The Telangana Authority for Advance Ruling (AAR), ruled that the EPC (Engineering, Procurement, and Construction) contract for power distribution and transmission company falls under services to “Government Entity” and attracts 18% GST.
The applicant, M/s. Vishwanath Projects Limited, is providing services viz., supply, erection, testing and commissioning of 33/11kV Substations with associated lines to M/s Odisha Power Transmission Corporation Limited(“OPTCL). The applicant desires to get ruling as to whether OPTCL is a Government Entity and if so the rate of tax in respect of aforementioned services provided by them to OPTCL.
As per the applicant’s interpretation, the power distribution and transmission companies are treated as Government Entity and the applicable GST rate is 12%.
It is evident from the website of OPTCL it is understood that with the enactment of the Electricity Act, 2003, the Government of Orissa through notification of a Transfer Scheme transferred the transmission business of GRIDCO and vested the same with OPTCL with effect from 01-04-2005. OPTCL, is a wholly owned Government Company. Under the Transfer Scheme, OPTCL has been notified as the State Transmission Utility (STU) and is also mandated to discharge the State Load Dispatch functions.
Section 2 of CGST Act, 2017 and TGST Act, 2017 defines “works contract” as a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other) is involved in the execution of such contract.
The Two-member Bench of the Authority comprising J. Laxminarayana, Additional Commissioner, Sales Tax and B. Raghu Kiran, Joint Commissioner, Central Tax observed that “Services Rendered to M/s OPTCL falls under services provided to a government entity and the applicable rate of tax is 18% (9% CGST + 9% SGST) for the services referred to by the applicant.”
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