In re Triveni Engicos Private Limited (GST AAR West Bengal)
The AAR, West Bengal in the matter of Triveni Engicons Private Limited [Order No. 14/WBAAR/2022-23 dated December 22, 2022] has ruled that the construction work carried out by the assessee of new private sidings pertains to the railways and GST @12% will be applicable on contracts for such construction, until the omission of Sl. No. 3(v)(a) of the Notification No. 11/2017 – Central Tax Rate dated June 28, 2017 (“the Services Rate Notification”) w.e.f. July 18, 2022.
Facts:
Triveni Engicons Private Limited (“the Applicant”) is a private incorporation engaged in the execution of works contract services. The applicant was awarded a contract by M/s Rites Limited, a Public Sector Undertaking under the Ministry of Railways on behalf of the Eastern Coalfields Limited (“ECL”) dated March 29, 2021. The Applicant’s work included construction of new railway sidings at Jhanjha area of ECL.
The Applicant contended that the aforementioned work may be considered as composite supply of works contract as defined in Section 2(119) of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) which is supplied by way of construction of original works pertaining to railways and therefore would be taxable at 12% GST as per SI. 3(v)(a) of the Services Rate Notification. Further, it was contended that work executed by the Applicant falls under the definition of original works as mentioned in clause 2(zs) of Notification No. 12/2017-Central Tax (Rate) dated June 28, 2017 (“the Services Exemption Notification”).
The Revenue contended that the work was related to the construction of a private railway siding and hence it was commercial in nature. The railway siding was constructed for carriage of goods of private parties and not for public carriage, so it was not “pertaining” to railways. The construction of rail infrastructure facilities other than railways fall under serial no. 3(xii) of the Services Rate Notification and hence the GST at 18% will be applicable.
Issues:
1. Whether the supply made by the Applicant would attract GST @12% or 18% under the Services Rate Notification?
2. Whether the work awarded can be covered under the definition of Works Contract as defined under Section 2(119) of the CGST Act?
3. Whether the rate of tax for the construction of rail infrastructure facilities will be under Sl. No. 3(v)(a) or Sl. No.3(xii) of the Services Rate Notification?
4. Whether the said work can be considered as works contract pertaining to railways?
Held:
The AAR, West Bengal in Order No. 14/WBAAR/2022-23 held as under:
