GST @12% is applicable on contract for the dredging of Wular Lake

GST @12% is applicable on contract for the dredging of Wular Lake

The West Bengal Authority for Advance Ruling ruled that GST @12% is applicable on contract for the dredging of Wular Lake.

1. Admissibility of the application

1.1 The Wular Conservation and Management Authority (hereinafter the recipient) has awarded the applicant a contract for the dredging of Wular Lake from RD 0 –RD 2090 metres along the Jhelam Bank with its feeder channels near village Saderkote Payen and Banyari for conservation and management of the lake. The applicant seeks a ruling on whether Sl No. 3 (vii) of Notification No 08/2017 – Integrated Tax (Rate) dated 28/06/2017 (hereinafter the IGST Notification), as amended from time to time, applies to the above supply.

1.2 The question is admissible under section 97(2)(b) of the GST Act read with clause (xviii) of section 20 of the IGST Act, 2017. The applicant declares that the question raised is not pending or decided in any forum. The concerned officer from the Revenue has not objected to the admission of the application.

1.3 The application is, therefore, admitted.

2. Submissions of the Applicant

2.1The applicant submits work allotment order and related documents. He provides a price schedule that describes the work and its value and argues that he is supplying works contract service involving earthwork in excavation and re-excavation of the drainage channels, and it consists more than 75% of the value of the contract.

2.2 The applicant submits that the recipient was the State Government. But, after the amendment of Article 370 of the Constitution of India, the Government of India has bifurcated the erstwhile State of Jammu and Kashmir into two union territories, being the Union Territory of Jammu and Kashmir and Union Territory of Ladakh. The recipient now is the Union territory of Jammu and Kashmir.

2.3 Based on the above submissions, the applicant argues that the supply is taxable @ 5% in terms of Sl No. 3 (vii) of the IGST Notification.

3. Submission of the concerned Officer

3.1 The concerned officer submits that it is difficult to ascertain from the available information whether the involvement of materials in the contract exceeds 25% of the contract value. He refrained himself from offering comment as there is a shortage of information in the application itself

4. Observations and findings of the Bench

4.1 Entry No. 3 (vii) of the Notification provides that a supply is taxable @ 5% if the contract is a composite supply of works contract as defined under section 2(119) of the GST Act, involving earthwork exceeding 75% of the contract value and the recipient is the Central Government, State Government, Union Territory, a government authority or a government entity.

4.2 The applicant submits an allotment order vide no 01/WUCMA of 2020-21 dated 02/06/2020 which mentions that the recipient awards applicant a contract of Rs. 148.5968 crore for increasing water holding capacity of Wular lake by way of earthwork excavation in all kinds of soils like earth, clay, silt, peat, sand etc. by mechanical means. Annexure A of the order specifies the scope of the work with an emphasis on earthwork in the excavation.

The Question and Ruling as follows :

Whether dredging of Wular Lake is an exempted supply??

RULING

The applicant’s supply, as mentioned in para 1.1, to the Wular Conservation and Management Authority is taxable under Sl No. 3(vii) of Notification No 8/2017 – Integrated Tax (Rate) dated 28/06/2017, as amended from time to time.

This Ruling is valid subject to the provisions under Section 103 until and unless declared void under Section 104(1) of the GST Act.

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