The Maharashtra Authority of Advance Ruling ( AAR ) has held that 18% GST is applicable on Composite supply under works contract.
The applicant, M/s KPC Projects Ltd., got selected based on their bid by the Uttar Pradesh RajkiyaNirman Nigam Ltd., (UPRNN) a government undertaking for the construction of 200 bedded ESI Hospital in Maharashtra.
The applicant approached AAR for clarification regarding the applicability of tax rate. The applicant submitted that they are providing works contract services in the form as defined under section 2 (119) of the CGST Act, 2017, to UPRNN, which involves services for the installation, fitting out, and construction of the hospital. Since UPRNN is a wholly-owned Government company, in terms of Sr. No. 3 (vi) of Notification 11/2017, as amended, is applicable to its supply and the applicant is eligible for the concessional rate of 12% GST.
The Authority observed that the Notification No. 11/2017 has been further amended by Notification No. 15/2021 and in which the word “a government authority or a government entity” are omitted. Therefore, the impugned service supplied by the applicant to a Government company will not be covered under Sr. No. 3 (vi) of Notification 11/2017.
The Coram of Mr. Rajiv Magoo (Central tax) and Mr. T. R. Ramnani (State tax) has held that “the impugned activity is not covered under Sr. No. 3 (vi) of Notification 11/2017 and therefore the said activity will be covered under the residuary clause (xii) of Sr. No. 3 Notification No. 11/2017 – mentioned above and the rate of GST to be paid by the applicant will be 18% of the taxable value”
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