In re ITD Cementation India Ltd (GST AAR West Bengal)
What should be the rate of GST on works contract for constructing a civil structure for a Govt entity?
Section 10 of the IWAI Act, 1985 mandates it to act on business principles while discharging its functions. Section 14(1)(k) even allows IWAI to set up joint ventures with equity participation for the purpose of inland shipping. Therefore, unless proceeds from such activities, including user fees and charges, are credited to the Consolidated Fund of India, they must be construed as proceeds from commerce and business.
Section 17(1) of the IWAI Act, 1985 empowers IWAI to collect user fees with previous approval of the Central Government. All such fees and charges are credited to the Inland Waterways Authority of India Fund, constituted under section 19(1) of the IWAI Act, 1985 and not to the Consolidated Fund of India.
The IWAI is clearly not the Government of India, but a Government Entity having no sovereign authority to collect Government revenue. Moreover, contrary to what the Applicant claims, the user fees that IWAI collects is not credited to the Consolidated Fund of India and is, therefore, not revenue but proceeds from business as defined under section 2(17) of the GST Act.
Also, Check at gst rate on works contract.
It is, therefore, evident that the Applicant is supplying works contract service for an original work that is meant for commerce and business. It does not, therefore, satisfy the conditions laid down under Serial No. 3(vi)(a) of the Rate Notification.
The Applicant’s supply of works contract service for construction of the Multi-modal IWT Terminal at Haldia, therefore, attracts GST at 18% rate under Serial No. 3(xii) of the Rate Notification.
Read AAAR order- Rate of GST on works contract for constructing a civil structure for a Govt entity
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, WEST BENGAL
1. The Applicant is stated to be supplying works contract service. He has entered into an agreement with Inland Waterways Authority of India (hereinafter the IWAI) for construction of a multi-modal IWT terminal at Haldia on EPC basis.
The Applicant seeks a ruling on applicability of Notification No. 24/2017-CT (Rate) dated 21/09/2017 and 31/2017 – CT (Rate) dated 13/10/2017. More specifically, he wants a ruling on what should be the rate at which GST should be charged on the works contract service to be supplied for construction of the above terminal.
The question is admissible under section 97(2)(b) of the CGST / WBGST Act, 2017 (hereinafter collectively referred to as “the GST Act”).
The concerned officer has raised no objection to admissibility of the Application.
The Application is admitted.
2. Notification No. 24/2017 – CT (Rate) dated 21/09/2017 and 31/2017 – CT (Rate) dated 13/10/2017 have amended Notification No. 11/2017 – CT (Rate) dated 28/06/2017 (hereinafter the Rate Notification). As a result, Serial No. 3(vi) of the Rate Notification, post such amendments, stands as below.
