Pure Labour Services for Construction of Single Residential Unit Exempt from GST: AAR [Read Order]

The Karnataka Authority for Advance Ruling (AAR) ruled that pure labour services provided for construction of single residential dwelling units are exempt from Goods and Services Tax (GST) subject to conditions under Notification No. 12/2017-Central Tax (Rate).

The applicant, House Construct Infra, submitted that it is engaged in providing pure labour services for construction, erection, commissioning and installation activities to individual owners of single residential dwelling units. It clarified that it does not supply any goods or materials and its services are limited only to labour work for standalone houses.

The applicant’s counsel argued that the services qualify as pure labour contracts relating to original works and are covered under Entry No. 11 of Notification No. 12/2017. The counsel argued that since the services are provided only to single residential units and not as part of any residential complex, the exemption from GST should apply.

The bench comprising Kalyanam Rajesh Rama Rao and Shivakumar S Itagi observed that the exemption applies only when services are like pure labour contracts without any supply of goods and relate to original works of a single residential unit. They explained that such exemption is not available for services provided to residential complexes, apartments, or housing projects involving multiple units.

The AAR observed that the applicant provides services only to individual owners of standalone residential houses and there is no transfer of property in goods in the execution of such contracts. It further observed that the services are not linked to any residential complex and are provided independently for single dwelling units.

The AAR stated that the services satisfy all the conditions prescribed under Entry No. 11 of Notification No. 12/2017-Central Tax (Rate) and hence qualify for exemption from GST. Accordingly, the supply of pure labour services for construction of single residential dwelling units is exempt from GST, subject to fulfilment of the specified conditions.

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