Poultry Farm Construction: Tax Implications on Works Contract Services under CGST/KGST Act 2017

The ruling determined that the construction of a poultry farm on immovable property constitutes a composite supply of works contract services under the CGST/KGST Act 2017. The applicant is ineligible for Input Tax Credit (ITC) and is subject to a tax rate of 9% CGST and 9% KGST. The transfer of poultry farm equipment and works executed for construction falls under HSN 9954.

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Issues:
1. Rate of tax on items and equipments used in the construction of a poultry farm on immovable property.
2. HSN code for the transfer of poultry farm equipment and works executed on immovable property.

Analysis:
1. Admissibility of the application:
The application sought clarification on the classification and liability to pay tax on goods and services, making it admissible under Section 97(2)(a) and 97(2)(e) of the CGST Act 2017.

2. Brief Facts of the case:
The applicant, a poultry company, breeds parent birds for commercial broiler chicks. They inquired about the tax rates and classification of various items needed for constructing a poultry farm on immovable property.

3. Findings & Discussion:
The Authority noted that the applicant engages in composite supply of works contract services on immovable property for poultry farm construction. The term "immovable property" was analyzed based on legal definitions, highlighting that the activity falls under the definition of composite supply.

4. Interpretation of Law:
The activity of constructing a poultry farm on immovable property constitutes a composite supply of works contract service under the CGST/KGST Act 2017. The applicant's procurement of goods and services for the construction is considered a composite supply, treated as a supply of services as per Schedule II to the CGST Act.

5. Input Tax Credit (ITC) & Tax Rate:
The applicant, constructing the farm on immovable property, is ineligible to claim ITC as per Section 17(5)(d) of the CGST Act. The ruling specified that the composite supply of works contract for poultry farm construction is classified under HSN 9954, attracting a tax rate of 9% CGST and 9% KGST.

6. Ruling:
1. The EPC contract for poultry farm construction on immovable property is taxed at 9% CGST and 9% KGST.
2. The transfer of poultry farm equipment and works executed for the construction is classified under HSN 9954.

This detailed analysis of the judgment provides insights into the legal interpretation and application of tax laws concerning the construction of a poultry farm on immovable property.

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