1) Whether the services provided to Uttar Pradesh Jal Nigam would be considered as a service provided to a governmental authority under GST Laws?
(2) What is the applicable GST rate on supply of works contracts services in relation to sewage treatment plant made by the Applicant to Uttar Pradesh Jal Nigam, on or after 1st Jan 2022?
4. As per the declaration given by the applicant in Form ARA-01, the issue raised by the applicant is neither pending in any proceedings nor decided in any proceedings in the applicant’s case under any of the provisions of the CGST Act, 2017/UPGST Act, 2017.
5. The applicant has submitted that-
(1) It is a Company incorporated and registered under the Companies Act, 1956, and is a leader in water resource management
(2) Uttar Pradesh Jal Nigam (“UP Jal Nigam/UPJN”) is a body corporate formed by the State legislature under the Uttar Pradesh Water Supply and Sewerage Act, 1975. The U.P. Jal Nigam is the apex body responsible for formulation, execution, promotion, financing, fixing tariffs etc., for implementation of water supply, sewerage, sewage treatment and disposal, river pollution abatement projects etc., including fixing State Standards for water supply and sewerage services.
(3) UPJN invited bids for “Design, Construction, Supply, Installation, Testing & Commissioning and Trial run of Tertiary Sewage Treatment Plant, laying of Pipe Line & other allied works for Treated Waste Water Reuse at 1X660 MW Panki Thermal Power Station Extension, Panki, Kanpur on UF and RO based technology to treat the secondary treated effluent from 210 MLD capacity Bingawan STP to produce 40 MLD water of desired quality including final effluent pump house, pipe line & other allied works for 1×660 MW Panki Thermal Power Station Extension at Panki, Kanpur on turnkey basis followed by Defect Liability period for 2 years” (“work”).
(4) The Applicant submitted its application on January 01, 2019, and the same was accepted by UPJN vide Letter of Award dated May 27, 2019. Pursuant thereto, SUEZ and UPJN entered into Contract Bond No. 1/GM (P.M-I)/ 2019-20 dated June 14, 2019 (“Contract”), for execution of the work. As per the Contract, the Applicant had to undertake works including designing, construction, supply, installation, testing and commissioning of Sewage Treatment Plant and operation & maintenance of the constructed work.
(5) The Applicant has entered into similar agreements for design, construction, and operation and maintenance of few other Water Treatment / Sewage Treatment Plants in the State of UP, with UPJN.
(6) As per S. 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.
(7) The services supplied by the Applicant to UPJN qualify as works contract service under the GST Laws.
(8) Vide Notification No. 11/2017 Central Tax (Rate) dated June 28, 2017, the Ministry of Finance, Department of Revenue, 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.
(9) The Central Govt, amended the Notification No. 11/2017- Central Tax (Rate) dated June 28, 2017, vide Notification No. 15/2021-Central Tax (Rate) dated November 18, 2021, wherein, in Entry 3(iii), the words “Union territory, a local authority, a Governmental Authority or a Government Entity” were substituted with “Union territory or a local authority”.
