Construction work for medical institute qualifies for concessional 12% GST rate under Notification 11/2017

AAR Odisha ruled that construction work for ISPAT Post Graduate Medical Institute and Super Specialty Hospital at Rourkela qualified for concessional GST rate of 12% under Notification No. 11/2017-Central Tax (Rate). The Authority held that SAIL Rourkela qualifies as a Government Entity for GST purposes, making the works contract service eligible for the reduced tax rate. The ruling confirmed that all prerequisites for the notified exemption were satisfied, entitling the contractor to the concessional rate on the entire contract value.

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Issues Involved:
1. Applicable rate of GST on the contract awarded by SAIL to the Applicant.
2. Applicability of the determined tax rate to the entire value of the works contract.
3. Eligibility for refund of excess tax paid.
4. Procedure for claiming the excess amount paid.

Issue-Wise Detailed Analysis:

1. Applicable Rate of GST on the Contract Awarded by SAIL:
The Applicant sought an advance ruling on the applicable rate of GST for the contract awarded by Steel Authority of India Ltd. (SAIL) for the construction of 'ISPAT Post-Graduate Medical Institute and Super Specialty Hospital' at Rourkela Steel Plant. The ruling confirmed that SAIL is a Government Entity and the construction work is entrusted by the Central Government to SAIL. Therefore, the tax rate applicable to the value of the contract between the Applicant and SAIL is leviable at 12% [CGST @ 6% + SGST @ 6%] as per Entry no 3(vi) (a) or (b) of Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017.

2. Applicability of the Determined Tax Rate to the Entire Value of the Works Contract:
The ruling clarified that the determined tax rate of 12% is applicable to the entire value of the works contract covered by the Memorandum of Understanding dated 13.08.2018. The Applicant's supply is classified under serial no. 3(vi)(a) or (b) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, which covers services provided to a Government Entity by way of construction of a structure predominantly for use as a clinical establishment.

3. Eligibility for Refund of Excess Tax Paid:
The Applicant had paid 18% tax on its invoices raised to SAIL and sought clarification on whether the excess tax of 6% (18% paid - 12% applicable) is refundable. The ruling stated that the question does not fall under the provisions of Section 97(2) of the CGST Act, 2017 and thus does not merit discussion/consideration at the forum.

4. Procedure for Claiming the Excess Amount Paid:
Regarding the procedure for claiming the excess amount paid, the ruling referred to Section 54 of the CGST Act, 2017, which deals with the refund of taxes. The Applicant was advised to follow the procedure/provision of Section 54 for claiming a refund.

Conclusion:
The ruling confirmed that the applicable GST rate for the contract between the Applicant and SAIL is 12% [CGST @ 6% + SGST @ 6%]. The excess tax paid by the Applicant may be eligible for a refund under Section 54 of the CGST Act, 2017, and the Applicant should follow the prescribed procedure for claiming the refund. The ruling is valid subject to provisions under Section 103(2) and until declared void under Section 104(1) of the GST Act. Appeals can be made to the Odisha State Appellate Authority for Advance Ruling under Section 100 of the CGST/OGST Act, 2017 within 30 days from the date of receipt of the advance ruling.

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