12% GST Payable On Works Contract Services Executed To Karnataka Housing Board For Construction Of Police Station: AAR

The two-member bench of M.P. Ravi Prasad and T.Kiran Reddy has held that work contract services executed to the Karnataka Slum Development Board under the Pradhan Mantri Awas Yojana, as a main contractor, are liable to 12% GST till 17.07.2022 and liable to tax at 18% GST from 18.07.2022.

The Applicant is a Civil Works Contractor engaged in the construction of houses and infrastructure activities for the Karnataka Slum Development Board under Pradhan Mantri Awas Yojana, the construction of buildings for Belagavi Smart City Limited under Smart City projects and the construction of a police station under the Karnataka Housing Board, Bangalore.

The applicant has sought an advance ruling in respect of the rate of work contract services executed to Karnataka Housing Board, Bangalore, with respect to the construction of a police station at Govindarajanagar, Bangalore.

Yet another issue raised was in respect of work contract services executed for the Karnataka Slum Development Board under the Prime Minister Awaz Yojana, as a main contractor.

The AAR held that only the composite supply of works contract provided by a sub-contractor to the main contractor who provides services specified in item 3(iii) or item 3(vi) to the Central Government, State Government, Union territory or a local authority is liable to tax at 12% GST. Since the applicant is into the construction of Magadi Road police station, the services provided by the applicant are covered under entry 3(xii) of Notification No.11/2017–Central Tax (Rate), dated 28.06.2017 and further amended vide Notification No.03/2022–Central Tax (Rate), dated 13.07.2022 and is taxable at 18% GST.

"Since the applicant is into the construction of 888 houses including infrastructure works in the slums of Ramanagara city under the PMAY (U)-HFA scheme, the same is covered under the above mentioned entry and the same is taxable at 12% GST," the AAR said.

Applicant's Name: Yankee Constructions LLP.

Dated: 29.08.2022

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