The Kerala Authority of Advance Ruling (AAR) ruled that 12% GST is applicable to works contracts awarded by Government authorities.
The Applicant, M/s. Ray Constructions Ltd. is carrying on business in the housing and construction sector. They are engaged in providing services of construction including materials and labor as per the tender requirements. They have received a work order from Vikram Sarabhai Space Centre for the construction of a building for the space transportation system. It is a composite contract which includes the supply of materials as well as service.
They have also received another work order from M/s. Infrastructure Kerala Ltd, a Public-Private Partnership Company promoted by the Government of Kerala, for the development of Medical College, Thiruvananthapuram which includes the construction of road, bridges, and other infrastructure.
The applicant has requested for advance ruling on the rate of tax applicable for the works contracts awarded by the Government authorities.
The Authority consisting of Joint Commissioner of Central Tax, Shivprasad S. IRS and Additional Commissioner of State Tax, B.S. Thyagarajababu ruled that the services provided by the applicant under both the contracts being a composite supply of works contract as defined in clause (119) of Section 2 of the CGST Act, 2017 provided to the Central Government and State Government by way of construction, erection, commissioning or installation of a civil structure or any other original works meant predominantly for use other than for commerce, industry or any other business or profession is covered under entry at SI No. 3 (vi) (a) of Notification No. 11/2017 Central Tax (Rate) dated June 28, 2017, as amended and attract GST at the rate of 12% (6% CGST and 6% SGST).
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