Maintenance of Existing Railway Tracks is Taxable at 18% GST: AAR [Read Order]

The Authority for Advance Ruling (AAR), West Bengal recently held that the works contract service of maintaining Railway Tracks as per the Letter of Acceptance (LOA) is taxable at the rate of 18% under the Serial no. 3 (ii) of the Rate Notification.

The applicant, Sreepati Ranjan Gope & Sons, an enlisted contractor engaged in the maintenance work of railway tracks. The applicant has sought a clarification to the Authority for Advance Rulings on the classification and Rate of Tax in the following two situations: (1) when maintenance of railways tracks is done by them by providing contractor’s labour only in cases where the Railways supply materials free of cost & (2) when maintenance of railways tracks is done by them by providing, both, contractor’s material and labour.

The Authority comprising of Members Vishwanath and Parthasarathy Dey on examination of the Letter of Acceptance (LOA) found that the work to be executed by the contractor involves repair maintenance and fitting out of the immovable property, namely, Railway Tracks, and also the transfer of property in goods. They observed that the work is a “Composite Supply” of labour and goods in the nature of Works Contract, as defined under Section 2 (119) of the Goods and Services Tax (GST) Act, and therefore, classifiable under (ii) of column 3 [Description of Service] of Heading 9954 (Construction services) of column 2 under Serial No 3 of column 1 of the Table in Notification No. 11/2017-CT (Rate) dated 28/06/2017 under the CGST Act, 2017 (1135-FT dated 28/06/2017 under the West Bengal GST Act, 2017) (Rate Notification.)