2018 (10) TMI 600 - AAR - GST

Works Contract Services - Composite supply - Sub-Contract - supply of works awarded by Public Works Department/SC-ST District Officer/Special Officer, Government Medical College being line departments of State Government, the civil structural, internal and external finishing, plumbing and sanitary arrangements, electrical, HVAC, lifts and fire fighting installations, including testing, commissioning attracts @12% GST. Held that - Government Authority means any authority or a board or any other body set up by an Act of Parliament or State Legislature or established by any Government with 90% or more participation by way of equity control. The Central University of Kerala established under the Central University Act. Hence the supply work relating to the construction of non-science building for various departments at Central University of Kerala, is also taxable @12% GST. Even if the work is executed through RITES Ltd, the applicable tax rate is 12% GST. Life Sciences Park, Trivandrum is an initiative of Kerala State Industrial Development Corporation Ltd. for providing basic infrastructural facilities to research institutions, science and technology academia and companies working in the field of Bio-Technoloo, Nano-Technology and Life Sciences - Therefore, it is evident that the Life Sciences Park, Trivandrum is a commercial venture of the KSIDC Ltd., a State Public Sector Undertaking and accordingly the works contract services in respect of construction of Biotech lab and administrative block at Life Science Park, Trivandrum is covered under SI No. 3 (xii) - Heading 9954 of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 attracting GST at the rate of 18%. Ruling - Supply of works contracts awarded by Government attracts 12% GST. Supply of works contracts awarded by the Central University of Kerala attracts 12% GST. Supply of work awarded by M/S. HLL Infra Tech Services Ltd. For the construction of Biotech lab and administrative block at Life Science Park, Trivandrum attracts 18% GST.

Summary

Issues:
1. Determination of GST rate for works contracts undertaken by a contractor for various government projects and subcontracts.

Analysis:
The applicant, a contractor for government projects, sought an advance ruling on the GST rate for different contracts involving construction works. The issue revolved around the applicability of GST rates for works contracts awarded by different entities. The Authority examined the relevant provisions of the GST Act, specifically the amendment to notification No. 8/2017, to determine the applicable tax rates. It was clarified that composite supply of works contracts provided to specified entities such as Central Government, State Government, local authorities, etc., falls under either 12% or 18% GST category based on the nature of the work.

In the first case, the ruling confirmed that works contracts awarded by specific government departments, including civil structural, plumbing, electrical, and other installations, attract 12% GST. Similarly, for the construction of a non-science building at Central University of Kerala, the applicable tax rate was also deemed to be 12% GST, irrespective of the involvement of RITES Ltd. The judgment emphasized that the Central University of Kerala falls under the category of entities eligible for the 12% GST rate.

Furthermore, regarding the construction of a Biotech lab and administrative block at Life Science Park, Trivandrum, the ruling determined that the project, being a commercial venture of a State Public Sector Undertaking, is subject to 18% GST. This decision was based on the classification of services under Notification No. 11/2017 Central Tax (Rate). The Authority concluded that works contracts awarded by the government attract 12% GST, including subcontracts, whereas specific projects like those at Central University of Kerala and Life Science Park, Trivandrum, are subject to different GST rates based on their nature and entities involved.

In summary, the Authority for Advance Rulings, Kerala issued specific rulings for each type of works contract, clarifying the applicable GST rates as follows:
i) Works contracts awarded by the Government - 12% GST.
ii) Works contracts awarded by Central University of Kerala - 12% GST.
iii) Works contracts awarded by HLL Infra Tech Services Ltd. for the construction of Biotech lab and administrative block at Life Science Park, Trivandrum - 18% GST.