Tunnel construction & related work  falls under earth work & eligible for concessional GST rate

In re Soma Mohite Joint Venture (GST AAAR Maharashtra)

The Maharashtra Appellate Authority for Advance Ruling  held that the services provided by the Appellant in the impugned matter qualifies for inclusion under entry 3(vii) of the Notification No. 12/2017-C.T. (Rate), dated 28.06.2017 (as amended by Notification No. 31/2017-C.T. (Rate) dated 13.10.2017).

It is evident that as per the work order, the work deals with excavation of earth and depositing it on the sides. As per the above definitions, it is clear that Earthwork includes excavation and as per the contract the Earthwork constitutes more than 92.66% of the contract by value. Thus apparently all the conditions of the entry are fulfilled.

Now we will deal with the observation of the AAR that the service provided by the appellant does not qualify for the entry as the present work is the construction of tunnel and its allied work and therefore said work cannot be considered as earthwork as contemplated by entry no. 3(vii) above. On a careful reading of the entry, we find ourselves in disagreement with the finding of the AAR. The entry says that the Composite supply should have earthwork forming more than 75% of the contract by value. Thus it very much clear from the wording that the Contract may be for something else- be it construction of building, tunnel, canal, road and in these contracts if the earthwork constitutes more than 75% then it qualifies for the above entry. If the intention of the Legislature had been to cover only pure contract of earthworks in it then a qualifying condition of more than 75% by value wouldn’t have been provided. We therefore find the reasoning of the AAR untenable.

We therefore hold that the Services provided by the appellant in the impugned matter qualifies for inclusion under entry 3(vii) of the Notification No. 12/2017-C.T. (Rate), dated 28.06.2017.(as amended by Notification No. 31/2017-C.T. (Rate) dated 13.10.2017).

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