GST not applicable on work contracts for which agreements executed before July 1, 2017: Madras HC

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Section 2(119) of the Central Goods and Services Tax Act, 2017, read with section 6 of the Tamil Nadu Value Added Tax Act, 2006 – Works contract – Petitioner was an association formed for welfare of members of road contractors carrying works for National Highways, and other Governmental organizations – It was a case of petitioner that contractor used to remit 2 per cent tax on value of work executed by them towards Work Contract Tax under Tamil Nadu Value Added Tax, 2006 – But, when CGST Act, 2017 came into force, i.e., with effect from 1-7-2017, Central Government issued notification notifying that 6 per cent of tax was to be levied towards work contract – Since State Government was also empowered to levy tax towards work contract tax in addition to work contract tax imposed by Central Government, contractor would be liable to pay 12 per cent of tax towards work contracts – Whether contract work for which agreements were executed prior to 1-7-2017, GST could not be imposed and 2 per cent VAT alone was applicable – Held, yes [Para 12].

Citation: [2018] 91 191 (Madras)