Port trust jetty construction for Navy taxed as works contract service at concessional 12% GST rate

AAR Kerala ruled on GST classification and rates for jetty construction works by a port trust for Indian Navy. The authority held that the supply constituted a works contract treated as service supply under CGST Act. The port trust, being a government entity, was denied full exemption under Notification 12/2017 as consideration wasn't received as grants from Central Government. However, concessional 12% GST rate under Notification 24/2017 was applicable for services supplied between 21.09.2017 and 17.07.2022. Post 18.07.2022, standard 18% GST rate applies following notification amendments. The ruling clarified tax liability periods and rates for ongoing construction project.

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Issues Involved:
1. Nature of services under the MoU.
2. Eligibility for GST exemption under Notification No. 12/2017.
3. Eligibility for reduced GST rate of 12% under Notification No. 24/2017.
4. Eligibility of contractors and sub-contractors for GST exemption.
5. Eligibility of contractors for reduced GST rate of 12%.
6. Eligibility for refund of excess GST paid.

Summary:

Issue 1: Nature of Services Rendered by CoPT
The Authority ruled that the activity undertaken by the applicant for the Construction of Jetty for the Indian Navy as per the MoU dated 22.02.2019 falls within the ambit of "Works Contract" as defined in Section 2(119) of the CGST Act, 2017.

Issue 2: Eligibility for GST Exemption
The Authority concluded that the service provided by the applicant to the Indian Navy as per the MoU dated 22.02.2019 is not eligible for exemption under the entry at SI. No. 9C of Notification No. 12/2017 CT (Rate) dated 28.06.2017, as inserted by Notification No. 32/2017-CT (Rate) dated 13.10.2017. The fourth condition, which requires the consideration to be received in the form of grants from the Central Government, was not satisfied.

Issue 3: Eligibility for Reduced GST Rate of 12%
The Authority ruled that the applicant is eligible for the concessional rate of GST of 12% [6% CGST + 6% SGST] as per the entry at Item (vi) of SI. No. 3 of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended, for services supplied as per the MoU dated 22.02.2019, for which the time of supply falls between 21.09.2017 and 17.07.2022. For services supplied on or after 18.07.2022, the GST rate of 18% [9% CGST + 9% SGST] applies.

Issue 4: Eligibility of Contractors and Sub-contractors for GST Exemption
The Authority did not provide a ruling on this issue as the question does not pertain to a transaction being undertaken or proposed to be undertaken by the applicant.

Issue 5: Eligibility of Contractors for Reduced GST Rate of 12%
The Authority did not provide a ruling on this issue as the question does not pertain to a transaction being undertaken or proposed to be undertaken by the applicant.

Issue 6: Eligibility for Refund of Excess GST Paid
The Authority did not provide a ruling on this issue as it is not covered by any of the matters enumerated in sub-section (2) of Section 97 of the CGST Act, 2017.

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