2026-VIL-163-GSTAT-TVP
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SGST Tribunal

GST - Eligibility of works contract services supplied to a statutory water authority for concessional rate of tax meant for local authority - Appellant provided works contract services to the Kerala Water Authority and paid tax at the concessional rate - Short payment of tax on invoices for which the rate of tax had changed with effect from 01.01.2022 through an amendment to Notification No. 11/2017-CT(Rate) as amended w.e.f. 1.1.2022 - Whether the Kerala Water Authority is a local authority under Section 2(69) of the CGST Act, 2017 and whether the Appellant is eligible for the concessional rate or liable at the higher rate on the invoices in question - HELD - The definition of local authority in Section 2(69) is specific and means only those bodies mentioned in the clauses of that definition. It does not include other bodies merely described as local bodies by virtue of a local law. Developmental authorities formed under town planning laws do not qualify as local authorities for GST. A statutory body, corporation or authority created by Parliament or a State Legislature is neither Government nor local authority, as it is a juridical entity separate from the State - The Kerala Water Authority was established under the State water supply and sewerage law as a body corporate, and the Kerala Water Supply and Sewerage Act, 1986 deems it a local authority for all purposes. That deeming provision does not make Kerala Water Authority a local authority under the CGST Act. The authority does not fall under any of the sub-clauses (a) to (g) of Section 2(69). The registration of the authority by the Department in the category of local authority does not alter this position. The CBIC Circular No. 245/02/2025-GST clarifies that statutory authorities such as development authorities are not local authorities under Section 2(69) - The works contract services supplied to the authority are not eligible for the concessional rate and are liable to tax at the 18% with effect from 01.01.2022 – Ordered accordingly - Liability to pay interest under Section 50(1) on differential tax paid partly through Electronic Credit Ledger - Appellant had paid the differential tax through the electronic credit ledger as to a part and through the electronic cash ledger as to the balance. The demand included interest on the entire differential tax - Whether interest is payable on the differential tax paid through the electronic credit ledger - HELD - Where differential tax is payable, interest for delayed payment follows automatically under Section 50(1), from the time of supply till the date of payment. The proviso to Section 50(1) restricts interest to that portion of tax which is paid by debiting the electronic cash ledger. Interest is therefore not payable to the extent of tax paid through the electronic credit ledger. Interest is payable only to the extent of tax paid through the electronic cash ledger - The interest is payable only on that portion of tax paid through the electronic cash ledger. The demand of interest accrued on the tax amount paid through the electronic credit ledger is set aside.
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