TaxTMI 
TaxTMI 
2026 (8) TMI 400
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....construction of Rail under Bridge, construction of tunnels and supplying and stacking of ballast, earth work and also sub contracts of all the mentioned works. 3. In view of the above, the applicant has sought advance ruling in respect of the following questions: i. What is the output GST rate for loading of ballast which is stacked adjacent to the railway tracks into the railway wagons which is stationed on the railway track by using JCB loader (Machinery)? 4. Admissibility of The Application: The applicant, under Column 13 of Form ARA-01, has selected category of issues, "Determination of the liability to pay tax on the goods or services or both. On examination of the nature of the question raised and the issue involved, it is found that the Applicant has correctly selected the said category of issue. Accordingly, the present application is held to be admissible in terms of Sections 97(2) (e) of the CGST Act, 2017. 5. Brief Facts of the Case:- The applicant is engaged in executing works contract to Indian Railways such as construction of Rail under Bridge works, construction of tunnels and supplying and stacking of ballast, earth work and also sub contracts of a....
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....k by using JCB loader (Machinery)? 12.1 In this regard, the Applicant submits that their works contract with Indian Railways for supply of Ballast is more than 70% of their total works contract. Since the GST rate for supply of Ballast is 5%. Accordingly, the Applicant is of the considered view that the loading charges charged for loading of ballast into Railway Wagons will also be taxes @ 5% under GST Act, 2017. 12.2 The issue for determination is whether the activity of loading ballast, stacked adjacent to the railway track, into railway wagons/hoppers placed on the track through deployment of a JCB loader (machinery), where the same contract also includes supply of ballast, is liable to be treated as an independent supply of service, or a composite supply with supply of ballast as the principal supply, or a works contract service under the provisions of the CGST Act, 2017. 13. Legal Provisions:- 13.1 Section 2 (119) of the CGST Act, 2017, defines "Work Contract Service" as follows:- "works contract" means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, ren....
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....installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning in relation to any immovable property. 14.3 Further, the activity of supplying ballast and loading the same into railway wagons is not undertaken in the course of execution of any work relating to an immovable property. Therefore, one of the essential conditions prescribed under Section 2(119) of the CGST Act, 2017 for classification as a works contract is not satisfied. 14.4 In view of the above, the activity under consideration cannot be classified as a "works contract" within the meaning of Section 2(119) of the CGST Act, 2017. 15 Accordingly, the issue requires examination from the perspective of whether the supply of ballast and the activity of loading the ballast into railway wagons constitute a composite supply in terms of Section 2(30) of the CGST Act, 2017, or whether they are to be treated as independent supplies liable to tax separately in accordance with their respective classifications. 15.1 For a transaction/ supply to qualify as a composite supply under Section 2(30) of the CGST Act, 2017, the following essential conditions must be satisfied:....
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....loading the ballast into railway wagons using a JCB loader. This loading activity is carried out independently of the earlier supply of ballast. Further, each activity is executed separately, is supported by separate consideration, and is invoiced independently. The supply of ballast is complete upon its delivery at the designated location and is not dependent upon the subsequent loading activity. Similarly, the loading of ballast into railway wagons does not alter the nature or character of the completed supply of goods. Therefore, both activities are distinct and independently identifiable supplies. 15.6 The expression "naturally bundled and supplied in conjunction with each other in the ordinary course of business" implies that the different elements of supply are so integrally connected that they are normally supplied together and one supply is ancillary to, or inseparable from, the other. In the instant case, the contractual arrangement itself treats the two activities as separate obligations by prescribing distinct rates and permitting independent execution of each activity. The supply of ballast stands completed upon delivery and transfer of ownership, whereas the load....
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....ngs to the Railways at the time of loading; (ii) Railway wagons are stationed on the railway track for the purpose of loading; (iii) The applicant deploys JCBs Loaders solely for lifting and loading ballast into the wagons; (iv) No transportation of ballast is undertaken by the applicant; (v) No shunting, towing, marshalling, movement or operation of railway wagons is carried out by the applicant; and (vi) Consideration is linked to the quantity loaded, measured in cubic metres, and not to any transportation distance or wagon movement. 17.3 It is evident from the above facts that the essential character of the activity is the handling and loading of goods into Railway wagons for their onward transportation by Railways. The activity does not involve transportation of goods or operation of railway rolling stock. Therefore, the classification is required to be examined under Heading 9967 relating to "Supporting services in transport". The relevant classification is as under: Heading Group SAC Description 9967 99671 996719 Other cargo and baggage handling services 17.4 The Explanatory Notes to the Scheme of C....