Labour with Material and Machines Not Exempt Under Entry 10 | AAR
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Case Details: Build Layer Constructions, In re. - [2025] 175 taxmann.com 15 (AAR-RAJASTHAN)
Judiciary and Counsel Details
- Utkarsh & Dr. Akhedan Charan, Member
-
Ranjan Mehta, Adv. for the Applicant.
Facts of the Case
The applicant, functioning as a subcontractor to a principal contractor engaged in constructing residential flats under a government housing scheme, entered into an agreement to provide labour services along with machinery and materials. The principal contractor had secured a work order from the Government of Rajasthan. The applicant sought an advance ruling on the classification and taxability of its services, claiming exemption under Entry No. 10 of Notification No. 12/2017-Central Tax (Rate), dated 28-06-2017. It was asserted that the supply constituted a pure labour contract eligible for exemption. The matter was accordingly placed before the AAR, Rajasthan.
AAR Held
The AAR Rajasthan held that the agreement involved not just labour but also supply of machinery and materials, thereby disqualifying the service from being treated as a pure labour contract. It was further noted that the exemption under Entry No. 10 of Notification No. 12/2017-Central Tax (Rate), dated 28-06-2017 is restricted to beneficiary-led individual house construction or enhancement under Housing for All (Urban) Mission or Pradhan Mantri Awas Yojana. Since the applicant could not establish the requisite linkage to such beneficiary-led activity, the exemption was held to be inapplicable. The service was held classifiable under Heading No. 9954, attracting GST at the rate of 18 per cent under section 9 of the CGST Act and the Rajasthan GST Act.
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