Strict construction of GST concessional works contract entry denied for headquarters retrofitting lacking nexus with entrusted functions.

Concessional GST under entry 3(vi) of Notification No. 11/2017 applies only to composite works contract services supplied to specified Government recipients where the civil structure or original works are meant predominantly for non-commercial use, and, for a Government entity, the supply is in relation to a work entrusted by Government. Retrofitting and strengthening of TANGEDCO's headquarters was treated as connected with a commercial entity's electricity generation and distribution activities, so the non-commercial use condition was not met. The required nexus with the entrusted governmental function was also not established. Exemption notifications were strictly construed, and eligibility was denied.

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Issues: Whether the appellant's works contract services provided to TANGEDCO for retrofitting and strengthening of its headquarters building qualified for the concessional rate under entry 3(vi) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, including whether the services were meant predominantly for use other than commerce, industry or any other business or profession and whether they were procured in relation to a work entrusted to the Government entity.

Analysis: The entry grants concessional tax only to composite supply of works contract services supplied to specified Government recipients, where the civil structure or original works are meant predominantly for use other than commerce, industry or any other business or profession, and, in the case of a Government entity, the supply must be procured in relation to a work entrusted by the Government. The works in question were found to relate to TANGEDCO's headquarters, and TANGEDCO's activities of generation and distribution of electricity were treated as commercial in nature for GST purposes. The explanation to the notification concerning activities of public authorities was held inapplicable to TANGEDCO as a Government entity. The condition requiring a nexus with the entrusted governmental function was also held not satisfied, because strengthening the headquarters building was not in relation to the entrusted work of generation and distribution of electricity. Exemption notifications were held to require strict construction, with the burden on the assessee to establish eligibility.

Conclusion: The appellant was not entitled to the concessional rate under entry 3(vi), and the rate of 18% was upheld.

Final Conclusion: The appeal failed on merits and the advance ruling was left undisturbed.

Ratio Decidendi: An exemption or concessional-rate entry for works contract services must be strictly construed, and eligibility exists only where the supply satisfies every stated condition, including the required nexus with the entrusted governmental function and the prescribed non-commercial use.

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