The Bengaluru Authority for Advance Ruling (AAR) has recently held that supply of frozen foods should attracts 18 percent Goods and Service Tax.
The applicant Suez India Private Limited is a company incorporated under the Companies Act 1956 and it is leader in water resource management. The applicant enter in to a agreement with that Bengaluru Water Supply and Sewerage Board (BWSSB) which was autonomous body formed by the state legislature.The agreement for design ,construction, operation , and maintenance of various water treatment and sewage treatments plants in Bengaluru
The applicant has sought an advance ruling on the issue related to Goods and service tax rate of supply of work contracts services in relation to sewage treatment made by the applicant to BWSSB on or after 1 January 2022.
Before the authority Priyanka Rathi counsel for the applicant submitted that service provided by BWSSB is taxable at 18% since BWSSB is a governmental authority for the purpose of Central Goods and Service Tax Act 2017.
Further the applicant submits that as per section 3 of the Bengaluru Water Supply and Sewerage Board Act, 1984 BWSSB is a Governmental Authority .
As per definition of the governmental authority the authority should be established by the government for carrying out the functions entrusted to the municipality under article 243W of the panchayat under article 243 G of constitution. Thus applicant submit that they are providing service to BWSSB which is governmental authority so they are liable to discharge tax at the rate of 18% on the works contracts supplied to BWSSB.
While in discussion the authority observed that” as per the notification N0.11/2017 Central Tax (Rate)as amended Notification No.30/2017,Defined Governmental Authority, so applicant is a government authority as per the above notification .
Since the applicant is a governmental authority, as per 3(iii) of the notification 20/2017 Central Tax (rate) the supply of work provided by the applicant is eligible to GST 12%.
But the 3(iii) of the notification 20/2017 Central Tax (rate) was omitted and now the work contract service supplied by the applicant to BWSSB was discussed 3(xii) of the notification 20/2017 Central Tax (rate) but now the rate of GST was 18%.
After considering the submissions, member of authorities consisting authority M P Raviprasad (Additional Commissioner Of Commercial Taxes) and Kiran Reddy T (Additional Commissioner Of Custom And Indirect Taxes) ruled that “work contract service supplied by the applicant in relation to sewage treatment to Bengaluru Water Supply and Sewerage Board on or after 1 January 2022 is exigible to GST at 18%.”
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