Works Contract Services Of Construction Of Railway Under Bridge Exigible To 18% GST: Karnataka AAR

The Karnataka Authority of Advance Ruling (AAR) has ruled that Indian Railways' contract services for the construction of the railway under the bridge are subject to 18% GST.

The two-member bench of M.P. Ravi Prasad and Kiran T. Reddy has observed that contract services for the construction of tunnels executed for Indian Railways by the applicant is exigible to GST at 18% if the applicant is providing the services either as the main contractor or as a subcontractor to the main contractor.

The applicant is engaged in executing work contracts for Indian Railways, such as the construction of rail under bridges and tunnels, the supply and stacking of ballast, and work contract services involving predominantly earthwork and subcontracts for all such works. The applicant has entered into a contract with Konkan Railway Corporation Limited for the supply and stacking of ballast.

The applicant is a partnership firm registered under the provisions of the Central Goods and Services Tax Act, 2017 as well as the Karnataka Goods and Services Tax Act, 2017. The applicant is involved in the execution of work contracts for Indian Railways, such as the construction of rail under bridges, tunnel construction, the supply and stacking of ballast and earthwork, and the subcontracting of all works.

The applicant has stated that they are engaged in executing work contracts for Indian Railways, such as the construction of rail under bridge works, tunnel construction, supplying and stacking of ballast and earthwork, and also subcontracting all the mentioned works. They have submitted a contract agreement wherein the applicant has entered into a contract with Konkan Railway Corporation Limited for the supply and stacking of ballast at the Thokur ballast depot, loading into KRCL hoppers for CTR (P), which works under AEN/Udupi in the jurisdiction of Senior Regional Engineer, Karwar.

The applicant sought an advance ruling with respect to the GST charged on the nature of the supply carried out by the applicant.

The AAR has noted that contract services involving predominantly earth work executed for Indian Railways (Central Government) by the applicant are exigible to GST at 12% if the applicant is providing the services either as a main contractor or as a subcontractor to the main contractor. The supply of ballast to railroads is exigible for GST at 5%.

Applicant’s Name: S K Swamy and Company

Date: 23-01-2023

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