The West Bengal Authority for Advance Ruling ( AAR ) has held that Goods and Service Tax ( GST ) would be applicable on the desilting of the foreshore of Prakasam Barrage to the Andhra Pradesh Government water resource department.
The applicant Reach Dredging had been rewarded a work order by the Water Resources Department, Government of Andhra Pradesh for desilting the foreshore of Prakasam Barrage. The said work included dredging in the foreshore of Prakasam Barrage with a dredger and depositing materials in the area of Govt. lands available adjacent to the river bunds including mobilisation and demobilisation of the dredger and laying the pipeline, POL‟s spares, repair and manpower and all other items required for operation and maintenance etc.
Sumit Nishania, on behalf of the applicant, submitted that the total value of the works contract consisted mainly of dredging and earthwork excavation which was pure service work and the cost of material transferred and consumed for execution and completion of the work contract was less than 25 per cent of the total agreement value.
On the other hand, revenue submitted that Entry No. 3 (vii) of the Notification No. 39/2017 dated 13-10-2017 had provided that a supply was taxable @ 5% if the contract was a composite supply of works contract as defined under section 2(119) of the GST Act, involving earthwork exceeding 75% of the contract value and the recipient was the Central Government, State Government, Union Territory, a government authority or a government entity.
The Authority of Advance Ruling of Brajesh Kumar Singh (CGST Member) and Joyjit Banik, (SGST Member) held that the supply undertaken by the applicant to the Water Resource Department, Government of Andhra Pradesh for desilting of the foreshore of Prakasam Barrage was a composite supply of works contract involving predominantly earthwork and would be taxable vide entry No. 3 (vii) of the Notification No. 39/2017- Integrated Tax (Rate) dated 13.10.2017, as amended.
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