GST on Horticulture development and maintenance services

[Megha Jain]

Dear Experts,

I am a proprietorship concern, engaged in providing horticulture development and maintenance of IIT Guwahati campus. IIT Guwahati is an entity established by the Government of India under the Ministry of Education. My query is regarding applicability of rate of tax (12% or 18%) on such services to the government entity.

[Sadanand Bulbule]

GST @ 18% is applicable on horticulture development and maintenance services provided to IIT Guwahati, as no concessional 12% rate is available for such services to Government entities post-2022 amendments.

[Megha Jain]

The services were provided from FY 2017-18 to FY 2022-23.

[Pinnacle Tax Advisor]

There was no exemption on this. GST rate was 18% on horticultural service/Gardner service

[YAGAY andSUN]

The issue pertains to the applicable GST rate on horticulture development and maintenance services provided to Indian Institute of Technology Guwahati, a Government Entity.

Horticulture development and maintenance services are in the nature of pure services relating to upkeep of land/immovable property. Such services do not qualify as "works contract" under GST, as they do not involve construction, erection, or installation resulting in immovable property. In the absence of a specific entry prescribing a concessional rate, these services fall under the residuary category, taxable at the standard rate of 18% in terms of Notification No. 11/2017-Central Tax (Rate).

The concessional rate of 12% was historically available only for specified works contract services provided to Government, Governmental Authorities, or Government Entities, subject to strict conditions. Horticulture or gardening/maintenance services were never covered within such concessional entries, and hence were not eligible for the reduced rate at any point in time.

Further, amendments brought through Notification No. 15/2021-Central Tax (Rate) (effective 01.01.2022) withdrew the concessional rate of 12% even for eligible works contract services supplied to Government Entities, thereby subjecting such supplies to 18% GST. This reinforces the legislative intent to tax such services at the standard rate.

It is a settled principle under GST law that the nature of supply, and not the status of the recipient, determines the applicable rate. Therefore, merely because services are provided to a Government Entity like IIT Guwahati does not entitle the supplier to any concessional rate unless specifically notified.

Accordingly, for the entire period from FY 2017-18 to FY 2022-23, horticulture development and maintenance services provided to IIT Guwahati were:

• Not exempt, and

• Not eligible for 12% GST,

and were rightly taxable at 18% (9% CGST + 9% SGST / 18% IGST).

[Megha Jain]

If we go through the definition of works contract as per sec 2(119) of the CGST Act, 2017, it covers repairs, maintenance, etc., of immovable property. So, horticulture development and maintenance of IIT Guwahati campus isn't covered under works contract service for the purpose of concessional rate of 12%?

[Shilpi Jain]

This needs further analysis since definition of goods does not cover standing crops.

It would be immovable property

[Shilpi Jain]

At present there is no concessional rate of tax for these services. 18% GST applicable.

AI Summary

Horticulture maintenance services to government entities attract 18% GST as pure services, not concessional works contract supply. Horticulture development and maintenance services supplied to a Government Entity are treated as pure services relating to upkeep of land or immovable property, not as works contract services merely because of the recipient's status. The applicable GST rate depends on the nature of the supply, and in the absence of a specific concessional entry, such services fall under the residuary category taxable at 18%. The concessional 12% rate was never available for horticulture or gardening maintenance services and was later withdrawn even for eligible works contract services supplied to Government Entities.