Concessional GST not available on works contract of godowns provided to govt. entity for business purposes: AAR

Case Details: Authority for Advance Rulings, Telangana Shree Constructions, In re - [2022] 145 taxmann.com 520 (AAR-TELANGANA)

Judiciary and Counsel Details

• • S.V. Kasi Visweswara Rao & Sahil Inamdar, Member

Facts of the Case

The petitioner entered into an agreements with TSIICL, a Government Entity for execution of works contracts of construction of godowns which in turn would be letting out godowns for its customers on rent. It filed an application for advance ruling to determine whether concessional rate of imposition of tax would be applicable on providing works contract services to TSIICL.

AAR Held

The Authority for Advance Ruling observed that concessional rate of GST as per Notification No.11/2017-Central Tax (Rate) was applicable to Government Entities and Governmental Authorities only if such construction was predominantly for use other than for commerce, industry or any other business or profession. However, in this case, godowns shall be given on rent by TSIICL that would amount to use of constructed premises for purpose of business.

Moreover, the phrases ‘Government Entity’ and ‘Governmental Authority’ were deleted from Entry at Serial No. 3(vi) of Notification No. 11/2017 by Notification No. 15/2021, dated 18.11.2021. Thus, the works executed even for ‘Governmental Entity or ‘Government Authority’ would be taxable at rate of 18%.