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2019 (3) TMI 1567 - AAAR - GSTWorks Contract Services (WCS) pertaining to railways - original works contract - Rate of tax - sub-contractor to main contractor - whether taxable at 12% GST or 18% GST? - N/N. 11/2017 dated 28.06.2017 as amended by the N/N. 1/2018 dated 25.01.2018 - Challenge to AAR decision. Held that:- The plain reading of the item (v) of the Sr. 3 of the Notification, it is very much clear that any supply of works contract pertaining to the railways including monorail and metro is subject to concessional rate of 12% GST - In the instant case, though the respondent i.e. M/S. Shree Construction is providing works contract services to its main contractor who has entered into works contract agreement with railways, the composite supply of works contract being carried out by M/s. Shree Construction is ultimately going to the use of railways without being subjected to any change or modification, thus the said works contracts, though undertaken by the sub-contractor, is undoubtedly pertaining to the railways and no one else. Thus, the condition specified under item (v) of the Sr. 3 of the said notification is completely fulfilled and therefore the services provided by the sub- contractor would attract concessional rate of 12% GST. There is no specific mention of subcontractor providing services in Sr. (v) as provided in item (ix) and (x) which were incorporated into the Notification 11/2017-C.T. by the amending notification 1/2018 dated 25.01.2018, there was no need to include such sub-contractors in the item (v) of the Notification as there was no confusion whether the sub-contractor will be eligible to such concessional rate of GST, since the activities described under item (v) of Sr, 3 of the notification are services specific. The service provider and the service recipient are immaterial for the determination of beneficiary of this concessional rate of GST. That is, if the works contract services provided by the main contractor or sub-contractor are pertaining to the railways, the concessional rate of 12% GST is allowed to the person who carries out the such works contract pertaining to railways. The ruling pronounced by the Advance Ruling Authority upheld. - Decided against the revenue.
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