GST Ruling: Railway track renewal services by M/s AKM Balaji JV classified as Works Contract
The Authority for Advance Ruling in Chhattisgarh determined that the services provided by M/s AKM Balaji JV to RITES Ltd. for renewal/renovation and improvements for a railway track fall under the residual entry of Notification No. 11/2017-Central Tax (Rate), attracting a GST rate of 9% CGST + 9% CGGST. The ruling clarified the classification of the services as a "Works Contract" and specified the applicable GST rate for the mentioned services.
Issues Involved:
1. Classification of the service as a "Works Contract."
2. Applicable GST rate for the works contract services provided to RITES Ltd.
Issue-wise Detailed Analysis:
1. Classification of the service as a "Works Contract":
The applicant, M/s AKM Balaji JV, contended that the services provided to RITES Ltd. should be classified as "Works Contract" under Section 2(119) of the Central Goods & Services Tax Act, 2017. The definition provided under this section is as follows:
- "Works contract" means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration, or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract.
The applicant further classified the services under HSN 995429 as per the Annexure to Notification No. 11 Central Tax (Rate) dated 28/06/2017, which includes services involving repair, alterations, additions, replacements, renovation, maintenance, or remodeling of the constructions covered above.
2. Applicable GST rate for the works contract services provided to RITES Ltd:
The applicant sought clarification on the applicable GST rate for the works contract services provided to RITES Ltd. under the letter of acceptance dated 20/12/2019 for the renewal/renovation and other improvements for the railway track from Karonji Station to Bhatgaon Railway Siding at Bhatgaon Area of SECL.
The relevant legal provisions and amendments were discussed in detail:
- The rate of GST for Works Contract service is prescribed under serial number 3 of Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017.
- Various amendments to this notification were considered, including Notification No. 20/2017-Central Tax (Rate) dated 22.08.2017, Notification No. 24/2017-Central Tax (Rate) dated 21.09.2017, Notification No. 31/2017-Central Tax (Rate) dated 13.10.2017, and Notification No. 01/2018-Central Tax (Rate) dated 25.01.2018.
The authority concluded that the services provided by the applicant to RITES Ltd. for the renewal/renovation and other improvements for the railway track fall under the residual entry, i.e., entry no.3 (xii) of Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017, as amended. Consequently, the applicable GST rate for these services is 9% CGST + 9% CGGST.
Order:
The ruling given by the Authority for Advance Ruling, Chhattisgarh, stated:
- The activities described in the letter of acceptance dated 20.12.2019, referred to by the applicant for Works Contract Service in relation to the works contract for renewal/renovation and other improvements for the railway track from Karonji Station to Bhatgaon Railway Siding at Bhatgaon Area of SECL, would attract GST at the rate of 9% CGST + 9% CGGST.
Thus, the application for advance ruling was answered, confirming the applicable GST rate for the specified works contract services.
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