Circular Number 152/08/2021-GS dated 17th June 2021
- Reference has been received by the Board for a clarification whether services
supplied to a Government Entity by way of construction such as of “a ropeway” are
eligible for concessional rate of 12% GST under entry No. 3 (vi) of Notification No.
11/2017- CT (R) dt. 28.06.2017. On the recommendation of the GST Council, this issue
is clarified as below.
- According to entry No. 3(vi) of notification No. 11/2017-CT (R) dated
28.06.2017, GST rate of 12% is applicable, inter alia, on-
“(vi) Composite supply of works contract as defined in clause (119) of section 2 of the Central
Goods and Services Tax Act, 2017, (other than that covered by items (i), (ia), (ib), (ic), (id),
(ie) and (if) above) provided to the Central Government, State Government, Union Territory,
a local authority a Governmental Authority or a Government Entity, by way of construction,
erection, commissioning, installation, completion, fitting out, repair, maintenance,
renovation, or alteration of –
(a) a civil structure or any other original works meant predominantly for use other
than for commerce, industry, or any other business or profession; “
3. Thus, said entry No 3 (vi) does not apply to any works contract that is meant
for the purposes of commerce, industry, business of profession, even if such service
is provided to the Central Government, State Government, Union Territory, a local
authority a Governmental Authority or a Government Entity. The doubt seems to
have arisen in the instant cases as Explanation to the said entry states, the term
‘business’ shall not include any activity or transaction undertaken by the Central
Government, a State Government or any local authority in which they are engaged
as public authorities. However, this explanation does not apply to Governmental
Authority or Government Entity, as defined in clause (ix) and (x) of the explanation
to said notification. Further, civil constructions, such as rope way for tourism
development shall not be covered by said entry 3(vi) not being a structure that is
meant predominantly for purposes other than business. While road, bridge,
terminal, or railways are covered by entry No. 3(iv) and 3(v) of said notification,
structures like ropeway are not covered by these entries too. Therefore, works
contract service provided by way of construction such as of rope way shall fall under
entry at sl. No. 3(xii) of notification 11/2017-(CTR) and attract GST at the rate of 18%.
39 GST Council met under the Chairmanship of Union Finance & Corporate Affairs Minister Smt Nirmala Sitharaman here today . The meeting was also attended by Union Minister of State for Finance & Corporate Affairs Shri Anurag Thakur besides Finance Ministers of States & UTs and seniors officers of the Ministry of Finance.
GST Council took following decisions relating to changes in GST rates on supply of goods and services.
1. The recommendation of the Fitment Committee for calibrating the GST rate structure to correct the inverted duty structure on various items like Mobile phones, Footwear, Textiles and Fertilizers was placed before the GST Council for discussion. The Council had a detailed discussion on the matter. Upon discussion the Council made the following recommendations:-
i. To raise the GST rate on Mobile Phones and specified parts presently attracting 12% to 18%.
ii. To deliberate the issue of calibrating the rate in other items for removing inversion in future meetings with further consultation and examination of issue.
2. GST rate on all types of matches (Handmade and other than Handmade) has been rationalised to 12% (from 5% on Handmade matches and 18% on other matches). This would address the classification issues. This issue was deliberated earlier in the 37 meeting and was pending for decision.
3 To reduce GST rate on Maintenance, Repair and Overhaul (MRO) services in respect of
aircraft from 18% to 5% with full ITC and to change the place of supply for B2B MRO services to the location of recipient. This change is likely to assist in setting up of MRO services in India.
Domestic MRO will also get protection due to 5% tax paid under section 3(7) of the Customs Tariff Act, 1975 on most imported goods (sent abroad for repairs) as this tax is not available as credit.
Note: It is proposed to issue notifications giving effect to these recommendations of the Council on 01 April, 2020.
01 April, 2020.
Before serving of the notice in FORM GST DRC-01 by the tax officer, the taxpayer can pay the taxpayer can pay interest @ 18% as per section 50 of the CGST Act and also a penalty of 15% as per Subsection 5 of section 74 and submit the same to the concerned officer in FORM GST DRC-03.
Notification No. 13/2017 – Central Tax, states the rate of interest to be paid or received by the taxpayers under CGST. The interest rate in case of delayed payment is 28%, reversal of input tax credit in case of a mismatch, ITC availed before supplier uploads the invoice the interest rate is 24%, in case of delayed refund the interest rate is 6% and in case of refund under adjudication process it is 9%.
As per the Tax Invoice, Credit and Debit Note Rules, released for GST on 18th May 2017, as per Rule 5 at the time of creation of receipt voucher, if the tax rate is not determinable, then the tax rate to be considered is 18%.