The Karnataka Authority for Advance Rulings (AAR) has held that the institutions set up to carry out functions entrusted by municipality are governmental authority and attracts GST of @18%.
The applicant, the Indian Hume Pipe Company Limited stated that they undertake a contract for construction of Head Works, Sumps, Pump Rooms, laying, jointing of pipeline and commissioning and maintenance of the entire work for Water Supply Projects / Sewerage Projects / Facilities. Their major customers include Government Bodies / Entities / Authorities / Local Bodies/ Municipalities.
The Applicant was awarded a contract by M/S. Bangalore Water Supply and Sewerage Board (BWSS) to execute the work of Rehabilitation/ Remodeling/ Replacement of sewer line.
It was observed that the BWSSB was a Board set up by The Bangalore Water Supply and Sewerage and the same cannot be considered a State Government. But as per section 3 of BWSSB Act 1964, all the members of BWSSB are appointed by the State Government. Since the BWSSB was set up by the Act of State Legislature to carry out a function entrusted to a Municipality under article 243W of the Constitution, the same may be considered a Governmental Authority.
Dr M.P. Ravi Prasad, Additional Commissioner of Commercial Taxes Member (State) and Sri. T. Kiran Reddy, Additional Commissioner of Customs & Indirect Taxes Member (Central) observed that since BWSSB is considered a Governmental Authority, the services supplied by the Applicant to the BWSSB are covered under entry 3 (xii) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, vide further notifications, and is eligible to GST at 18%. The applicant was represented by Sri Manish Goel.
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