In re Indian Hume Pipe Company Ltd. (GST AAR Uttar Pradesh)
Question a- Whether the supply of Services by the Applicant to M/s. UTTAR PRADESH JAL NIGAM is covered by Notification No. 15/2021 Central Tax (Rate), dated 18th November, 2021 r/w. Notification No.22/2021- Central Tax (Rate), dated 31st December, 2021.
Answer a- Answered in negative.
Question b- If the supplies as per Question a are covered by Notification No. 15/2021-Central Tax (Rate), dated 18th November, 2021, r/w. Notification No. 22/2021- Central Tax (Rate), dated 31st December, 2021, then what is the applicable rate of Tax under the Goods and Services Tax Act, 2017 on such Supplies made w.e.f. 01-01-2022.
Answer b- Not answered as per reply of question a above.
Question c- In case if the supplies as per Question a are not covered by the Notification supra then what is the applicable rate of tax on such supplies under the Goods and Services Tax Act, made w.e.f. 01-01-2022.
Answer c- CGST 9% and SGST 9%.
Also Read AAAR Ruling: Utttar Pradesh Jal Nigam is not a Local authority; 18% GST applicable on works contract services
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING,UTTAR PRADESH
1. M/s Indian Hume Pipe Company Ltd., Gwalior Road, Karari, Jhansi, Uttar Pradesh, 284003 (here in after referred to as the applicant) is a registered assessee under GST having GSTIN: 09AAACT4063D1ZK.
2. The Applicant has submitted application for Advance Ruling dated 28-06-2022 enclosing duly filled Form ARA-01 (the application form for Advance Ruling) along with certain annexure.
3. The Applicant in his application sought Advance Ruling as follows:-
a. Whether the supply of Services by the Applicant to M/s. UTTARPRADESH JAL NIGAM is covered by Notification No. 15/2021-Central Tax (Rate), dated 18th November, 2021 r/w. Notification No. 22/2021- Central Tax (Rate), dated 31st December, 2021
b. If the supplies as per Question a are covered by Notification No. 15/2021-Central Tax (Rate), dated 18th November, 2021, r/w. Notification No. 22/2021- Central Tax (Rate), dated 31st December, 2021, then what is the applicable rate of Tax under the Goods and Services Tax Act. 2017 on such Supplies made w.e.f. 01-01-2022; and
c. In case if the supplies as per Question a are not covered by the Notification supra then what is the applicable rate of tax on such supplies under the Good’s and Services Tax Act, made w.e.f. 01-01-2022.
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) The Applicant is a Company registered under the Indian Companies Act.
(2) It undertakes Contracts for Construction of Head works, Sumps, Pump Rooms, laying, jointing of pipe line and commissioning and maintenance of the entire work for Water Supply Projects I Sewerage Projects/ Facilities.
(3) Its major customers include Government Bodies/ Entities/Authorities/Local Bodies/Municipalities.
(4) The applicant has been awarded a contract by M/s. UTTAR PRADESH JAL NIGAM vide Department Letter No. 130/Vividh-13/11 dated 25-02-2021.
(5) M/s UTTAR PRADESH JAL NIGAM holds PAN AAALU0256C under Income Tax Act, 1961 and GSTIN 09AAALU0256C320 under the Goods & Services Tax Act, 2017.
(6) Public Health Engineering Department was created in 1927 to provide drinking water supply and sewerage facilities in Uttar Pradesh. In year 1946, it was rechristened as Local Self Government Engineering Department (LSGED). In 1975, it was converted to Uttar Pradesh Jal Nigam through Uttar Pradesh Water Supply and Sewerage Act, 1975 (ACT no-43, 1975). As per this Act, Jal Nigam has jurisdiction over whole Uttar Pradesh (except Cantonment Area). The basic objective of creating this Corporation is development and regulation of water supply & sewerage services and for matters connected therewith.
(7) The Notification No. 15/2021-Central Tax (Rate), dated 18th November, 2021 seeks to amend parent Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017, which prescribed Rate of Tax on Construction Services at Serial No. 3 of the Table therein, viz-“(ii) composite supply of works contract as defined in clause 119 of section 2 of Central Goods and Services Tax Act, 2017” at 9% under CGST Act; thereby implying total GST at 18% (CGST – 9% + SGST -9%).
