Krishna Veer Yadav Vs ARSS Sips (JV) (Agra GSTAT)
Summary: The Goods and Services Tax Appellate Tribunal, Agra Bench, allowed the Uttar Pradesh State Tax Department’s appeal against the first appellate authority’s order granting relief to ARSS Sips (JV) on construction services supplied to North Central Railway during 2019-20. The registered joint venture undertook earthwork, embankment and cutting work, drains, retaining/toe walls, minor and major bridges, relocation of signals and cables, and related protection and ancillary works. It raised invoices aggregating Rs. 12,13,74,088/- and discharged GST at 12%. The proper officer classified the supplies as general construction services under SAC 995423 and 995424, considered them taxable at 18%, and initiated proceedings under Section 74, alleging short payment through wilful misstatement. The resulting order raised a differential GST demand of Rs. 72,82,446/- with applicable interest and penalty. The first appellate authority set aside this main demand, following which the Department approached the Tribunal.
A separate tax liability of Rs. 43,248/- relating to other income of Rs. 75,100/- had been confirmed by the first appellate authority. Since the taxpayer had neither appealed against that finding nor filed a memorandum of cross-objection, the Tribunal excluded that liability from its examination. The dispute before it was confined to whether the railway construction services qualified as a composite supply of works contract under Serial No. 3(v)(a) of Notification No. 11/2017-Central Tax (Rate), as amended by Notification No. 20/2017-Central Tax (Rate), attracting 12% GST.
The Department relied on the taxpayer’s invoices describing the supplies as “general construction services”. The Tribunal held that classification under the broad construction heading 9954 did not, by itself, establish eligibility for the concessional entry. It considered structural evidence and billing breakups necessary to demonstrate that the services concerned construction or repair of immovable property and satisfied the requirements of the specified railway works contract entry. On the record before it, the Tribunal found that the taxpayer had failed to establish those requirements. It consequently rejected the first appellate authority’s approach that all railway construction services attracted 12% GST, describing that finding as legally untenable and contrary to the record.
Accordingly, the Tribunal set aside the appellate order dated 16.01.2026 and restored the adjudication order dated 28.06.2025, holding the disputed general construction services taxable at 18% rather than 12%. The Department’s appeal was allowed, thereby restoring the main differential tax demand of Rs. 72,82,446/-. The order was pronounced in open court on 30 October 2026.
FULL TEXT OF THE JUDGMENT/ORDER OF GSTAT
1. Being aggrieved by the order dated- 16.01.2026, passed by first appellate authority in first appeal no. AD090925149253R/2025, whereby by allowing the respondent’s first appeal order in original passed by adjudicating officer on 28.06.2025, has been modified by accepting tax liability of Rs. 43,248/- only on respondent while the main demand of Rs. 72,82,446/- has been quashed, department of UP state tax has preferred the present appeal u/s 112 of Central Goods and Services, Act/Uttar Pradesh Goods and Services Tax, Act, 2017 (for short CGST/UPGST, Act) on the direction of commissioner. For convenience hereinafter in the order appellant and respondent will be addressed as department and taxpayer respectively.
2. Before narrating the facts of the case it would be beneficial to note that taxpayer did not show his income of Rs. 75,100/- as taxable income, which was detected in audit and accordingly in addition to main demand of tax from construction services, Rs. 43,248/- were imposed as goods and services tax from other income, on taxpayer. To that extent learned first appellate authority has confirmed the order in original and no appeal or memorandum of cross objection has been filed by respondent taxpayer therefore, findings recorded by learned first appellate authority to that extent are not subjected to appreciation by this tribunal and discussion of this tribunal now would be in respect of tax on construction services rendered by taxpayer to Indian Railway a government entity.
3. In order to disposal of this second appeal filed u/s 112 of CGST/UPGST, Act facts of the case in brief are that taxpayer is a registered Joint Venture having GSTIN 09AAEAA3620K1ZV and provides construction and other services. Main business place of taxpayer is at house no. A-17 situated at eldeco county, Bijalui, jhasni. Taxpayer provides construction services regarding earthwork in embankment/cutting blanketing side, drains, retaining/toe wall, construction of minor bridges and removal of infringement of signals, cables equipment with other aligned work, construction of major bridges and earthwork in approaches including protection and other ancillary work to North Central Railway in the year 2019-20. For works performed by him to railway he submitted several tax invoices for a total amount of Rs. 12,13,74,088/- on which he paid GST at the rate of 12% through his GSTR-1 and GSTR-3B.
