In absence of conclusive proof that the work pertains to government, Contracts of SKG-JK-NMC Associates (JV) are not covered under concessional rate of 12% instead of 18%

Last updated: 20 January 2021

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The Gujarat Authority for Advance Ruling has determined that SKG-JK-NMC Associates (JV) cannot claim a concessional GST rate of 12% on their works contracts. The ruling states that without conclusive proof that the work pertains to the government, the standard GST rate of 18% will apply. This decision was made in the absence of sufficient evidence demonstrating the government's direct involvement in the specific contracts awarded by RITES Ltd.

Court :
Gujrat AAR

Brief :
The applicant is engaged in the execution of Works Contract of ‘Construction of Pavement, Track Work, Warehouse, Admin Building, E&M works and other miscellaneous works at Khodiyar, Gandhinagar, Gujarat awarded by M/s RITES Ltd..

Citation :
ADVANCE RULING NO. GUJ/GAAR/R/36/2020

GUJARAT AUTHORITY FOR ADVANCE RULING
GOODS AND SERVICES TAX
A/5, RAJYA KAR BHAVAN, ASHRAM ROAD,
AHMEDABAD – 380 009.

ADVANCE RULING NO. GUJ/GAAR/R/36/2020
(IN APPLICATION NO. Advance Ruling/SGST&CGST/2018/AR/60)
Date: 03.07.2020
Name and address of the applicant : M/s. SKG-JK-NMC Associates (JV), Shaligram, C-201, Lake View, Nr.Vaishnvo Devi Circle, S.P. Road, Khoraj, Gandhinagar, Gujarat-382735

GSTIN of the applicant :24ABIFM9433G1Z5

Date of application :24.10.2018

Clause(s) of Section 97(2) of CGST / GGST Act, 2017, under which the question(s) raised. :b). Applicability of a notification issued under the provisions of CGST Act.

Date of Personal Hearing :11.06.2020 (through Video Conferencing)

Present for the applicant :CA Suresh Kumar Goyal

B R I E F FA C T S

The applicant is engaged in the execution of Works Contract of ‘Construction of Pavement, Track Work, Warehouse, Admin Building, E&M works and other miscellaneous works at Khodiyar, Gandhinagar, Gujarat awarded by M/s RITES Ltd..

2. The applicant has been awarded the work of ‘Construction of Pavement, Track Work, Warehouse, Admin Building, E&M works and other miscellaneous works at Khodiyar, Gandhinagar, Gujarat awarded by M/s RITES Ltd. (a Public Sector Undertaking owned by Indian Railways) vide Works Order No. Rites/RPO-ADI/NHSRCL/CONCOR/DCT-KHD/2018 dated 13.06.2018 for Rs.49.27 Crores (exclusive of GST). Copy of allotment letter enclosed).

To know more in details find the attachment file

FAQ :

The main issue is whether the works contracts awarded to SKG-JK-NMC Associates (JV) by RITES Ltd. are eligible for a concessional GST rate of 12% or the standard rate of 18%.

The applicant, SKG-JK-NMC Associates (JV), likely sought to apply the concessional GST rate of 12% to their contracts.

The Authority ruled that the contracts are not covered under the concessional rate of 12% and will be subject to the standard rate of 18%.

The concessional rate was denied because there was no conclusive proof that the work undertaken by SKG-JK-NMC Associates (JV) pertained directly to the government.

The contracts were awarded by M/s RITES Ltd., which is a Public Sector Undertaking owned by Indian Railways.