The Chhattisgarh Authority for Advance Rulings ( AAR ) has recently ruled that the construction undertaken by the applicant- , other than construction of railway lines is not a composite supply to the works contract, thereby attracting 18% Goods and Services Tax ( GST ) [9% Central GST + 9% State GST).
The company applied for a Tender for construction of CBD Railway Station in Chhattisgarh. The company was awarded the tender as per the prescribed rules by Nava Raipur Atal Nagar Vikas Pradhikaran (NRANVP).
The tender and agreement included the following infrastructure:
Railway Platform
Railway station offices
Parking area
Internal drop off lanes and roads
Pavements. footpath
Buildings within the boundary
Foot over bridge
Boundary.
The applicant contended that the nature of services as per the above facts for construction of railways to be done by the Company falls under Sr no 3 (v) of Notification 11/2017 Central Tax (Rate) dated 28 June 2017 as amended by Notification 20/2017 dated 22 August 2017 which provided the GST rate @ 12% for such services.
It was further submitted by the applicant that the following requisites for the applicability of the notification were met:
Works Contract service
Composite Supply
Original Works
Pertains to Railways.
However, as observed by the authority bench of Sonal K Mishra and Rajiv Kumar Agrawal, in addition to the non-adherence of the other aspects/conditions for availing the benefit of notification claimed by the applicant as discussed by the applicant, came to the conclusion that the said construction project being undertaken by the applicant cannot be termed as “pertaining to railways”, much essential for entitlement of the reduced rate of tax as provided under s.no. 3(v)(a) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended.
In short, the ruling stated that the construction services undertaken by the applicant attract 18% Goods and Services Tax (GST) with 9% CGST and 9% SGST.
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