12% GST to be charged by Sub-Contractor to main Contractor on Work Contract Services on Construction of Roads: AAR [Read Order]

GST - sub contractor - main contractor - work - contract - services - construction - roads - Taxscan

The Maharashtra Authority of Advance Ruling (AAR) ruled that 12% GST be charged by the sub-contractor to the main contractor on Work Contract Services on Construction of Roads.

The Applicant is providing work contract service (WCS) as a subcontractor to the main contractor for the construction of Roads to be used by the general public. As per Notification, No 20/2017 C.T.(Rate) did 22/08/2017 the rate of GST is 12% for Construction, erection, commissioning, installation, completion repair, maintenance renovation alteration of Roads to be used by the general public. Also as per Sr No. 12 in the press release of the 25th meeting of GST council held at New Delhi on 18/01/2018, proposed that the rate of GST applicable to the main contractor should be levied by sub-contractor, although Notification No. 01/2018 C.T. (R) dated 25/01/2018 does not specify the service provided by a subcontractor to the main contractor for the construction of Roads.

The Applicant is a sub-contractor providing service to the main contractor for original contract work of constructing the Roads to be used by the General Public for which 12% GST is applicable and not 18%, as applicable in other cases. Works conducted by the applicant as a sub-contractor are identical to the works to be performed by the main contractor & the nature of the Transactions also remains the same so according to the applicant, this transaction will be charged to GST @ 12%.

The applicant has sought the advance ruling on the issue in respect of the ax Rate to be charged by the sub-contractor to the main contractor on Work Contract Services on Construction of Roads.

The Coram of Rajiv Magoo and T.R.Ramnani held that in respect of Sub-Contract awarded to the applicant by M/s J. P. Enterprises (main contractor), to whom Aurangabad Municipal Corporation awarded the contract for Executing Work of construction of Concrete Roads in Aurangabad City Packages P-2, the rate to be charged is 6% SGST plus 6% CGST, total 12%.

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