The Kerala Authority of Advance Ruling (AAR) ruled that Kochi Metro Rail Limited (KMRL) is a “Government Authority” and it is not liable to pay Good and Service Tax (GST) on Funds received from Kerala Government for paying the cost of water metro project.
The applicant, M/s. Kochi Metro Rail Limited (KMRL) is a Special Purpose Vehicle formed for the implementation, operation and maintenance of Kochi Metro Rail Project as per orders from the Planning Commission and the Union Government. KMRL is a joint venture company with equal equity contribution from Government of India and Government of Kerala. KMRL has been entrusted by the State Govt. with a project of executing and operating an integrated water transport system in Kochi.
The project includes providing modern and safe watercraft, jetties, access roads, lighting and other ancillary Infrastructure developments. The water metro project has been initiated as part of urban planning and to improve amenities available to the public. It aims to improve the entire public transportation system in Kochi. The project is partly funded by the Government of Kerala and partly out of a loan taken by the Government of India from a German agency. M/s.Kreditanstalt fur Wiederaufbau (KFW). A tripartite project agreement has also been entered between KFW. Government of Kerala and KMRL.
The applicant has sought the advance ruling on the issues that since the Government of Kerala is the de jure owner of the assets of the water metro project and the works contracts are performed by contractors with whom agreements are entered into by KMRL on behalf of Government of Kerala, whether KMRL has any liability to pay GST on the funds received from Govt. of Kerala for paying the cost of the water metro project; Whether a GST invoice is to be raised on Govt. of Kerala for transferring the value of assets on a back to back basis completion of the works and in the above cases, is liable, how will the ITC be claimed by the applicant.
The Authority consists of the members Shivprasad S. and B.S. Thyagarajababu ruled that the applicant being the agency for executing and operating the integrated water transport project in Kochi is rendering pure services to the Government of Kerala which is falling under the service classification code 998339. Hence, the services provided by the applicant to the Government of Kerala are exempted from payment of goods and services tax by virtue of the entry at Sl No. 3 of Notification No. 12/2017 Central Tax (Rate) dated June 28, 2017.
“The applicant falls under the definition of “Governmental Authority” under Para 2 (z) of Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017,” the AAR said.
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