The West Bengal Authority of Advance Ruling (AAR) ruled that 5% GST is applicable on composite supply of works contract to the Wular Conservation and Management Authority as it is a Governmental Authority.
The Wular Conservation and Management Authority has awarded the applicant, RDL-ZYCHL-JV a contract for the dredging of Wular Lake from RD 0 –RD 2090 metres along the Jhelam Bank with its feeder channels near village Saderkote Payen and Banyari for conservation and management of the lake.
The applicant sought the advance ruling on whether Sl No. 3 (vii) of Notification No. 08/2017– Integrated Tax (Rate) dated June 28, 2017, as amended from time to time, applies to the above supply.
The applicant provided a price schedule that describes the work and its value and argues that he is supplying works contract service involving earthwork in excavation and re-excavation of the drainage channels, and it consists more than 75% of the value of the contract.
The applicant submits that the recipient was the State Government. But, after the amendment of Article 370 of the Constitution of India, the Government of India has bifurcated the erstwhile State of Jammu and Kashmir into two union territories, being the Union Territory of Jammu and Kashmir and Union Territory of Ladakh. The recipient now is the Union territory of Jammu and Kashmir.
Based on the above submissions, the applicant argued that the supply is taxable at the rate of 5% in terms of Sl No. 3 (vii) of the IGST Notification.
The coram of Susmita Bhattacharya and Parthsarthi Dey clarified that Entry No. 3 (vii) of the Notification provides that a supply is taxable at the rate of 5% if the contract is a composite supply of works contract as defined under section 2(119) of the GST Act, involving earthwork exceeding 75% of the contract value and the recipient is the Central Government, State Government, Union Territory, a government authority or a government entity.
Therefore, the AAR ruled that the applicant’s supply to the Wular Conservation and Management Authority is taxable under Sl No. 3(vii) of Notification No 08/2017 – Integrated Tax (Rate) dated 28/06/2017, as amended from time to time.
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