GST on Services to Railways

[Kalpesh Shah]

Respected Experts,

Our client is providing Following Services to Railways :

1. Platform cleaning Services, which is purely Service contract.

2. Parking Contract from Railway and paying railway License Fees for the same.

My question is whether :

1. Platform cleaning Services fall under RCM/ Forward Charge or considered as Exempt service under notification 12/2017 CGST (rate) dt : 28-6-2017 ?

2. Parking Charges payable to Railways falls under RCM or Forward Charge ?

for both the above cases Railway is asking to pay GST first and then they release payment later.

Your views is highly appreciable.

Thank you.

[Amit Agrawal]

W.r.t. your first query, I presume that you are referring to possibility of exemption under Serial No. 3 of notification 12/2017 CGST (rate) dt : 28-6-2017. I also presume that my 'Railways', you mean Railway Dept. of Central Govt.

While 'Railway' is indeed 'Central Govt'., one of the condition of said exemption is that your activities should be 'by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution'.

'Running of railways and maintenance / cleaning of platforms thereto' do not satisfy above requirements in my view. It is my understanding that Platform cleaning Services, provided to Railways are not exempted under above-said serial No. 3, even if same is 'pure service' provided to Central Govt.

And as you are service provider to Govt., GST on above activities will be payable by you under forward charge basis in my view.

All above are strictly personal views of mine and same should not be taken as professional advice / suggestion.

[Amit Agrawal]

W.r.t. your second query, I do not think that I have understood fulls facts of the case. Furthermore, one may need to go through tender-document, agreements / work-orders etc. to do full analysis of the issue/s involved. Hence, I refrain myself to post my views thereon.

[Ganeshan Kalyani]

Sir, recipient is seeking confirmation as regard tax is paid by you to Govt. or not. Some suppliers do this type of checking. Otherwise it is seen that few supplier collects the tax but do not pay it to the govt. May be because of that reason your service recipient is asking for confirmation from you. You being service provider you are supposed to charge correct tax on the tax invoice and pay it to the govt. on or before the due date.

[KASTURI SETHI]

I agree with both experts in toto. There is one case law in support of views of both experts.

M. SRINIVASAN Versus UNION OF INDIA - 2021 (5) TMI 39 - MADRAS HIGH COURT

 

[Kalpesh Shah]

Thank you for your valuable feedback.

Thank you Amit Agrawal Sir

Thank you Ganeshan Kalyani Sir

Thank you Kasturi Sethi Sir

AI Summary

Platform Cleaning Services Not Exempt Under Notification 12/2017 CGST; Forward Charge Applies; Parking Services Need Further Analysis A client provides platform cleaning and parking services to the Railways and seeks clarification on whether these services fall under Reverse Charge Mechanism (RCM) or Forward Charge, and if they are exempt under notification 12/2017 CGST. An expert opines that platform cleaning services are not exempt and GST should be paid under forward charge. For parking services, further analysis of agreements is needed. Another expert suggests that the Railways seek confirmation of tax payment to prevent non-compliance. A case law supporting the experts' views is mentioned, and the client expresses gratitude for the feedback.