The Authority of Advance Ruling (AAR) has ruled that GST at the applicable 18 % rate is payable by the applicant on construction work contract services to Uttar Pradesh Jal Nigam.
Shri Kunal Agarwal, Advocate appeared before the authority to put forward the contentions.
M/s Concrete Udyog Limited,the applicant engaged in the execution of projects involving the laying of cement concrete pipes. The Applicant has been sanctioned a tender by Uttar Pradesh Jal Nigam ( UPJN’) for the execution of works involving the construction & design of a pumping plant containing prestressed concrete cylinder pipelines (PCCP).They also undertake all ancillary works such as the development of roads/paths, drain septic Tanks, sewer lines, water supply system externalelectrification, service connection to buildings, etc.
The infrastructure would ultimately pass on from UPJN to Tehri Hydro Development Corporation Limited (‘THDC’), an undertaking owned by the National Thermal Power Corporation Limited, Ministry of Power, Government of India.
The UPJN was created by the Government of Uttar Pradesh by enacting the U.P. Water Supply and Sewerage Act, 1975 (UPWSS Act). It is a body corporate having perpetual succession and a common seal and is capable of suing and being sued in its name.
It was submitted by the applicant that the UPJN is covered in the definition of ‘Local Authority’.It was observed that inequalityis a governmental authority. such authority must be set up by an act of Parliament/State Legislature, should have 90% or more stake in government, and should carry out any function entrusted to a Municipality under article 243 W of the Constitution of India.
The Authority Bench observed that “the Notification No.l 1/2017- Central Tax (Rate) dated.Iune 28. 2017 was amended vide Notification No. l 5/2021 -Central Tax (Rate) dated November 18, 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.”
It was thus ruled by Shri Rajendra Kumar, Member (Central Tax) and Shri Vivek Arya, Member (State Tax) that “as the UPJN does not qualify as a ‘local authority’ and it qualifies as a governmental authority, the tax rate of 18% is applicable on the works contract services provided to UPWS by way of Entry 3(xii) of Notification No. 11/2017- Central Tax (Rate) dated June 28, 2017.”
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to TaxscanAdFree. Follow us on Telegram for quick updates.
