Case Law Details
In re Centre For Symbiosis of Technology (GST AAR Karnataka)
The applicant provided consultancy services to KUIDFC for the program called NKUSIP, involving supervision and programme management consultancy for the PMC works undertaken in divisions of Bellary and Gulbarga. Accordingly, the applicant entered into an agreement dated 26.07.2017 and completed the project during 2019. The instant application was filed on 08.11.2022, after completion of the said project in 2019, as the applicant intends to seek clarity as to whether services rendered to KUIDFC are exempted from GST or not. In the instant case the maintainability of the application needs to be examined.
In this regard we observe that Section 95(a) of the CGST Act 2017, while defining the term ‘advance ruling’, stipulates that an applicant can seek advance ruling on the questions specified under Section 97(2) of the CGST Act 2017, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the said applicant.
It is pertinent to mention here that the word “being” is the present participle of the verb “be” and used to form tenses in the progressive (or continuous) aspect. A present participle is a verb form (or verbal) made by adding -ing to the base that often functions as an adjective. Use of present participle denotes present and continuing action. Thus the phrase ‘being undertaken’ refers to an ongoing and continuous supply.
The GST Flyer also says that the definition of Advance Ruling under the CGST Act 2017 is a broad one, which can be given on a proposed transaction as well as a transaction already being undertaken by the applicant, which is an ongoing transaction.
In the instant case the questions, on which the applicant seeks advance ruling, are not in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the said applicant, but in relation to a completed supply, provided by them. Therefore the instant application is beyond the jurisdiction of this authority and hence is liable for rejection.
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, KARNATAKA
M/s. Centre for Symbiosis of Technology (herein after referred to as `Applicant), # 11 86 12, BDA Commercial Complex, I Floor, 3rd Block, Koramangala, Bengaluru – 560 075, having GSTIN 29AAATC2026J1ZW, have filed an application for Advance Ruling under Section 97 of CGST Act, 2017 read with Rule 104 of CGST Rules, 2017 and Section 97 of KGST Act, 2017 read with Rule 104 of KGST Rules, 2017, in form GST ARA-01 discharging the fee of Rs.5,000/- each under the CGST Act, KGST Act.
2. The applicant stated that they are a premier society registered under Societies Act, providing services of infrastructure, urban development, monitoring and evaluation studies as consultants; they are registered under CGST / KGST Act 2017; they have provided service to Karnataka Urban Infrastructure Development Finance Corporation Ltd., (KUIDFC).
3. Applicant also stated that KUIDFC is incorporated under Companies Act, having 75.20% of shareholding by the State Government of Karnataka and 24.80% of shareholding by the Chairman, Bangalore Development Authority, a Government Entity in terms of definition given in Notification No.32/2017-Central Tax (Rate) dated 13.10.2017; KUIDFC is a State Level Nodal Agency for implementation of Government of India schemes like JNNURM, UIDSSMT etc., which has secured the status of State Level Financial Institution (SLFI) from Government of India. KUIFDC, as a financial intermediary, gets funds from Government of Karnataka, Government of India, World Bank, ADB and other financial markets and provides financial and technical assistance to all Urban Local Bodies (ULBs) in Karnataka including City Corporation, BBMP, BDA, BWSSB and other such agencies in the form of loans and grants for urban infrastructure projects taken up by the ULBs. KUIFDC is under management and control of the State Government of Karnataka by virtue of composition of Board of Directors. The administrative expenses incurred by KUIDFC towards staff and project monitoring etc. is adjusted as management fee and all surplus is transferred back to the State Government.
4. The applicant further stated that they have entered into an agreement dated 26.07.2017, as Supervision and Project Management Consultants with KUIFDC for their program me namely NKUSIP for the divisions i.e. Bellary and Gulbarga and completed the project during 2019. It had been informed by the KUIFDC that the services provided by the applicant fall under article 243W and hence does not attract GST. Thus the applicant has not claimed GST from KUIFDC and filed the GST returns for this project under exempted category.
5. In view of the above, the applicant has sought advance ruling in respect of the following questions:
a) Whether KUIFDC, which is an intermediary agency between ULBs/Town Municipal Councils functioning as Program me Management Unit (PMU) through the divisional offices, implementing agencies of the Local Government Bodies and State Line Departments in the efficient monitoring of sub-programmers, is eligible for claiming exemption from GST under the conditions of exemption as per Notification No.12/2017 as pure services, for the period of our services provided to them i.e. July 2017 to June 2019.
b) The services provided by STEM (the applicant), our office, as Supervision and Program me Management Consultants for NKUSIP programme of KUIFDC from July 2017 to June 2019 by the virtue of PMC works undertaken by our office (viz: Supervision and monitoring of Water supply to households, underground drainage network, water treatment plants, sewage treatment plants with respect to quality control procedures and quality control of the works done by the contractor, assisting in resolving specific technical and other implementation related issues at the field level, investigate particular construction problems or delays that have been reported from the site and recommended actions to be taken to resolve the problems or overcome the delays. Also, analyse and allocate/ apportion delays attributable to implementing agency, contractor etc and suggest remedial as well as penal action, assist in interpreting and applying the various legal provisions of the contract documents, and in amicably resolving disputes, detailed contract management and web based progress monitoring, resource mobilization for each contract monitoring and reporting physical and financial monitoring and reporting the same to KUIFDC) comes under pure services as specified under GST Act and if the same is exempted from applicability of GST for supplying our services to KUIFDC.
