In re S.K. Swamy and Company (GST AAR Karnataka)
M/s S.K. Swamy and Company, a registered partnership firm engaged in executing works contracts for Indian Railways, including construction of rail under bridges, tunnels, earthwork, supply and stacking of ballast, and related subcontract works, sought an advance ruling on the applicable GST rate for loading ballast stacked adjacent to railway tracks into railway wagons using JCB loaders. The applicant contended that since more than 70% of its works contract related to the supply of ballast, which attracted GST at 5%, the loading charges should also be taxed at 5%.
The Authority admitted the application under Section 97(2)(e) of the CGST Act as relating to the determination of tax liability. During the personal hearing, the applicant’s authorised representative reiterated the submissions made in the application.
The Authority first examined whether the activity constituted a works contract under Section 2(119) of the CGST Act. It observed that a works contract requires activities such as construction, erection, installation, repair, renovation or similar activities relating to immovable property, involving transfer of property in goods. In the present case, the activity consisted of supplying ballast and subsequently loading it into railway wagons using JCB loaders. The Authority found that the loading activity neither related to immovable property nor involved any of the activities contemplated under the statutory definition of a works contract. Consequently, it held that the activity could not be classified as a works contract under Section 2(119).
