In re Shree Construction (GST AAR Maharashtra)
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 SCSI each, 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
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, MAHARASHTRA
PROCEEDINGS
(under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017)
The present application has been filed under section 97 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 SHREE CONSTRUCTION, the applicant, seeking an advance ruling in respect of the following questions :
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?
2. Whether to charge tax rate of 12% GST or 18% GST?
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 provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / MGST Act would be mentioned as being under the “GST Act”.
2. FACTS AND CONTENTION – AS PER THE APPLICANT
The submissions, as reproduced verbatim, could be seen thus-
Statement of relevant facts having a bearing on the question(s) raised
1. We are providing works contract service as sub-contractor to main contractor for original contract work pertaining to railways.
2. As per Notification No-20/2017- Central Tax (Rate) dated 22-08-2017 the ratetT GS’ is 12% for composite supply of works contract supplied by way of construction, erection, commission or installation of original works pertaining to railways.
3. As per SR.No-12 in press release of 25th 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.
4. 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.
Statement containing the applicant’s interpretation of law and/or facts, as the case may be, in respect of the afore said question(s) (i.e. applicant’s view point and submissions on issues on which the advance ruling is sought)
1. As per our view point even though we are sub-contractor providing service to main contractor for original contract work pertaining to railways, we should charge 12% GST only and not 18% as applicable in other cases.
2. The contract for original works pertaining to railways remains the same works contract.
3. As there is difference of opinion after reading of press release of 25th meeting of GST council dated 18-012018 and notification No 1/ 2018 dated 25-01-2018, we are not in position to levy correct rate of GST on original sub-contracting work pertaining to railways carried on by us for our main contractor.
4. This advance ruling is sought clarification for rate of tax to be levied by the sub-contractor to main contractor for original contract work pertaining to railways.
Further submissions, as reproduced verbatim, could be seen thus-
Our Submission is in Part 1 and Part 2 hereunder –
1. Part 1 – The Issue put before your honour.
2. Part 2 – The submission and explanation in support of our issue.
Part 1: Issue
a. We are a Works Contractor.
b. We 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.
c. We have been awarded a subcontract by another works contractor to execute the original work of civil construction for Railways.
d. As per the schedule of GST rate for a service under GST, the composite value of works contract is classified along with rates of tax as hereunder.
Extract of classification of services
Section 5 Construction Services
