In re Sealwel Corporation Private Limited (GST AAR Telangana)
We notice from the schedule concerning ‘Shareholding of Promoter’ of the annual accounts of M/s TSSPDCL that 100% shares of the company were held by the Hon’ble Governor of Telangana. This clear indicates that the Government of Telangana have 100 percent control over TSSPDCL and thus TSSPDCL is evidently covered under the definition of ‘Government Entity’.
The next issue to be decided in this regard is whether the impugned services supplied by the applicant are for the works which are used for other than commerce, industry, or any other business or profession. As per the details furnished by the applicant in the Annexure -II enclosed to the application, the works undertaken are for execution/implementation of various projects for (i) Capacitor Bank Works in Nalgonda etc.; (ii) HVDS-High Voltage Distribution Systems in Suryapet used for agricultural feeders. The applicant further stated that the Government of Telangana is reimbursing the money to M/s TSSPDCL on behalf of the customers for agricultural services rendered. Thus, M/s TSSPDCL is not rendering any non-commercial services in as much as they are getting reimbursed for their activity on behalf of their customers. Therefore, this activity cannot be termed as other than commercial/business purposes.
We therefore opine that the impugned works undertaken are for business/commercial purposes and therefore, the benefit of Concessional Rate of 12% (6% CGST + 6% SGST) is not applicable to the services supplied by the applicant. Further, we notice that the services supplied by the applicant are subjected to 18% (9%CGST + 9%SGST) in terms of SI. No. 3(xii) of Not. No. 11/2017-CT (R) dated 28.06.2017 (as amended).
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, TELANGANA
(Under Section 100(1) of the CGST/TGST Act, 2017, any person aggrieved by this order can prefer an appeal before the Telangana State Appellate Authority for Advance Ruling, Hyderabad, within 30 days from the date of receipt of this Order)
1. M/s. Sealwel Corporation Private Limited, 345/SRT-S. R Nagar- Hyderabad -500 038, Telangana, (GSTIN No. 36AAOCS4141F1ZB) has filed an application in FORM GST ARA-01 under Section 97(1) of TGST Act, 2017 read with Rule 104 of CGST/TGST Rules.
2. At the outset, it is made clear that the provisions of both the CGST Act and the TGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the TGST Act. Further, for the purposes of this Advance Ruling, the expression ‘GST Act’ would be a common reference to both CGST Act and TGST Act.
3. It is observed that the queries raised by the applicant fall within the ambit of Section 97 of the GST ACT. The Applicant enclosed copies of challans as proof of payment of Rs. 5,000/- for SGST and Rs. 5000/- for CGST towards the fee for Advance Ruling. The concerned jurisdictional officer also raised no objection to the admission of the application. The application is therefore, admitted
4. Brief facts of the case:
The facts, in brief, that were reported by the tax payer in their application are as follows:-
a. The applicant is a Company registered under the Indian Companies Act, 1956. It is engaged is the business of execution of “works contracts’ as defined under sec. 2(119) of the GST Acts, 2017. It is a registered taxable person under the Act. It is executing such works contracts inter-alia include to TSSPDCL
b. Presently they are undertaking works related to,-
(i) System improvement project for conversion of existing LT network into High voltage Distribution system (HVDS) for Agriculture feeders in Nalgonda district on selected Agricultural Feeders under JICA funding with the Contractee i.e., Southern Power Distribution Company Limited State of Telangana;
(ii) They deal with supply of llkvlMVAR & 2MVAR Capacitor banks with associated (outdoor type) equipments, erection, testing & commissioning of same at various sites with the contractee. i.e., Southern Power distribution Company Limited State of Telangana.
c. Further, the applicant revealed that for all the works the bills are being raised on the Account officer, Pay & Accounts of respective TSSPDCL and the Bill passing authorities are (D.E, A.D.E & A.E) Officers subordinate to them.
d. The applicant brought to the notice of this Authority that the Questions raised in the instant application were decided by the Authority for Advance Ruling, Andhra Pradesh under the provisions of GST Act. A copy of the order was filed for perusal at the time of personal hearing.
5. Questions raised:
The applicant seeks Advance Ruling in respect of the following issues;
1. (a) Whether in the terms and conditions of the following contracts that the applicant entered into with the contractee therein, the ‘supply of service’ involved therein would amounts to a supply to Government, Government Agency or Government Entity in terms of the Notification No.20 dated:22.08.2017, Notification No. 32, dated: 13.10.2017?
(b) What would be the norms to decide a contractee is Government/ Government Agency/Entity?
Description of the contracts being done to Telangana Power Distribution Corporations (DISCOMS),-
(i) HVDS- High Voltage Distribution Systems in Suryapet
(ii) Capacitor Bank Works in Nalgonda etc.
2. When the Contractee gets funds/grants from Central or State Government for given work, can it be called as work being done to a Government/ Government Agency/Entity? In this situation can the work be called as non-commercial?
3. Whether all these contractees shall basically be Government/Agencies/ Entity or is there any possibility in a particular work it can be said that a contractee is of this kind?
4. In respect of HVDS to Agriculture Section, the State Government reimburses the money for agriculture service (i.e.. reimbursement to TSSPDCL (Electricity Consumption)-In this situation, whether the supply by the applicant would amount to a supply to Govt/Govt. Agency/Entity?
5. Whether TSSPDCL falls under the definition of Government Authority/ Government Entity as defined in Notification No. 31/13-10-2017 Central Tax (Rate) and other connected Notifications?
6. What is the applicable rate of tax on the works executed to TSSPDCL mentioned in above?
On Verification of basic information of the applicant, it is observed that the applicant falls under State Jurisdiction, i.e. Deputy Commissioner (State Tax)- STU-1, Hyderabad Rural Division. Accordingly, the application has been forwarded to the jurisdictional officer to offer their remarks as per the Section 98(1) of TSGST Act,2017.The opinion of the jurisdictional authority is as under:
