The Gujarat Authority of Advance Ruling (AAR) ruled that 12% GST on Service of Work Contract provided by the sub-contractor with effect from 25 January, 2018.
The applicant, M/s. Kunal Structure (India) Pvt. Ltd. entered into a contract for the construction of Deendayal Upadhyay Govt. Medical College, Rajkot with M/s. HLL Infra Tech Service (HITES) Ltd. which is a Govt. of India Enterprise. M/s. HITES as the Executive Agency of Ministry of Health & Welfare, Govt. of India, New Delhi floated a tender for the said work under the Pradhan Mantri Swasthya Suraksha Yojna, Phase-III (PMSSY-III).
The applicant submitted that they were granted the Letter of Award on 08.06.2016. The scope of work included construction of multi storied building including water supply, sanitary and plumbing, comprehensive Fire Fighting/ Protection System, Internal & External Electrification, HVAC works, Lifts, WTP, STP, ETP, CCTV and Security System, Solar Panel, PA System, EPABX/ Communication System, LAN System, site development works such as Internal Road + Path & site leveling, sewer and storm water drainage work etc.
The applicant sought the Advance Ruling on the issue whether the Service of Work Contract provided by the Applicant as sub- contractor are taxable at the rate of 12% for the period prior to 25.01.2018 when Notification No. 11/2017-CT (Rate) dated June 28, 2017 was amended by Notification No. 01/2018-CT (Rate) dated January 25, 2018.
The coram of Sanjay Saxena and Mohit Aggarwal noted that vide Notification No. 01/2018-CT (Rate) dated January 25, 2018 a new entry no. 3(ix) was inserted in the principal rate Notification No. 11/2017- CT (Rate) dated 28.06.2017 vide which “Composite supply of works contract as defined in Clause (119) of Section 2 of the Central Goods and Services Tax Act, 2017 provided by a sub-contractor to the main contractor providing services to the Central Government, State Government, Union territory, a local authority, a Governmental Authority or a Government Entity” was made taxable at the rate of 12%.
The AAR ruled that the GST rate 12% prescribed under Sr. No. (ix) vide Notification No. 01/2018-CT (Rate) dated 25.01.2018 is effective from the date of issue of said Notification i.e. January 25, 2018.
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