GST rate for road bridge construction services depends on supply timing: 12% before July 18 2022, 18% after under Section 97(2)

Kerala AAR ruled that GST rate determination for works contract services provided to Kerala State Transport Project (KSTP) for road and bridge construction depends on supply timing. Services supplied before 18.07.2022 attract 12% GST (6% CGST + 6% SGST), while services supplied from 18.07.2022 onwards attract 18% GST. The ruling clarified that such construction services for public use fall under standard GST rates rather than requiring determination of KSTP's governmental status, as this question fell outside AAR's statutory scope under Section 97(2) of CGST Act.

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Issues Involved:
1. Status of Kerala State Transport Project (KSTP) in GST: Government Authority, Government Entity, or Government Department.
2. GST rate on works contract services provided by a Government Contractor to KSTP for construction of roads and bridges for public use.

Issue-wise Detailed Analysis:

1. Status of Kerala State Transport Project (KSTP) in GST:
- The applicant sought clarification on whether KSTP is a Government Authority, Government Entity, or Government Department.
- The Authority for Advance Ruling (AAR) determined that this question does not fall under any of the subject matters listed in sub-section (2) of Section 97 of the CGST Act.
- Consequently, no ruling was issued on this question.

2. GST Rate on Works Contract Services Provided to KSTP:
- The applicant provides composite supply of works contract services, specifically the construction of roads and bridges, to various government departments, including KSTP.
- The applicant was uncertain about the applicable GST rate due to the recent increase from 12% to 18% as per Central Tax Notification No. 13/2021, effective from 01.01.2022.
- The AAR examined the relevant provisions and notifications under the CGST Act and KSGST Act, noting that the provisions are substantially the same except for certain differences.

Key Points Discussed:
- Notification No. 11/2017-Central Tax (Rate): Entry No. 3(iv) specifies that works contract services for the construction of roads and bridges for public use are taxable at 12% (CGST @ 6% and SGST @ 6%).
- Amendment via Notification No. 03/2022-Central Tax (Rate): Effective from 18.07.2022, the reduced rate of 12% was omitted, increasing the tax rate to 18% (CGST @ 9% and SGST @ 9%).

Conclusion:
- The AAR ruled that the works contract services provided by the applicant for the construction of roads and bridges for public use are taxable at 12% (CGST @ 6% and SGST @ 6%) if the time of supply, determined as per Section 14 of the CGST Act, is before 18.07.2022.
- If the time of supply is on or after 18.07.2022, the services will be taxable at 18% (CGST @ 9% and SGST @ 9%).

Ruling:
- Question 1: No ruling issued as the question is not covered under sub-section (2) of Section 97 of the CGST Act.
- Question 2: The GST rate for works contract services provided by the applicant to KSTP for the construction of roads and bridges for public use is 12% (CGST @ 6% and SGST @ 6%) if the time of supply is before 18.07.2022, and 18% (CGST @ 9% and SGST @ 9%) if the time of supply is on or after 18.07.2022.

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