The Central Board of Indirect Taxes and Customs (CBIC), today issued a circular clarifying that the construction services provided to a Government Entity, in relation to construction such as of a Ropeway on turnkey basis would attract 18% GST.
As per the recommendation of the GST Council meeting on 28th May 2021, the CBIC clarified that entry No. 3 (vi) of Notification No. 11/2017- CT (R) dt. 28.06.2017does not apply to any works contract that is meant for the purposes of commerce, industry, business of profession, even if such serviceis provided to the Central Government, State Government, Union Territory, a local authority a Governmental Authority or a Government Entity.
“The doubt seems to have arisen in the instant cases as Explanation to the said entry states, the term ‘business’ shall not include any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities. However, this explanation does not apply to Governmental Authority or Government Entity, as defined in clause (ix) and (x) of the explanation to said notification,” the circular said.
“Further, civil constructions, such as rope way for tourism development shall not be covered by said entry 3(vi) not being a structure that is meant predominantly for purposes other than business. While road, bridge, terminal, or railways are covered by entry No. 3(iv) and 3(v) of said notification, structures like ropeway are not covered by these entries too. Therefore, works contract service provided by way of construction such as of rope way shall fall under entry at sl. No. 3(xii) of notification 11/2017-(CTR) and attract GST at the rate of 18%,” it added.Subscribe Taxscan AdFree to view the Judgment