In re M/s. Shree Construction (GST AAAR Maharashtra)
The Advance Ruling Authority upheld the order passed by the Advance Ruling Authority, by observing that the any works contract pertaining to the railways, carried out by the main contractor or its sub-contractors are eligible for the concessional rate of 12% GST in terms of the provisions of the item (v) of the Notification No. 11/2017-C.T. (Rate) dated 28.06.2017.
AAR Ruling-GST Rate on Work Contract Services pertaining to railways by sub-contractor
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, MAHARASHTRA
At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the MGST Act.
The present appeal has been filed under Section 100 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as “the CGST Act and MGST Act”] by the Assistant Commissioner, Central Tax, Division-I (Talegaon), Pune-I Commissionerate(herein after referred to as the “Appellant”) against the Advance Ruling No. GST-ARA-09/2018-19/B-65 Mumbai, Dt. 11.07.2018
BRIEF FACTS OF THE CASE
A. M/s. Shree Construction (hereinafter referred to as ‘the party’) are providing works contract service as sub-contractor to main contractor for original contract work pertaining to Railways. They execute and undertake composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017.
B. It is the opinion of the party that as per Notification No-20/2017- Central Tax (Rate)dated 22-08-2017 the GST is 12% for composite supply of works contract supplied by way of construction, erection, commissioning or installation of original works pertaining to railways. As per Sr.No-12 in press release of 251h meeting of GST council held at New Delhi on 18-01-2018, the rate of GST applicable to main contractor should be levied by sub-contractor.
C. Further, it is stated by the party that as per Notification No-01/2018- Central Tax( Rate) dated 25-01-2018 the service provided by sub- contractor to main contractor for railway original works contract services is not specified in the notification. The party say that they are sub-contractor providing service to main contractor for original contract work pertaining to railways, and they should charge 12% GST only and not 18% as applicable in other cases. The contract for original works pertaining to railways remains the same works contract. As there is difference of opinion after reading of press release of 25′h meeting of GST council dated 18-01-2018 and notification No 1/2018 dated 25-01 -2018, the party are not in position to levy correct rate of GST on original sub-contracting work pertaining to railways carried on by them for their main contractor. Accordingly,
Advance Ruling was sought for clarification for rate of tax to be levied by the sub-contractor to main contractor for original contract work pertaining to railways.
D. The Advance Ruling Authority passed an order under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 and the questions were answered as under –
Q. No. 1 : What Tax rate to be charged by the sub contractor to main contractor on Works Contract Services (WCS) pertaining to railways original works contract?
Answer: The tax rate to be charged by the sub-contractor to the main contractor would be @ 6% of CGST and 6% of SGST , in the present case.
Q. No. 2: Whether to charge tax rate of 12% GST or 18% GST?
Answer : The tax rate to be charged would be 12% in the present case.
