2026-VIL-164-AAR
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SGST Advance Ruling Authority

GST - Kerala AAR - Taxability of Centage charges received by a Special Purpose Vehicle from Kerala Infrastructure Investment Fund Board for implementation of Government infrastructure projects - Applicant, a funding agency established by the State Government, was appointed as SPV for implementation of projects funded by Kerala Infrastructure Investment Fund Board, executing a Tripartite Agreement between the funding agency, the Applicant and the Administrative Department, the owner of the project - Applicant received Centage charges as percentage-based fees - Whether there is any GST liability on Centage charges received by the Applicant, and if so, the rate applicable - HELD - The activities undertaken by the Applicant are administrative and professional in nature, constituting project management services for construction projects classifiable under the relevant SAC, and fall within the ambit of supply of services - Exemption under Sl. No. 3 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, requires the service to be a pure service to Government and to relate to a function entrusted to a Panchayat or Municipality under Articles 243G or 243W read with the Eleventh and Twelfth Schedules - While the services rendered are pure services, the projects executed, comprising state and coastal highways, tourism corridor roads and similar categories, do not fall within the scope of roads and bridges envisaged for Panchayats and Municipalities under the said Schedules - Exemption under Sl. No. 3 of the Notification held not available - Services rendered by the Applicant in the form of project management and implementation services against Centage charges held classifiable under Heading 9983 and liable to GST at the rate of 18% - Ordered accordingly - Recipient of supply for invoicing - Determination of recipient of supply for the purpose of raising tax invoice on Centage charges - Whether the Special Purpose Vehicle is required to raise invoice in favour of the Administrative Department, the owner of the project, for the services rendered to the Government - HELD – In terms of Section 2(93) the term ‘recipient’ means the person liable to pay the consideration, and the statute contemplates that consideration may be discharged by a person other than the recipient, such that the source of payment is not determinative and the real contractual relationship between the parties governs identification of the recipient - The Tripartite Agreement establishes that the concerned Administrative Department owns the projects and has the power to take material decisions regarding implementation, and is the requisitioning authority receiving the supplies required for execution of the projects - The funding agency was introduced as a conduit for disbursing payment on account of delay in release of funds affecting time-bound implementation, its role being limited to review, monitoring and funding, and it cannot be considered the recipient merely because it discharges the consideration - The Administrative Department, being the owner of the projects and the actual recipient of the services, is liable to pay the consideration within the meaning of the statutory definition of recipient - Applicant held required to raise the tax invoice in favour of the Administrative Department of the Government, being the recipient of the supply of services.
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