12% GST leviable on sub-contractor for construction of roads on behalf of main contractor: AAR

Whether Clause (iv) of Sl. No. 3 of Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017 covers contract of construction of roads and whether the said clause restrict that such road construction will be liable to tax of concessional rate of 12 per cent only if road construction is carried out by main contractor was the issue before AAR, Maharashtra as under:

AUTHORITY FOR ADVANCE RULINGS, MAHARASHTRA

Core Construction (Yatin Manoj Mora), In re

[2022] 136 taxmann.com 335 (AAR – MAHARASHTRA)

Let us have a short overview of the AAR.

The issue in above case was with regard to the GST rate on the Construction of concrete roads under Heading No. 9954 & its Classification.

In this case, Aurangabad Municipal Corporation was awarded contract for executing work of construction of concrete roads in Aurangabad City.

Main contractor awarded part of said contract to applicant-sub-contractor.

AAR observed as under:

Clause (iv) of Sl. No. 3 of Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017 covers impugned contract of construction of roads.

Said clause does not restrict that such road construction will be liable to tax of concessional rate of 12 per cent only if road construction is carried out by main contractor.

Even if construction of road is carried out by a sub-contractor, still it shall attract rate of 12 per cent.

Thus, in respect of sub contract awarded to applicant rate of GST to be charged is 12 per cent under Maharashtra Goods and Services Tax Act, 2017.

Conclusion:

 

Where a municipal corporation awarded to main contractor a contract for construction of roads and main contractor awarded part of said contract to applicant-sub-contractor, such sub contract is liable to 12 per cent GST