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Issues: (i) Whether the applicant's supply of works contract service for construction of the multi-modal inland waterways terminal qualified for the concessional rate under Serial No. 3(vi) of Notification No. 11/2017-CT (Rate), as amended; (ii) whether the supply was instead taxable at 18% under Serial No. 3(xii) of the said notification.
Issue (i): Whether the applicant's supply of works contract service for construction of the multi-modal inland waterways terminal qualified for the concessional rate under Serial No. 3(vi) of Notification No. 11/2017-CT (Rate), as amended.
Analysis: The relevant entry granted 6% rate for composite supply of works contract supplied to specified government recipients only when the recipient Government Entity procured the work in relation to a function entrusted to it and, in the case of clause (a), where the work was meant predominantly for use other than commerce, industry, or business. The terminal project was found to be an original work and the recipient was treated as a Government Entity, but the nature of the project showed that it created infrastructure for commercial use of the national waterway. User fees and charges collected by the recipient were not credited to the Consolidated Fund of India and were treated as proceeds from business. On that footing, the work did not satisfy the condition of predominant non-commercial use.
Conclusion: The supply did not qualify for the concessional rate under Serial No. 3(vi).
Issue (ii): Whether the supply was instead taxable at 18% under Serial No. 3(xii) of the said notification.
Analysis: Once the concessional entry was held inapplicable, the supply fell within the residual rate applicable to the works contract service described in Serial No. 3(xii). The ruling therefore applied the higher rate to the construction contract for the terminal.
Conclusion: The supply was taxable at 18% under Serial No. 3(xii).
Final Conclusion: The ruling determined that the amended concessional entry did not apply to the applicant's works contract for the terminal, and the supply was liable to GST at the higher rate.
Ratio Decidendi: A works contract supplied to a Government Entity is eligible for the concessional GST rate only if the contractual work is procured for an entrusted governmental function and the project is predominantly non-commercial; infrastructure created for commercial exploitation remains outside the concessional entry.
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