In re Build Layer Constructions (GST AAR Rajasthan)
The Authority for Advance Ruling (AAR), Rajasthan, has ruled that M/s Build Layer Constructions is not eligible for GST exemption on its “pure labor” construction services provided as a sub-contractor for a project under the Pradhan Mantri Awas Yojana (PMAY). The AAR’s decision hinged on the applicant’s involvement in supplying materials in addition to labor, and a failure to conclusively prove the main contractor’s direct engagement in the PMAY scheme.
M/s Build Layer Constructions, a firm specializing in construction services, sought an advance ruling on the applicability of Notification No. 12/2017-Central Tax (Rate) dated June 28, 2017, which provides a ‘Nil’ GST rate for “pure labor contracts” related to construction under the Housing for All (Urban) Mission or Pradhan Mantri Awas Yojana.
Background of the Case:
The applicant entered into an agreement to provide “Pure Labor Services” to M/s BCM Builders LLP. BCM Builders LLP, in turn, had a contract with the Rajasthan Government to construct 380 flats under the “Affordable Housing Scheme under Pradhan Mantri Awas Yojana,” which included both material and labor components. Build Layer Constructions argued that its sub-contract with BCM Builders LLP was solely for “Pure Labor Services,” encompassing all labor-related work for flat construction, with BCM Builders LLP directly providing all materials. They contended that since the notification was “activity-based,” it should extend to sub-contractors involved in the PMAY project.
The applicant emphasized two key requirements for availing the exemption:
