Case Law Details
In re Karnataka Urban Infrastructure Development and Finance Corporation Limited (GST AAR Karnataka)
AAR examined whether the applicant, is the proper person to file the instant application or not, being the recipient of the impugned services to which the questions are related.
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. 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 the service/s being received 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 Karnataka Urban Infrastructure Development and Finance Corporation Limited (called as the ‘Applicant’ hereinafter), # 22, Nagarabhivriddhi Bhavan, 17th ‘F’ Cross, Old Madras Road, Indiranagar 2nd Stage, Bengaluru – 560 038, Karnataka, having GSTIN number 29AAACK6953F1ZC, have filed an application for Advance Ruling under Section 97 of CGST Act, 2017 8v KGST Act, 2017 read with Rule 104 of CGST Rules, 2017 KGST Rules 2017, in FORM GST ARA-01 discharging the fee of Rs.5,000/- each under the CGST Act and the KGST Act.
2. The applicant stated that they are incorporated under Companies Act 1956 with 75.20% of share holding by State Government of Karnataka and 24.80% share holding by Chairman, Bangalore Development Authority; that they are a Government Entity in terms of definition given in Notification No. 32/2017-Central Tax (Rate) dated 28.06.2017; they are a State level nodal agency for implementation of Government of India schemes like JNNURM, UIDSSMT etc.,; they have secured the status of State Level Financial Institution (SLFI) from Government of India.
3. The Government of Karnataka releases funds to the applicant through budgetary support by way of aids, grants and loans to implement the approved economic development programs in the state. The applicant deploys the said funds, as per the guidelines of Government of Karnataka through Urban Local Bodies (ULB), on urban infrastructure development projects such as water supply projects, underground drainage, sewerage treatment plants, storm water drains, solid waste management, rain water harvesting, roads and roadside drains, construction of low cost sanitation, urban transportation-BMTC, KSRTC etc.
4. The applicant utilises the funds for the purpose of the projects and any unutilised amount is transferred back to the State Government. The applicant supplies the following services
a) Project monitoring services provided to urban local bodies, which are classified as pure services and are exempted (excluding works contract service or other composite supplies involving supply of any goods) that are provided to local authority by way of activity in relation to any function entrusted to a panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243 W of the Constitution.
b) Occasional taxable supply of services related to scrap sales.
Further, the applicant is a recipient of services for the following major items;
i. Legal Services
ii. Project monitoring services rendered by professionals
iii. Rent a cab services
5. The applicant provides financial intermediary services to all Urban Local Bodies (ULBs) towards implementation of Urban Infrastructure Projects, including payment of contractors and compliance of statutory functions that are rendered on behalf of ULBs but invoices for the projects are raised on the applicant.
6. M/s Larson 85 Toubro Limited (L85T) entered into a works contract for building and supply of water supply system of Belagavi City with the applicant and City Corporation, Belagavi. The GST invoices, for the projects, are raised by L85T in the name of the applicant, as per the terms of the contract. L&T has started raising invoices charging GST @ 18%, on the applicant, for the works billed after 01.01.2022.
7. In view of the above, the applicant sought advance ruling in respect of the following questions:
a) “Whether the works contract service to build, design, operate and transfer bulk supply, distribution systems of the existing water supply systems in Belagavi City, Karnataka is covered under clause iii of Sl.No.3 of Notification No.11/ 2017-Central Tax (Rate) dated 28.06.2017, as amended by Notification No.22/ 2021 dated 31.12.2021?”
b) “Whether the reimbursement of manpower service provided as a part of Operation and Maintenance in relation to works contract service to build, design, operate and transfer bulk supply, distribution systems of the existing water supply systems in Belagavi City, Karnataka is covered under clause iii of Sl.No.3 of Notification No.11/ 2017-Central Tax (Rate) dated 28.06.2017, as amended by Notification No.22/ 2021 dated 31.12.2021?”
c) “Whether pure services provided to KUIDFC in relation to works contract service to build, design, operate and transfer bulk supply, distribution systems of the existing water supply systems in Belagavi City, Karnataka continue to be exempt under Sl.No.3 of Notification No.11/ 2017-Central Tax (Rate) dated 28.06.2017, as amended by Notification No.22/ 2021 dated 31.12.2021?”
PERSONAL HEARING PROCEEDINGS HELD ON 29.09.2022
8. Sri Shrikant Varanasi, Chartered Accountant & Authorised 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 85 the submissions made by their learned representative during the time of hearing.
11. The applicant sought advance ruling in respect of the questions mentioned at para 7 supra. Before going into the merits of the case, we proceed to examine whether the applicant, is the proper person to file the instant application or not, being the recipient of the impugned services to which the questions are related.
12. 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. 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 the service/s being received by them. Therefore the instant application is beyond the jurisdiction of this authority and hence is liable for rejection.
13. 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.
