The Gujarat Authority of Advance Ruling (AAR) held that 18% GST payable on services of works contract for irrigation, construction work supplied by sub-sub contractor to sub-contractor.
The applicant,M/s. Kababhai Popatbhai Savalia is engaged in providing works contract service directly to sub-contractors who execute the contract with the main contractor for original contract work with the irrigation department (State of Gujarat).
The applicant has sought the clarification for the rate of tax to be levied from the sub-contractor for original contract work pertaining to irrigation and construction work (works contract). The applicant submits that they should be charged 12% GST only and not 18% as applicable in other cases.
The coram of Arun Saxena and Arun Richard noted that the Government Irrigation Division awarded a work contract to Main Contractor M/s JSIW for EPC of a pumping station. Subsequently, the Main contractor awarded the said work to sub contractor M/s Radhe Construction. Subsequently, the sub contractor awarded the said work to the applicant, who is now a sub-sub contractor.
The AAR clarified that to be eligible for being covered at Sr no 3 (iii) of said NT 11/2017 CT(R), the two conditions shall be satisfied namely Composite Supply of Works Contract to be supplied by Main Contractor to Government and Supply by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of canal, dam or other irrigation works.
“GST rate on subject supply is 18% for services supplied by the sub sub-contractor to sub-contractor M/s Radhe and supply merits entry at Heading 9954, Entry No 3(ii) of Notification No.11/2017-CT(R) dated 28-6-17,” the AAR ruled.
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