Authority for Advance Ruling gives verdict on supply of works contract services to Indian Railways

Authority for Advance Ruling gives verdict on supply of works contract services to Indian Railways

A company had entered a contract with the Konkan Railway Corporation Limited

The Bangalore bench of the Authority for Advance Ruling (AAR) has ruled that the supply of work contract services to the Indian Railways, including the construction of railways and tunnels would be eligible for Goods and Service Tax (GST) at 18 percent.

The applicant SKS Swamy and Company was engaged in executing works contract to the Indian Railways.

The works included the construction of rail underbridge works, construction of tunnels and supplying and stacking of ballast, earthwork, and also subcontracting of all these.

The company submitted a contract agreement wherein the applicant entered into a contract with the Konkan Railway Corporation Limited (KRCL) for supplying and stacking of ballast at the Thakur ballast depot, loading into KRCL hoppers.

The applicant sought an advance ruling regarding the percentage of GST output tax to be charged for the works contract executed to the Indian Railways.

The Karnataka bench of the Income Tax Authority of M.P Ravi Prasad (State Member) and Kiran Reddy T (Central Member) held that the works contract services like construction of railway under-bridge and tunnels would be exigible to GST at 18 percent. The works contract services involving predominantly earthwork would be exigible for GST at 12 percent. The supply of ballast to railways would be eligible for GST at 5 percent.

This was if the applicant was providing the services either as a main contractor or as a subcontractor to the main contractor.

Advocate BK Srinivas appeared for the applicant.