AAR-Karnataka- Works contract service provided by applicant to National Centre for Biological Sciences (NCBS) for construction of hostel building on campus is taxable at 18 per cent GST under residual item no. (xii) of Serial No. 3 of Notification No. 11/2017- Central Tax (Rate) dated 28-6-2017.

May 26, 2020


The applicant (M/s. Hombale Construction & Estates Private Limited) has entered into a works contract agreement with the National Centre for Biological Sciences (NCBS) for construction of hostel building at NCBS.

Issue before the AAR

Whether applicant should charge GST @12 % for service provided to NCBS as per Noficaon No 24/2017 Central Tax (Rate) dated 21-09-2017?

Discussion and Finding of AAR

  • The applicant submitted that the contractee; i.e. NCBS is of the opinion that since it is a fully-funded aided institute administratively controlled by the Department of Atomic Energy, Govt. of India and the activities of NCBS are related to the educational research, 12% rate is applicable as per the serial No. 3 of the item no. (vi) of the Noficaon No. 11/2017 dated 28.06.2017 and amended by Noficaon 24/2017 dated 21.09.2017.
  • Notification 24/2017 dated 21.09.2017 as:
    “(vi) Services provided to the CG/SG/UT, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, find out, repair, maintenance, renovation, or alteration of – (a) a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession; (b) a structure meant predominantly for use as (i) an educational, (ii) a clinical, or(iii) an art or cultural establishment; or (c) a residential complex predominantly meant for self-use or the use of their employees or other persons specified in paragraph 3 of Schedule III of the CGST Act, 2017.
  • It is clear from the outset that NCBS is not a CG/SG/UT or a local authority or a governmental authority. The only question is whether NCBS is a Government Entity or not. Clause (x) of paragraph 4 of Noficaon No. 11/2017 dated 28.06.2017 as amended by Noficaon No. 31/2017 dated 13.10.2017 defines Government Entity as:
    “Government Entity” means an authority or a board or any other body including a society, trust, corporation,
    • set up by an Act of Parliament or State Legislature; or
    • Established by any Government,
      With 90% or more partition by way of equity or control, to carry out a function entrusted by the CG/SG/UT or a local authority.
  • Further, it was observed that the NCBS began as a separate centre of TIFR in 1992. The Government of India has agreed to fund the institute and the institute was to function as an “autonomous unit under the aegis of TIFR”. Hence it is clear that NCBS is neither set up by an Act of Parliament or State Legislature; nor established by any government. Hence NCBS is not a Government Entity.
  • In view of the above, the service supplied by the applicant is not covered under clause (vi) of Serial No 3 of the Noficaon No. 11/2017 dated 28.06.2017 and hence not applicable for 12% rate and the service is taxable at 18% under the residual item no. (xii) of serial no. of Noficaon 11/2017.

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