Guj AAR: 12% GST Rate for the Work Contract Services from 25 Jan 2018

The Gujarat Authority of Advance Ruling (AAR), last week (on Saturday) ruled that 12% GST shall be applicable on the Service of Work Contract that has been allocated by the sub-contractor effective from January 25, 2018.

In the aforesaid case, the applicant Messrs Kunal Structure (India) Pvt. Ltd. got into a contract for the constructing ‘Deendayal Upadhyay Govt. Medical College, Rajkot’ with Messrs HLL Infra Tech Service (HITES) Ltd. that is an undertaking of the Govt. of India. Messrs HITES in the capacity of Agency (Executive) of Ministry of Health & Welfare, Govt. of India, New Delhi floated in a market a tender for the aforesaid work under the ‘Pradhan Mantri Swasthya Suraksha Yojna, Phase-III (PMSSY-III)’.

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The applicant further submitted that it was accorded the Letter of Award on 08.06.2016. The nature of the job included construction of the multi-storied building that included water supply, Internal & External Electrification, HVAC works, comprehensive Fire Fighting/ Protection System, sanitary and plumbing, Lifts, STP, WTP, ETP, Solar Panel, PA System, CCTV, and Security System, LAN System, EPABX/ Communication System, sewer, site development works such as Internal Road + Path & site levelling, drainage work and so on.

However, the applicant filed the case at Authority for Advance Ruling (AAR) Get to know about AAR (Authority for Advance Rulings) under GST India along with its mechanism. Also, we have described its objectives, powers, orders, etc, Gujarat on the matter of whether the service of work contract allocated by the applicant on a sub-contractor basis is to be taxed at the rate of 12% for the time period before January 25, 2018, when Notification No. 11/2017-CT (Rate) bearing date June 28, 2017, was modified by Notification No. 01/2018-CT (Rate) bearing date January 25, 2018.

The Coram of Mohit Aggarwal and Sanjay Saxena noted that through Notification No. 01/2018-CT (Rate) bearing date 25.01. 2018, a new entry no. 3(ix) was added in the Notification No. 11/2017- CT (Rate) bearing date 28.06.2017 vide which “Composite supply of works contract as defined in Clause (119) of Section 2 of the Central Goods and Services Tax Act, 2017 provided by a sub-contractor to the main contractor providing services to the Central Government, State Government, Union territory, a local authority, a Governmental Authority or a Government Entity” was ruled to be taxable at the rate of 12%.

The AAR further ruled that the GST rate of 12% prescribed under Sr. No. (ix) through Notification No. 01/2018-CT (Rate) dated January 25, 2018, shall be effective from the date of issue of the aforesaid Notification i.e. January 25, 2018.