In a Recent Ruling, the Telangana State Authority For Advance Ruling (AAR) held that the works contract services under General Construction service for long-distance underground/overland/ submarine pipe lines, communication and electric power lines (cables); pumping stations and related works service would be taxable @18%.
The applicant M/s. Transmission Corporation of Telangana Limited (TS TRANSCO) is State Transmission Utility (STU) notified by Government of Telangana under Section 39 of Electricity Act, 2009. The applicant sought Advance Ruling on Classification of supplies, eligibility to obtain services at reduced rate, and eligibility to avail input tax credit benefit.
The applicant submitted that they have made construction of electricity transmission infrastructure to the pumping stations under lift irrigation schemes and are eligible for exemption from GST . They have also engaged a private turnkey contractor on back to back arrangement for the purpose of executing contracts to I & CAD and are eligible for concessional rate of 12% on such supplies.
The applicant also submitted that the supplied works contract services to South Central Railways under General Construction service for long-distance underground/overland/submarine pipe lines, communication and electric power lines (cables), pumping stations and related works; transformer stations and related works.
This service is taxable at the rate of 9% under both Central Goods and Service Tax and State Goods and Service Tax Acts 2017. The applicant also engaged a private turnkey contractor on a back to back arrangement to execute the electric contract.
The authority bench noted that the applicant will supply works contract services to South Central Railways under General Construction service for long-distance underground/overland/ submarine pipe lines, communication and electric power lines (cables); pumping stations and related works, which would be taxable @18%.
It was also noted that if the applicant will supply work contract service in nature of General Construction service for long-distance pipe lines, communication and electric power lines, pumping stations and transformer stations and related works, which would be taxable @ 9% under CGST/SGST Acts.
It was thus ruled by the panel of Sri B. Raghu Kiran and Sri S. Kasi Visweswara Rao that the supplying works contract services under General Construction service by the applicant would be taxable @18% under Central Goods and Service Tax Act, 2017.
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