18% GST on Works Contract of Construction of Pavement, Track Work, Warehouse, Admin Building pertaining to railways: AAR [Read Order]

GST - Works Contract - Construction of Pavement - Track Work - Warehouse - Admin Building - AAR - Taxscan

The Gujarat Authority of Advance Ruling (AAR) ruled that 18% GST on Works Contract of Construction of Pavement, Track Work, Warehouse, Admin Building pertaining to railways.

The applicant, M/s. SKG-JK-NMC Associates (JV) is engaged in the execution of Works Contract of ‘Construction of Pavement, Track Work, Warehouse, Admin Building, E&M works and other miscellaneous works at Khodiyar, Gandhinagar, Gujarat awarded by M/s RITES Ltd..

The applicant has been awarded the work of ‘Construction of Pavement, Track Work, Warehouse, Admin Building, E&M works and other miscellaneous works at Khodiyar, Gandhinagar, Gujarat awarded by M/s RITES Ltd., which is a Public Sector Undertaking owned by Indian Railways for Rs.49.27 Crores (exclusive of GST).

The applicant has sought the advance ruling on the issue whether the said work can be covered under clause 3(v)(a) of the Notification No.11/2017-Central Tax (Rates) dated June 28, 2017 i.e. Works Contract by way of construction, erection, commissioning or installation of original works pertaining to railways so as the entitle it for charging rate of 12% GST instead of 18%.

As per clause 3(v)(a) of the Notification No.11/2017-Central Tax (Rates) dated 28.06.2017, composite supply of Works Contract as defined in clause (119) of Section 2 of CGST Act, 2017 by ways of construction, erection, commissioning or installation by way of construction, erection, commissioning or installation of original works pertaining to Railways, including monorail and metro shall attract reduced rate of 12% GST instead of normal  18% GST applicable to Works Contracts.

The coram consisting of Sanjay Saxena and Mohit Agarwal ruled that the said contract work is not covered under clause 3(v)(a) of the Notification No.11/2017-Central Tax (Rates) dated June 28, 2017, as amended by Notification No. 20/2017-Central Tax (Rate) dated August 22, 2017.

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