Operation/Maintenance of municipality water distribution network is a Works Contract: AAR

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  • Last Updated on 28 March, 2022

GST Works contract - Heading 9954 - GST Classification

Case Details: Authority for Advance Rulings, West Bengal Suez India (P.) Ltd., In re - [2022] 136 taxmann.com 132 (AAR-WEST BENGAL)

Judiciary and Counsel Details

    • Brajesh Kumar Singh and Joyjit Banik, Member
    • Sandip ChorariaRajkumar Banerjee, AR’s and Ms. Payel Agarwal, ACA for the Applicant.

Facts of the Case

The applicant was engaged in the business of design, construction and operation and maintenance of water distribution networks for municipal bodies across India. It filed an application for advance ruling to determine whether operation and maintenance of water distribution network to be considered as composite supply or not.

AAR Held

The Authority for Advance Ruling observed that the scope of work as per the contract would include supply, laying, installation and commissioning of distribution network along with operation and maintenance. For contract, a single letter of acceptance has been issued wherein there is no split of contract value. Since contract has two or more supplies of goods or services or both; supplies are naturally bundled and supplied in conjunction with each other, it would be amounting to composite supply being indivisible single contract. Therefore, this contract would qualify as works contract and would be treated as supply of services.

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