Contract For Construction Of New Railway Siding Is Covered Under “Works Contract”, Attracts 12% GST: West Bengal AAR

The West Bengal Authority for Advance Ruling (AAR) has ruled that the contract for the construction of new railway siding is covered under the definition of a "works contract" and attracts 12% GST.

The two-member bench of Brajesh Kumar Singh and Joyjit Banik has observed that the work executed by the applicant in connection with the construction of a Railway siding at Jhanjra Area by Eastern Coalfields Limited (ECL) pertains to railways.

The applicant is a private corporation and is engaged in the execution of contract services. The applicant was awarded a contract by Rites Limited, a public sector undertaking owned by the Ministry of Railways, Government of India. M/s Rites Limited has appointed the applicant for the work on behalf of Eastern Coalfields Limited.

The applicant contended that the work may be considered a composite supply of works contract that is supplied by way of the construction of original works pertaining to railroads and therefore would be taxable at the rate of 12%.

The applicant sought an advance ruling on the issue of the applicant's supply for the construction of new railway sidings in the Jhanjra Area of ECL in response to an order received from M/s.RITES Ltd. is covered under the definition of a work contract and will be taxed on its supply.

The AAR has held that the work is in relation to immovable property and certainly involves the transfer of property in goods and qualifies to be a "works contract" as defined in clause (119) of Section 2 of the GST Act.

Applicant’s Name: Triveni Engicons Private Limited

Date: 22.12.2022

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