In re M/s. Shreeji Infrastructure India P. Ltd. (GST AAR Madhya Prdesh)
MPPGCL has been entrusted with the work of power generation in the State of Madhya Pradesh. Though we do not have details of work entrusted by the State Government to MPPGCL, on the basis of facts brought on record through the present application, we safely conclude that the essential and sole work entrusted to MPPGCL by the Government of Madhya Pradesh is of electricity (power) generation. M/s.MPPGCL has awarded a works contract for construction of 599 residential quarters at Shri Singaji Thermal Power Project Stage-ll, Near Village Dongalia Distt Khandwa, to the Applicant. However, the civil construction of residential quarters is neither the primary work entrusted to MPPGCL nor it has any bearing on the work i.e. power generation by any means. Accordingly, we fail to understand as to why the benefit of concessional rate @12% GST should be available to this particular works contract awarded to the Applicant? The intention of the legislature has been to concessional rate to such work which has been entrusted to a government entity for public interest in general. Any work having direct involvement in the entrusted work i.e. power generation would merit exemption envisaged under Sr.No.3(vi)(c) of the Notification No.11/2017-CT(Rate) under CGST Act and corresponding notification under MPGST Act 2017, but extrapolating and extending this concessional rate to any or all activities of MPPGCL will not only be unwarranted but also defeat the very purpose of concessional rate.
We also take a note of the departmental opinion given in this matter by the Joint Commissioner, CGST & Central Excise, Jabalpur, as discussed in foregoing paras, and we express our agreement with the same. The activity in question definitely does not have any relation to the principal work of power generation entrusted by the state government to MPPGCL, and therefore the works contract service of construction of residential quarters would attract GST @18% (9% CGST + 9% SGST) in terms of Notification No.11/2017-CT Rate dtd.28.06.2017 and corresponding notification under MPGST Act 2017.
FULL TEXT OF ORDER OF AUTHORITY FOR ADVANCE RULING, MADHYA PRADESH
1. BRIEF FACTS OF THE CASE:
1.1. M/s. Shreeji Infrastructure Private Limited (herein after referred to as the ‘applicant company’), having its registered office at 1180, University Road, South Civil Lines, Jabalpur, (MP) and CIN U45203CT1999PTC020826.
1.2. That, the applicant company is engaged in carrying out the works contract in relation to construction of road, bridges, buildings, civil structures of government, semi government and private undertakings, secured through tenders in the case of government undertakings, and through personal negotiations in case of private undertakings.
1.3. The Madhya Pradesh Power Generating Co. Ltd. (MPPGCL), a company owned by the Government of Madhya Pradesh, floated a tender through e-tending process, for General Civil Work Package of 2*660 MW Shri Singaji Thermal Power Project Stage-ll, near village Dongalia, distt. Khandwa (MP) India (Tender Spn. No. MPPGCL/CIVIL ENGINEERING/SSTPP-I/CB/01) (Online Tender Spn. No. 3497). The applicant company filled the tender and the same was allotted to it by MPPGCL, as per the scope of work mentioned below:
Scope of Work:- Construction of building and structure for colony at village Siveria on lumpsum turnkey basis, which includes approximately 599 staff quarters for plant personnel, all internal connecting roads and drains, necessary geotechnical investigations, complete site clearance & site developmet work, complete water supply system, overhead tanks & underground sump, complete sanitary & sewage works system including Sewage treatment plant, rain water harvesting system, complete electrification system, etc. The contractor shall carry out all other miscellaneous work that will be necessary for completing this package on turnkey basis.
1.4. That, during the course of carrying out the construction work, the applicant company raised Running Bills (RA bills) for the portion of work completed at a point of time. To MPPGCL by charging CGST and SGST at the rate of 9% each, in view of Notification no. 11/2017Central Tax (rate) dated 28.06.2017 Chapter 99 Section 5 Heading 9954- entry 3(ii) |.
