Concessional GST for works contract services denied where the supply was commercial and the recipient was not a qualifying public authority.

Works contract services supplied to a distribution company did not qualify for the concessional GST rate because the notification applied only to supplies made to specified government recipients for works predominantly used other than for commerce, industry, business or profession. Although the recipient was treated as a Government entity, it was not regarded as a State Government or local authority acting as a public authority for the relevant explanation, and the activity was found to be commercial in nature. Clarification letters from government authorities were held to have no legal force to change the statutory classification. The supply was therefore taxable at the regular rate for works contract services.

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Issues: Whether the works contract services rendered to the distribution company were eligible for concessional GST rate of 12% as services provided to Government or Government entity for use other than commerce.

Analysis: The applicable notification framework granted a concessional rate only where the services were supplied to specified government recipients for works meant predominantly for use other than commerce, industry or any other business or profession. The recipient was held to be a Government entity, but not a State Government or local authority acting as a public authority for the purpose of the relevant explanation. The activity was treated as commercial in nature, and the clarification letters from government authorities were found to have no legal force to alter the statutory classification of the supply.

Conclusion: The supply did not qualify for the concessional rate of 12% and was taxable at the regular rate applicable to works contract services.

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