GST concessional rate for railway works denied where the contract was not proved as a composite works contract linked to railway infrastructure.

A concessional GST rate for original works pertaining to railways applies only where the contract is shown on evidence to be a composite supply of works contract involving transfer of property in goods and to be genuinely connected with railway infrastructure in the statutory sense. On the facts, the construction of a railway station and allied structures was treated as a standalone commercial project awarded by a development authority, not as a qualifying railway work, so the concession was unavailable. After the relevant entry was omitted from 18.07.2022, the claimed concession also ceased to be available. The construction services were therefore placed under the residuary 18% GST entry.

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Issues: Whether the construction contract for the CBD railway station and allied structures qualified for the concessional GST rate under serial no. 3(v)(a) of Notification No. 11/2017-Central Tax (Rate), and whether the supply was a composite supply, a works contract, and original works pertaining to railways.

Analysis: The applicable concessional entry required the supply to be a composite supply of works contract, involving transfer of property in goods in the execution of the contract, and to consist of construction, erection, commissioning or installation of original works pertaining to railways. On the material placed, the Authority found that the record did not establish the supply as a composite supply in the statutory sense. It also held that the project, though described as a railway station construction, was awarded by a development authority for a standalone commercial construction project on land of the local development body and was not shown to be a work connected with railway carriage or railway infrastructure in the statutory sense. Accordingly, the work was not held to pertain to railways for purposes of the concessional entry. The Authority further noted that serial no. 3(v)(a) was omitted with effect from 18.07.2022, after which the claimed concession was unavailable.

Conclusion: The concessional rate under serial no. 3(v)(a) was not available on the facts found. The construction services were taxable at the residual rate of 18% under serial no. 3(xii) both for the period up to 17.07.2022 and thereafter.

Final Conclusion: The ruling denies the claimed concessional GST treatment for the impugned construction work and places the supply under the residuary tax entry.

Ratio Decidendi: A works contract concession for original works pertaining to railways is only where the contract is shown, on the evidence, to be a composite supply of works contract and to be genuinely connected with railway infrastructure in the statutory sense; absent such proof, the residuary rate applies.

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