The Gujarat Authority of Advance Ruling (AAR) ruled that 18% GST payable on services provided by subcontractors to main contractors pertaining to irrigation, construction, maintenance works to the irrigation department.

The applicant, M/s. Kababhai Popatbhai Savalia submits that JSIW Infrastructure pvt.ltd. has received the original contract from the irrigation department (State of Gujarat) for the construction of a pumping station at 161.03 km. near Jalansar and supplying and laying MS pipeline of 2650 mm. Diameter to 600 mm dia from Ch.146.383(UND-III) to 216.053 km with branches for moh and sorathi with all allied work (total pipeline length 104.165 km.) etc. and maintenance of the commissioned project for 10 years. Copy of the contract is submitted. The applicant further submits that JSIW Infrastructure has executed the same contract with Radhe Construction and M/s. Radhe Construction has further executed the agreement with the present applicant qua to the original work.

The applicant has sought the advance ruling on the issue at what rate of tax the liability should be determined on services provided by us (sub-contractors) to the main contractor pertaining to the irrigation, construction and maintenance works to the irrigation department, State of Gujarat. Under which head we should classify our services to execute irrigation, construction and maintenance work supplied to the irrigation department, State of Gujarat. Whether to charge a tax rate of 12% GST or 18% GST.

The coram of Sanjay Saxena and Arun Richard held that GST rate on subject supply is 18% for services supplied by the sub- sub-contractor to sub-contractor M/s Radhe and supply merits entry at Heading 9954, Entry No 3(ii) of Notification No.11/2017- CT(R) dated 28-6-17.