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2020 (8) TMI 520 - AAR - GSTClassification of services - rate of tax - works contracts awarded by the Government authorities - construction of a building for space transportation system - HELD THAT - As per Section 2 (119) of the CGST Act, 2017; works contract means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract - On a perusal of the work orders and the agreements entered by the applicant it is clear that the services rendered by the applicant clearly falls within the definition of works contract under Section 2(119) of the CGST Act, 2017. Since the services provided by the applicant under both the contracts fall under the definition of works contract under Section 2 (119) of the CGST Act, 2017 and the services being provided to the Central Government and State Government as discussed above the applicant is eligible for the concessional rate of GST of 12% prescribed in Sl No. 3 (vi) (a) of the Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017 as amended.
Issues:
Rate of tax applicable for works contracts awarded by Government authorities. Analysis: The applicant, a construction company, received work orders for projects from the Vikram Sarabhai Space Centre and Mis. Infrastructure Kerala Ltd. The contracts included both supply of materials and services. The applicant sought an advance ruling on the applicable tax rate for these government-awarded works contracts. The Vikram Sarabhai Space Centre, a part of the Indian Space Research Organisation, awarded a contract to the applicant for the construction of a building. The recipient of the services provided by the applicant in this case is the Department of Space of the Government of India. Similarly, Mis. Infrastructure Kerala Ltd, acting as a Special Purpose Vehicle for the Department of Health and Family Welfare of the Government of Kerala, awarded a project to the applicant for the development of a Medical College. The recipient of services in this contract is the Department of Health and Family Welfare of the Government of Kerala. The services provided by the applicant fall within the definition of a works contract as per Section 2(119) of the CGST Act, 2017, which involves the transfer of property in goods during the execution of the contract. Notification No. 11/2017 - Central Tax (Rate) specifies that composite supply of works contracts provided to Central or State Government entities for specific types of projects are eligible for a concessional GST rate of 12%. Considering the nature of the contracts and the recipients of the services, the applicant is eligible for the concessional GST rate of 12% as per the relevant notification. Therefore, the ruling issued states that the services provided by the applicant under the government-awarded works contracts are covered under the specified entry of the notification and attract GST at the rate of 12% [6% CGST and 6% SGST].
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