Contract Deemed Indivisible & Not Eligible for Concessional GST Rate

The Authority determined that the contract in question was indivisible and classified as a works contract under the CGST Act'2017. The applicant was found ineligible for the concessional GST rate of 12% as per Notification No.24/2017-Central Tax (Rate) because the contracting entity, KPTCL, did not meet the criteria to be considered a State Government entity.

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Issues:
1. Whether the contract is divisible or indivisible.
2. Applicability of tax rate under Notification No.24/2017-Central Tax (Rate).

Issue 1: Whether the contract is divisible or indivisible:
The applicant sought clarification on whether the contract with KPTCL is divisible into supply of goods and services or an indivisible works contract. The contract involved three connected agreements for supply of materials, erection, and civil works, awarded in response to a single tender notification. The Authority considered the definition of "works contract" under Section 2 clause 119 of the CGST Act'2017, which includes various activities related to immovable property where transfer of goods is involved. The Authority concluded that the contract, being indivisible in nature, falls squarely under the category of a works contract, which is considered a service under the CGST Act'2017.

Issue 2: Applicability of tax rate under Notification No.24/2017-Central Tax (Rate):
The second issue revolved around whether the applicant is eligible for the concessional GST rate of 12% as per Notification No.24/2017-Central Tax (Rate). The applicant argued that KPTCL should be considered a "State Government" entity based on the notification's wording. However, the Authority clarified that statutory bodies, corporations, or authorities created by Parliament or State Legislature are not considered government entities. As KPTCL is registered under the Companies Act'1956 as a separate entity, it does not qualify as a State Government or State Government Authority. Consequently, the applicant was deemed ineligible for the concessional GST rate of 12% under Notification No.24/2017-Central Tax (Rate).

Conclusion:
The Authority ruled that the contract was indivisible and classified as a works contract. Additionally, the applicant was not entitled to the concessional GST rate of 12% as per Notification No.24/2017-Central Tax (Rate) due to KPTCL not meeting the criteria to be considered a State Government entity.

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