Contract work not treated as railway-related under GST clause, taxed at 18% instead of 12%.

The court ruled that the contract work, while qualifying as a 'Works Contract' and involving 'original works', did not conclusively pertain to railways due to lack of evidence. Consequently, the work was not covered under clause 3(v)(a) of the relevant Notification, resulting in the applicable GST rate remaining at 18% instead of the reduced rate of 12%.

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Issues Involved:
1. Whether the work awarded can be covered under the definition of Works Contract as defined under Section 2(119) of the CGST Act, 2017.
2. Whether the said work can be considered as 'original work' as mentioned in clause 3(v)(a) of the Notification No.11/2017-Central Tax (Rates) dated 28.06.2017.
3. Whether the said work can be considered as works contract pertaining to railways including monorail and metro.

Detailed Analysis:

Issue 1: Definition of Works Contract
The applicant argued that the work awarded to them involves construction in relation to immovable property wherein transfer of property in goods is involved. This aligns with the definition of 'Works Contract' under Section 2(119) of the CGST Act, 2017, which includes building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration, or commissioning of any immovable property. Therefore, the work awarded to the applicant is covered under the definition of 'Works Contract'.

Issue 2: Consideration as 'Original Work'
The term 'original works' as per clause (zs) of Notification No.12/2017-Central Tax (Rates) dated 28.06.2017 includes all new constructions, all types of additions and alterations to abandoned or damaged structures on land that are required to make them workable, and erection, commissioning, or installation of plant, machinery, or equipment or structures. The applicant's scope of work, which includes laying of track work, pavement, construction of admin building, warehouse, and electrical/fire-fighting works, falls under 'new constructions' and thus qualifies as 'original work'.

Issue 3: Pertaining to Railways
The primary contention was whether the work pertains to railways. The applicant cited that the work was awarded by M/s RITES Ltd., a Public Sector Undertaking owned by the Ministry of Railways, Government of India, and thus should be considered as pertaining to railways. However, the term 'railways' as per Section 2(31) of the Railway Act, 1989 includes various components related to public carriage of passengers or goods. The applicant failed to provide conclusive proof that the work pertains specifically to railways as defined under Section 2(31) of the Railway Act, 1989. No evidence was presented to establish that the work was in respect of 'Government railway' or 'Non-Governmental railway'. Therefore, the third condition was not satisfied.

Conclusion:
The ruling concluded that while the contract qualifies as a 'Works Contract' and involves 'original works', it does not conclusively pertain to railways due to lack of evidence. Thus, the contract work is not covered under clause 3(v)(a) of the Notification No.11/2017-Central Tax (Rates) dated 28.06.2017, and the applicable GST rate remains 18% instead of the reduced rate of 12%.

Ruling:
The contract work is not covered under clause 3(v)(a) of the Notification No.11/2017-Central Tax (Rates) dated 28.06.2017, as amended by Notification No. 20/2017-Central Tax (Rate) dated 22.08.2017, and therefore, the applicable GST rate is 18%.

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