Composite Supply Of Hospital Construction Works For Govt Entity Attracts 18% GST: Maharashtra AAR

The Maharashtra Authority of Advance Ruling (AAR), consisting of members Rajiv Magoo and T.R. Ramnani, has ruled that 18% GST is payable on the composite supply of hospital construction works for government entities. The Uttar Pradesh Rajkiya Nirman Nigam Ltd. (UPRNN), a Government of Uttar Pradesh Undertaking, has floated online global open e-tenders for the construction of a 200-bed ESI Hospital at Butibori, Nagpur, Maharashtra for which, M/s. KPC Projects Ltd. The applicant was selected based on their bid for the work and entered into a contract with UPRNN to provide the work. The scope of the present work order requires the applicant to construct the hospital for (ESIC) Employee State Insurance Corporation, a statutory body under the Ministry of Labour and Employment, Govt. of India. The applicant has sought an advance ruling on the issue. In view of the construction services provided by the applicant to UPRNN, is the applicant eligible to avail the concessional rate of GST at 12% as prescribed in S. No. 3 (vi) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended. If not, what is the appropriate rate and classification of GST to be charged by the applicant? The AAR found that there was a composite supply of works contract provided to UPRNN, a government entity, by way of the construction of a clinical establishment, i.e., a hospital. The Authority clarified that Rate Notification No. 11/2017 has been further amended by Notification No. 15/2021–CTR dated 18.11.2021 (with effect from 01.01.2022) and in Sr. No 3, in column (3), in item (vi), for the words "Union territory, a local authority, a governmental authority or a government entity", the words "Union territory or a local authority" have been substituted and that means the words "or a governmental authority or a government entity" have been omitted." Therefore, with effect from 01.01.2022, the services supplied by the applicant will not be covered under Sr. No. 3 (vi) of Notification No. 11/2021–CTR dated 28.06.2017. "Since the service is expected to commence only at a future date, in view of the amended Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, the impugned activity is not covered under Sr. No. 3 (vi) mentioned above and therefore the said activity will be covered under the residuary clause (xii) of Sr. No. 3 of Notification No. 11/2017 and the rate of GST to be paid by the applicant will be 18% of the taxable value," the AAR said. Applicant's Name: KPC Projects Ltd. Dated: 04/05/2022 Click Here To Read/Download Order

Composite Supply Of Hospital Construction Works For Govt Entity Attracts 18% GST: Maharashtra AAR

Mariya Paliwala

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