6. BRIEF FACTS OF THE CASE: The applicant furnished the following facts relevant to the issue:
6.1 The applicant entered into contract agreement for providing consultancy services as Supervision and Program Management Consultants with KUIFDC on 26.07.2017; they had submitted monthly invoices to KUIFDC, initially along with GST; they were informed that the services provided for NKUSIP project does not attract GST as the pure services provided by them were exempted from GST vide Notification No.12/2017-Central Tax (Rate) dated 28.06.2017. KUIFDC informed that Government entities providing services pertaining to water supply and sanitation etc., which are basic amenities provided to the ULBs and hence they submitted revised invoices without claiming GST and also filed GST returns with transactions from KUIFDC project shown under exemption. Thus the applicant filed instant application seeking advance ruling as to whether KUIFDC being an intermediary between ULBs and State Government of Karnataka is exempted from GST as per the Notification 12/2017 supra or not.
7. Applicant’s Interpretation of Law: The applicant furnished the following interpretation of law with regard to the questions raised.
7.1 KUIFDC is incorporated under Companies Act 1956, having shareholding
of 75.20% by State Government of Karnataka and 24.80% by Chairman, Bangalore Development Authority; it is a Government Entity in terms of the definition of Government Entity given in Notification No.32/2017-Central Tax (Rate) dated -13.10.2017. KUIFDC is a State Level Nodal Agency for implementation of Government of India schemes like JNNURM, UIDSSMT etc., and KUIFDC has secured the status of State Level Financial Institution (SLFI) from Government of India. KUIFDC, as a financial intermediary, procures funds from Government of Karnataka, Government of India, World Bank, ADB and other financial markets and provides financial and technical assistance to all Urban Local Bodies (ULBs) in Karnataka including City Corporation, BBMP, BDA, BWSSB and other such agencies in the form of loans and grants for urban infrastructure projects taken up by the ULBs. KUIFDC is under management and control of the State Government of Karnataka by virtue of composition of Board of Directors. The administrative expenses incurred by KUIDFC towards staff and project monitoring etc. is adjusted as management fee and all surplus is transferred back to the State Government.
7.2 Based on the above facts, the applicant claims that the constitution of KUIFDC is that of “Government Entity”, as defined in Notification No.32/2017 supra as amended to mean
“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 percent or more participation by way of equity or control, to carry out a function entrusted by the Central Government, State Government, Union Territory.
7.3 However, they have been infringed through their council members that KUIFDC may not be exempted as they are not directly Government Body by itself and constituted under Companies Act 1956 and by virtue it is only an agency formed for financing the implementation works acting as an intermediary or nodal agency on behalf of State Government and ULBs.
PERSONAL HEARING PROCEEDINGS HELD ON 10.11.2022
8. Sri Joseph, Senior Manager and Sri. Nagaraju, Accounts Executive & Authorized Representative of the applicant appeared for personal hearing proceedings and reiterated the facts narrated in their application.
FINDINGS & DISCUSSION
9. At the outset we would like to make it clear that the provisions of CGST Act, 2017 and the KGST Act, 2017 are in pari-materia and have the same provisions in like matters and differ from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions a reference to the CGST Act would also mean reference to the corresponding similar provisions in the KGST Act.
10. We have considered the submissions made by the applicant in their application for advance ruling. We also considered the issues involved on which advance ruling is sought by the applicant and relevant facts along with the arguments made by the applicant & the submissions made by their learned representative during the time of hearing.
11. The applicant sought advance ruling in respect of the question mentioned at para 5 supra. We proceed to examine, before going into the merits of the case, the maintainability of the instant application.
12. The applicant provided consultancy services to KUIDFC for the program called NKUSIP, involving supervision and programme management consultancy for the PMC works undertaken in divisions of Bellary and Gulbarga. Accordingly, the applicant entered into an agreement dated 26.07.2017 and completed the project during 2019. The instant application was filed on 08.11.2022, after completion of the said project in 2019, as the applicant intends to seek clarity as to whether services rendered to KUIDFC are exempted from GST or not. In the instant case the maintainability of the application needs to be examined.
13. In this regard we observe that Section 95(a) of the CGST Act 2017, while defining the term ‘advance ruling’, stipulates that an applicant can seek advance ruling on the questions specified under Section 97(2) of the CGST Act 2017, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the said applicant.
14. It is pertinent to mention here that the word “being” is the present participle of the verb “be” and used to form tenses in the progressive (or continuous) aspect. A present participle is a verb form (or verbal) made by adding -ing to the base that often functions as an adjective. Use of present participle denotes present and continuing action. Thus the phrase ‘being undertaken’ refers to an ongoing and continuous supply.
15. The GST Flyer also says that the definition of Advance Ruling under the CGST Act 2017 is a broad one, which can be given on a proposed transaction as well as a transaction already being undertaken by the applicant, which is an ongoing transaction.
16. In the instant case the questions, on which the applicant seeks advance ruling, are not in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the said applicant, but in relation to a completed supply, provided by them. Therefore the instant application is beyond the jurisdiction of this authority and hence is liable for rejection.
17. In view of the above, we pass the following
RULING
The application filed by the Applicant for advance ruling is rejected, in terms of Section 98(2) of the CGST Act 2017.
