Works contract classification and concessional GST rate apply to housing construction for a Government Entity under the notification.

Construction of housing complexes and residential houses was treated as works contract service because the activity involved supply of both goods and services in relation to immovable property under section 2(119) of the GST law. Bangalore Development Authority was regarded as a Government Entity, as it was created under State legislation and subject to Government control. The housing project, being a civil structure for predominantly non-commercial use and supplied to a Government Entity for work entrusted by the State Government, fell under entry 3(vi)(a) of Notification No. 11/2017-Central Tax (Rate) rather than entries 3(ii), 3(iv) or 3(v), attracting the concessional GST rate.

---

---

Issues: (i) Whether the applicant's construction activity constituted works contract service under the GST law; (ii) Whether Bangalore Development Authority was a Government Entity; (iii) Whether the applicant's transaction fell under entry 3(vi)(a) of Notification No. 11/2017-Central Tax (Rate) and not under entries 3(ii), 3(iv) or 3(v).

Issue (i): Whether the applicant's construction activity constituted works contract service under the GST law.

Analysis: The activity involved supply of both goods and services in relation to immovable property and was therefore examined as a works contract. The construction of housing complexes and residential houses answered the statutory description of works contract service.

Conclusion: The activity was held to be works contract service under section 2(119) of the GST law.

Issue (ii): Whether Bangalore Development Authority was a Government Entity.

Analysis: The Authority was found to be established under State legislation and controlled by the Government of Karnataka. Its composition and governance showed governmental control sufficient to satisfy the notification definition of Government Entity.

Conclusion: Bangalore Development Authority was held to be a Government Entity.

Issue (iii): Whether the applicant's transaction fell under entry 3(vi)(a) of Notification No. 11/2017-Central Tax (Rate) and not under entries 3(ii), 3(iv) or 3(v).

Analysis: The project was a residential housing project for general public and not one of the special categories covered by entries 3(ii), 3(iv) or 3(v). The services were supplied to a Government Entity in relation to a work entrusted to it by the State Government, and the construction was of a civil structure meant predominantly for use other than commerce, industry or other business or profession.

Conclusion: The transaction was held to fall under entry 3(vi)(a) of Notification No. 11/2017-Central Tax (Rate) and to be taxable at 6% under the CGST and corresponding Karnataka GST notification.

Final Conclusion: The advance ruling accepted the applicant's classification and rate position for the housing construction service supplied to Bangalore Development Authority.

Ratio Decidendi: Where construction services supplied to a Government Entity are in the nature of works contract and relate to a civil structure meant predominantly for non-commercial use, the concessional rate under entry 3(vi)(a) applies if the work is entrusted to the recipient by the Government.

---