AAR: 18% GST Applies for Work Contract Services Under General Construction

The work contract services beneath the General Construction service for long-distance underground/overland/ submarine pipelines, communication and electric power lines (cables); pumping stations, and related works service shall subject to get taxed at an 18% rate, the Telangana State Authority For Advance Ruling (AAR) stated in a ruling.

The petitioner M/s. Transmission Corporation of Telangana Limited (TS TRANSCO) is a State Transmission Utility (STU) stated by the Government of Telangana under Section 39 of the Electricity Act, 2009. The petitioner asks for the Advance Ruling on the Classification of Supplies, eligibility to bring services at lesser rates and claim eligibility for the advantages of ITC.

The applicant claimed that they are qualified for a GST exemption since they built the infrastructure for electrical transmission to the pumping stations under lift irrigation systems. In order to execute contracts worth CAD, they have hired a private turnkey contractor on a back-to-back basis. These supplies qualify for a 12% concessionary rate.

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Under General Construction service the applicant supplied works contract services to South Central Railways for long-distance underground/overland/submarine pipelines, communication and electric power lines (cables), pumping stations and related works; transformer stations, and pertinent works.

Under both the Central Goods and Service Tax and State Goods and Service Tax Acts 2017 the same service would get taxed at a 9% rate. To execute the electric contract the petitioner also hired a private turnkey contractor on a back-to-back arrangement.

An 18% rate shall be levied on the supply works contract services to South Central Railways under General Construction service for long-distance underground/overland/ submarine pipelines, communication and electric power lines (cables); pumping stations, and pertinent works, the authority bench witnessed.

It indeed witnessed that when the petitioner shall supply the work contract service in the nature of the General Construction service for long-distance pipelines, communication, and electric power lines, pumping stations and transformer stations, and related works, which levies a tax of 9% rate under CGST/SGST Acts.

A panel of Sri B. Raghu Kiran and Sri S. Kasi Visweswara Rao stated an 18% GST tax rate shall be levied under Central Goods and Service Tax Act, 2017 if the petitioner’s supply works contract services under General Construction service.