(8) ….Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 was subsequently amended vide Notification No. 20/2017-Central Tax (Rate) dated 22nd August. 2017; whereby in Serial No. 3 of the fable therein item (iii) was inserted viz -“(iii) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied to the Government, a local authority or a Governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of,-(a)…., (b) canal, dam or other irrigation works; (c) pipeline, conduit or plant for (1) water supply (ii) water treatment, or (iii) sewerage treatment or disposal.” to be taxed at 6% under CGST Act; thereby implying total GST at 12% (CGST 6% + SGST – 6%).
(9) Subsequently Notification No. 31/2017 dated 13th October, 2017 was issued to amend Serial No. 3(iii) viz – “Central Government, State Government, Union territory, a local authority, a Governmental Authority or a Government Entity”. Further, this Notification also clarified the meaning of the term Government Authority and Government Entity to mean as under –
“Governmental Authority” means an authority or a board or any other body,- (i) set up by an Act of Parliament or a State Legislature; or (ii) established by any Government, with 90 per cent or more participation by way of equity or control, to carry out any function entrusted to a Municipality under article 243 W of the Constitution or to a Panchayat under article 243 G of the Constitution.
“Government Entity” means an authority or a board or any other body including a society, trust, corporation, i) set up by an Act of Parliament or State Legislature; or ii) established by any Government, with 90 per cent or more participation by way of equity or control, to carry out a function entrusted by the Central Government, State Government. Union Territory or a local authority.”
(10) The functions entrusted to a Municipality under the Twelfth Schedule to Article 243W of the Constitution are as under:-
(a) Urban planning including town planning.
(b) Regulation of land-use and construction of buildings.
(c) Planning for economic and social development.
(d) Roads and bridges.
(e) Water supply for domestic, industrial and commercial purposes.
(f) Public health, sanitation conservancy and solid waste management.
(g) Fire services.
(h) Urban forestry, protection of the environment and promotion of ecological aspects.
(i) Safeguarding the interests of weaker sections of society, including the handicapped and mentally retarded.
(j) Slum improvement and up gradation.
(k) Urban poverty alleviation.
(l) Provision of urban amenities and facilities such as parks, gardens, playgrounds.
(m) Promotion of cultural, educational and aesthetic aspects.
(n) Burials and burial grounds; cremations, cremation grounds; and electric crematoriums.
(o) Cattle pounds; prevention of cruelty to animals.
(p) Vital statistics including registration of births and deaths.
(q) Public amenities including street lighting, parking lots, bus stops and public conveniences.
(r) Regulation of slaughter houses and tanneries.
(11) Notification No. 15/2021-Central Tax (Rate), dated 18th November, 2021, r/w. Notification No. 22/2021- Central Tax (Rate), dated 31st December, 2021 now issued seeks to amend at Sr. No. 3 (iii) as – “Union territory or a local authority” thereby deleting the words – a Governmental Authority or a Government Entity.
6. The applicant has submitted their interpretation of law as under-
(1) The Contractee’s of the Applicant in question are holding PAN AAALU0256C. 4th character in PAN denotes the Status of the PAN holder and as the 4th character in the case under consideration is “L” it denotes Local Authority.
(2) Further, the Contractee’s of the Applicant in question are holding GSTIN 09AAALU0256C320 and the Registration Certificate as issued by the GST Department classifies the Contractee under Local Authority.
(3) As the Contractee’s of the Applicant are classified as Local Authority as per the GST Authorities, they are of the opinion that-
(a) The said transaction is covered by Notification No. 15/2021-Central Tax (Rate), dated 18th November, 2021 r/w. Notification No. 22/2021- Central Tax (Rate), dated 31st December, 2021; which after amendment now reads as “(iii) Composite supply of works contract as defined in clause (119) of Section 2 of the Central Goods and Services Tax Act, 2017, supplied to Central Government, State Government, Union territory or a local authority”.
(b) the said transaction is liable to tax under the GST Act @ 12%; and
(c) Not Applicable
7.1 The application for advance ruling was forwarded to the Jurisdictional GST Officer to offer his comments/views/verification report on the matter. The Assistant Commissioner, CGST & Central Excise Division Jhansi vide his letter C.No. V(30)41-Tech/Misc/JHS/18/pt 11/781 dated 01.09.2022 submitted that UPJN (Uttar Pradesh Jal Nigam) who will be the recipient of composite supplies qualifies as a “local authority” in terms of sub-section (3) of Section 3 of “The Uttar Pradesh Water Supply and Sewerage Act, 1975”. and therefore supplies by the applicant seems to be covered under the Entry 3(iii) of the Notification No. 11/2017 as amended. He further submitted that as per available records, no proceedings on the question raised in application is pending or decided, under any of the provisions of the Act.
