The Telangana bench of the Authority for Advance Rulings (AAR) has held that 12% GST is applicable on the works contract executed for the construction of the Administrative building for TSIIC.
The applicant, M/s. Siddhartha Constructions are into the business of works contracts and have executed works for Telangana State Industrial Infrastructure Corporation Limited (TSIIC). The applicant in this contract has constructed an administrative building for the TSIIC. The applicant approached the AAR bench contending that they have executed works to a Government entity and hence qualify for a lower rate of tax at the rate of 12%.
A bench comprising SV Kasi Viswesara Rao (Addl Commissioner, SGST) and B Reghu Kiran (Addl Commissioner, CGST) observed that the Memorandum of Association of TSIIC at clause III(a)(3) clearly states that the company pursues the objectives to implement the schemes of incentives, subsidies and the like formulated by the Government of Telangana or Government of India or other authorities or institutions and to administer such schemes of incentives from time to time in the interest of establishments and development of industries. Thus TSIIC organization works to further the policies of the State Government, Central Government, and Local Government for the development of industries in the State of Telangana.
Allowing the above contentions, the bench held that “Therefore the works contract executed by the applicant for construction of Administrative building for TSIIC falls under Sr No. 3(vi) of Notification No. 11/2017-CT (Rate) as amended till date and therefore taxable at the rate of 6% under CGST & SGST each. However, for works executed from 01-01-2022, the rate shall be 9% under CGST & SGST each as the Phrase ‘Governmental Authority or Governmental entity is excluded, vide notification Number. 15/2021, dated.18.11.2021.”
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