18% GST Payable On The Composite Supply Of Welding Services On Railway Tracks Along With Labour Services: West Bengal AAR

The West Bengal Authority of Advance Ruling (AAR) has ruled that the conversion of short weld rails (SWR) to long weld rails (LWR) by flash butt welding on the railway tracks along with the supply of labour services shall be treated as composite supplies.

The two-member bench of Brajesh Kumar Singh and Joyjit Banik has observed that 18% GST shall be payable on the composite supply of welding services on the railway tracks along with labour services.

The applicant was awarded a sub-contract from M/s Patil Rail Infrastructure Pvt. Ltd. to undertake the work of conversion of SWR to LWR by flash butt welding on the tracks running from Furkating (FKG) to Jorhat (JTTN) to Mariani (MXN), in the state of Assam. The work also includes the supply of all assistance and labour for the welding of rail joints.

The applicant sought an advance ruling on the issue rate of GST in respect of work being undertaken by the applicant as a subcontractor for the conversion of SWR to LWR by flash butt welding on the railway tracks.

The applicant argued that the supply of labour services, along with the supply of job work services, should be considered a composite supply because these supplies are naturally bundled, with the job work being the primary supply and the labour supply being ancillary. Hence, the rate of GST would be the same as that of job work.

The AAR has observed that services such as welding of railway tracks and labour services are naturally bundled and supplied in conjunction with each other and therefore would fall under the ambit of "composite supply" as defined in clause (30) of Section 2 of the GST Act.

Applicant’s Name: Purple Distributors Pvt. Ltd.

Date: 22.12.2022

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