AAR rules 18% GST on APIIC works contracts, 12% rate for agricultural cold storage under notification 11/2017

AAR Andhra Pradesh ruled on GST rates for works contracts executed by applicant for APIIC. The composite supply of works contract constitutes service supply under Section 2(119) CGST/APGST Act 2017. APIIC qualifies as government entity with 100% government shareholding. Construction projects 1-6 attract 18% GST rate under SAC 9954 as they serve business purposes without proof of non-commercial use. Construction project 7 (20MT cold storage for Primary Processing Centre) qualifies for concessional 12% GST rate under notification 11/2017 clause V(e) as agricultural infrastructure.

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Issues:
1. Applicability of CGST and SGST Tax Rate on listed works executed for Andhra Pradesh Industrial Infrastructure Corporation.
2. Applicability of CGST and SGST Tax Rate on construction of 20MT cold storage building for Primary Processing Centre under Mega park scheme.

Analysis:
1. Applicability of Tax Rate on Listed Works:
The applicant sought a ruling on the tax rates for various construction works awarded by Andhra Pradesh Industrial Infrastructure Corporation Limited (APIIC). The works included construction projects like compound walls, stormwater drains, and administrative buildings. The Authority determined that the works contract falls under SAC Heading No. 9954, with a tax rate of 18% (9% CGST + 9% SGST) as per Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017. The applicant failed to prove that the constructions were for purposes other than business, making them ineligible for the concessional rate of 12%.

2. Applicability of Tax Rate on Cold Storage Building:
Regarding the construction of a 20MT cold storage building for the Primary Processing Centre, the Authority examined if it qualified for the concessional rate. Based on the provisions of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017, the construction was classified under V (e) of sl.no 3 under heading 9954, making it eligible for the concessional rate of 12% (CGST and SGST each). The Authority concurred with the applicant's claim on the applicable tax rate for this specific project.

In conclusion, the Authority ruled that the listed works, except for the cold storage building, are subject to a tax rate of 18%, while the construction of the cold storage building falls under the concessional rate of 12% as per the relevant notifications. The judgment clarified the classification of works, the eligibility for concessional rates, and the specific tax rates applicable to each type of construction project based on the provisions of the GST Acts and notifications.

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