Railway works contract concession denied where locomotive supply was treated as predominantly goods, not original works.

Manufacture, supply, installation and commissioning of electric locomotives for Indian Railways was examined under the GST rate notification for composite supply of works contract involving original works pertaining to railways. The authority construed the notification with the statutory definitions of works contract and railway, and held that the contract, viewed commercially, was predominantly a supply of goods with civil construction and installation only ancillary. It further held that the activity was not original works pertaining to railways within the concessional entry. The concessional railway-related rate was therefore unavailable, and the applicable GST rate was 9% CGST and 9% SGST.

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Issues: Whether the applicant's contract for manufacture, supply, installation and commissioning of electric locomotives for Indian Railways and related works was a composite supply of works contract involving original works pertaining to railways so as to attract the concessional rate applicable to such supplies.

Analysis: The relevant entries in the rate notification were construed on the basis of the statutory definition of works contract and the meaning of "railway" in the applicable goods and services tax law, read in the context of the Railways Act definition. The supply was examined in its commercial and contractual setting. The predominant supply was found to be supply of goods, while the civil construction and installation elements were treated as ancillary. The work was also found not to be a supply of original works pertaining to railways within the intended scope of the concessional entry, and the expression "railways" was not restricted to the narrow sense suggested by the applicant.

Conclusion: The applicant's activity did not qualify for the lower rate as a composite supply of works contract pertaining to railways; the applicable GST rate was 9% CGST and 9% SGST.

Ratio Decidendi: For concessional treatment under the railway-related works contract entry, the supply must answer the statutory description of original works pertaining to railways on a substantive reading of the contract and the notification entry, and a predominant supply of goods does not by itself satisfy that requirement.

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