4. On verification learned proper officer has issued a SCN u/s 74 of CGST/UPGST, Act to taxpayer that he has short paid tax by willful misstatement as service provided by him comes under head of genera construction services SAC no. 995423 and 995424 those are taxable at the rate of 18% GST but he has paid the tax of 12% GST. In such SCN demand of deficit GST was assessed as 72,82,446/- along with applicable interest and penalty. Learned proper officer issued SCN to taxpayer which was replied unsatisfactorily and thus, learned adjudicating officer passed the order u/s 74(9) of CGST/SGCT, Act.
5. Feeling aggrieved by the order passed by proper officer as aforesaid, taxpayer preferred first appeal which was allowed by first appellate authority and to the extent of demand of Rs. 72,82,446/- raised in pursuance of order in original, order was set aside, hence this second appeal before this tribunal by state tax department, through its official Sh. Krishna Veer Yadav, Dy. Commissioner.
6. We have heard the learned authorized representatives of respective parties and perused the record carefully. The question for determination may be stated thus-
Whether general construction services provided by taxpayer to Indian Railway, comes under the head of “Composite Supply of Works Contract to Railways and are covered by entry at sr. no. 3(v)(a) of notification no. 11/2017 as amended by notification no. 20/2017 Central Tax (Rate) attracting 12% tax .?
FINDINGS WITH REASON
7. In this second appeal filed by department of state tax, U.P u/s 112 of CGST/UPGST, Act, before the appellate tribunal the core issue revolves around the correct classification and applicable GST rate for general construction services provided for railway infrastructure product by the tax payer. Learned adjudicating officer has held that services provided by taxpayer are not covered in the head of construction of buildings residential or commercial but same are covered with “general construction services” which should be assessed under GST slab of 18% not in slab of 12%. In first appeal learned first appellate authority has held that services provided by taxpayer to Indian railway which is a government entity comes under the construction services in relation to immovable property and thus being work Contract services to Railway and are taxable at the rate of 12%.
8. Question before this appellate tribunal is only as to whether services provided by taxpayer to Indian Railway such as earthwork in embankment/cutting blanketing side, drains, retaining/toe wall, construction of minor bridges and removal of infringement of signals, cables equipment with other aligned work, construction of major bridges and earthwork in approaches including protection and other ancillary work are work contract services and thus are covered by notification no 11/2017 as amended by notification no.20/2017 or not.
9. Thus, work contract description indisputedly includes bridges, toe walls, major/minor construction, signal relocation and earthwork. Unless the taxpayer can mathematically demonstrate with structural proofs and billing breakups that construction services provided to Railways are only in relation to construction /repairing of immovable property, the contract can not qualify for the 12% concessional rate under serial no. 03(V)/(a) of notification no. 11/2017-CT(Rate) as amended by notification no, 20/2017 CT(Rate) dated 22-08-2017.
10. Learned authorized representative appeared for department has also drawn our attention to the tax invoices submitted by taxpayer to Indian Railway regarding services rendered by him. In such invoices as noted in the facts it is described the service as “general construction services” which are taxable at the rate of 18% until unless taxpayer would not show these services are work contract services. As per SAC (Services Accounting Code) 9954, all construction and works contract services fall under the heading of 9954, however, simply grouping everything under “construction of immovable property” ignores the specific sub entries under notification no. 11/2017 central tax dated June 28, 2017 (as amended). Further, taxability of works contract services provided to central/state governments local authorities, government entities and government undertakings like Indian Railways is strictly govern by notification state above. As per serial no. 03(V) of the said notification any composite supply of works contracts other than those specifically carved out attracts a standard rate of 18% (09% CGTS+ 09% SGST). As stated earlier, as per serial no. 03(V) of the notification prescribes a concessional rate of 12% (06% CGST+ 06% SGTS) is only for a composite supply of works contract provided to railway, in this matter taxpayer has not shown supply of services provided by him involves construction services in relation to immovable property and are composite supply of works contract. Therefore, in the present matter services provided by the taxpayer do not qualify for 12% rate under Sr. No. 3(V)(a) and defaults to the standard 18% rate.
11. In this way, findings recorded by first appellate authority is that all railway construction services fall under “work contract services at the rate of 12% GST” is legally untenable, perverse to record and thus liable to be overturned.
12. Consequently, on the discussion above, we are of the considered opinion that this second appeal is sound on the factual and legal aspects and deserves to be allowed. Accordingly, order in appeal dated16.01.2026, passed by first appellate authority is set aside and order in original, dated28.06.2025, passed by adjudicating officer is restored as taxpayer has short paid tax by charging 12% GST instead of applicable 18% standard rates on general construction services to Indian Railway, a central government undertaking.
13. There is no pending interim application in the appeal.
14. Order is pronounced in open court on this day of 30th of October, 2026.
15. Copy of order be communicated to all concerned, as per rules.