7.2 The applicant is registered with the State GST and the Joint Commissioner (Corporate Circle), State Tax, Jhansi Zone vide his C.No. 112/PA/Joi. Comm (Ka. Sa.) Ra. Kar/Appeal-Akshya/Jhansi/2022-23 dated 15.07.2022 submitted his report as under-
(a) the supply is not covered in Notification No. 15/2021-Central Tax (Rate), dated 18th November, 2021 read with Notification No. 22/2021-Central Tx (Rate) dated 31.12.2021.
(b) there is no significance of question at si no. (b) in view of aforesaid answer of question (a).
(c) the supply attracts rate of GST @ 18%.
(d) no proceedings on the question raised in application is pending or decided, under any of the provisions of the Act
8. The opportunity of personal hearing was granted on 20.09.2022 which was attended by Mr. Manish Goel, during personal hearing, the applicant reiterated the submissions made in the application of advance ruling.
DISCUSSION AND FINDING
9. At the outset, we would like to make it clear that the provisions of both the CGST Act and the UPGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the UPGST Act. Further for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / UPGST Act would be mentioned as being under the ‘CGST Act’.
10. We have gone through the submissions made by the applicant and have examined the explanation submitted by them. The applicant has ticked following issues in column no. 13 of Form GST ARA-01-
(1) determination of the liability to pay tax on any goods or services or both.
We find that the issue raised in the application is squarely covered under Section 97(2) of the CGST Act 2017. We therefore, admit the application for consideration on merits.
11. We observe that the questions on which advance ruling is sought by the applicant are as under-
a. Whether the supply of Services by the Applicant to M/s. UTTARPRADESH JAL NIGAM is covered by Notification No. 15/2021-Central Tax (Rate), dated 18th November, 2021 r/w. Notification No. 22/2021- Central Tax (Rate), dated 31st December, 2021
b. If the supplies as per Question a are covered by Notification No. 15/2021-Central Tax (Rate), dated 18th November, 2021. r/w. Notification No. 22/2021- Central Tax (Rate), dated 31st December, 2021 . then what is the applicable rate of Tax under the Goods and Services Tax Act, 2017 on such Supplies made w.ef. 01-01-2022; and
c. In case if the supplies as per Question a are not covered by the Notification supra then what is the applicable rate of tax on such supplies under the Goods and Services Tax Act, made w.ef 01-01-2022.
12.1 The applicant vide their email dated 09.09.2022 have sought ruling on following additional question-
1. Whether a “Person” can have different Constitution of Business-
2. Under the different Acts- Income Tax Act/GST Act
3. Under the same act-GST Act.
12.2 As per Section 97(2) of the CGST Act 2017, advance ruling can be sought on following issues-
1. Classification of any goods and services or both under the act.
2. Determination of time, value, and supply of goods and services.
3. Applicability of a notification that affects the tax rate.
4. Whether input tax credit of tax paid or deemed to be paid.
5. Whether the applicant is required to be registered.
6. Determination of the liability to pay tax on any goods or services or both.
7. Whether any particular transaction is a supply of goods or services or both.
12.3 We are of the view that the additional question raised by the applicant is not covered in Section 97(2) of the CGST Act, 2017 as such we do not admit additional question.
13. The Notification No.11/2017- Central Tax (Rate) dated June 28. 2017 was amended vide Notification No. 15/2021-Central Tax (Rate), dated 18th November, 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”. The Notification No. 15/2021-Central Tax (Rate), dated 18th November, 2021 was superseded by the Notification No. 22/2021- Central Tax (Rate), dated 31st December, 2021 and Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 was amended by the said notification as under-
In the said notification, in the TABLE, against serial number 3,
(1) in column (3),in the heading ‘Description of Service”, in items (iii),(vi),(ix) and (x), for the words “Union territory, a local authority, a Governmental Authority or a Government Entity” the words “Union territory or a local authority” shall be substituted.
Thus, as on date, the amended Entry 3(iii) of the Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 with effect from 01.01.2022 reads as follows:
