Composite contract is of the nature of “Indivisible”under Works Contract service and hence not Taxable at concessional rate of 12% GST : AAR Karnataka

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Applicant is engaged in execution of works awarded by M/s Karnataka Power Transmission Corporation Limited (KPTCL) for construction of power lines, erection of transmission towers and transformers – Contract is a single composite contract with three connected agreements for supply of materials, erection and civil works respectively.

Ruling sought as to whether the contract is a divisible contract [Supply of Goods & Supply of Services] or an Indivisible Contract [Works Contract]; whether rate of tax of 12% [CGST + SGST] is applicable in terms of notification 24/2017-CT(R).

Held: Contract entered by the applicant is of the nature of “indivisible” and squarely falls under Works Contract service – M/s KPTCL is registered under the Companies Act, 1956 and is a separate entity, therefore, cannot be considered as State Government or a State Government authority – applicant is not entitled for benefit of concessional rate of 12% under notification 24/2017-CT(R): AAR Karnataka

Citation: 2018-TIOL-38-AAR-GST