rate of tax applicable on construction services provided to a Government Entity, in relation to construction such as of a Ropeway
the Goods and Services
Tax Act, 2017 came into force in
The Central Government has clarified in Notification No. 152/08/2021 dated 17.6.2021 that works contract service provided by way of construction such as of rope way shall fall under entry at sl. No. 3(xii) of notification 11/2017-(CTR) and attract GST at the rate of 18%.
The relevant Circular is given below for ready reference:
CBIC-190354/36/2021-TRU
Section-CBEC
Government of
India Ministry of Finance
Department of Revenue
*****
To,
North Block, New Delhi, Dated
the 17th June, 2021
The Principal Chief Commissioners/
Chief Commissioners/
Principal
Commissioners/ Commissioner
of Central Tax (All) /
The Principal Director Generals/ Director Generals (All)
Madam/Sir,
Sub– Clarification regarding rate of tax applicable on construction services provided to a Government
Entity, in relation to construction such as of
a Ropeway on turnkey basis-reg.
Reference has been received by the Board for a clarification whether services supplied to a Government Entity by way of construction such as of “a ropeway” are
eligible for concessional rate of 12% GST under entry No. 3 (vi) of Notification No.
11/2017- CT (R) dt. 28.06.2017.
On the recommendation of the GST Council, this issue
is clarified as below.
2. According to
entry
No.
3(vi) of
notification
No.
11/2017-CT
(R)
dated
28.06.2017, GST rate
of
12% is applicable, inter alia,
on-
“(vi) Composite supply of works contract as defined in clause (119) of section 2 of the Central
Goods and Services Tax Act, 2017, (other than that covered by items (i), (ia), (ib), (ic), (id),
(ie) and (if) above) provided to the Central Government, State Government, Union Territory,
a local authority a Governmental Authority or a Government Entity, by way of
construction,
erection,
commissioning, installation,
completion, fitting out, repair, maintenance,
renovation, or
alteration of –
(a) a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession; “
….
2.1 Thus, said entry No 3 (vi) does not apply to any works contract that is meant
for the purposes of commerce, industry, business of profession, even if such service
is provided to the Central Government, State Government,
authority a Governmental Authority or a Government Entity. The doubt seems to have arisen in the instant cases as Explanation to the said entry states, the term
‘business’ shall not include any activity or transaction undertaken by the Central
Government, a State Government or any local authority in which they are engaged
as public authorities. However, this explanation
does
not apply to Governmental Authority or Government Entity, as defined in clause (ix) and (x) of the explanation to said notification. Further,
civil constructions, such as rope way for tourism
development shall not be
covered by said entry 3(vi) not being a structure that is meant
predominantly
for
purposes
other than business.
While road, bridge,
terminal, or railways are covered by entry No. 3(iv) and 3(v) of said notification, structures like ropeway
are not covered
by these entries too. Therefore, works
contract service provided
by way of construction such as of
rope way shall fall under entry at sl.
No. 3(xii) of notification 11/2017-(CTR) and
attract GST
at
the rate of 18%.
3. Difficulty if
any, may be brought
to
the notice
of the Board.
Yours faithfully,
(Rajeev Ranjan)
Under Secretary, TRU Email:
rajeev.ranjan-as@gov.in Tel: 011 2309 5558