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18% GST on electrification work provided to Government entity

Recently AAR gave an important ruling dated 2th November 2019 regarding rate of GST applicable on electrification work to APSPDCL in case of GVS Projects (P) Ltd. [2019] 111 taxmann.com 528 (AAR-ANDHRA PRADESH) which is discussed as below:

Facts of the Case
  • The applicant is engaged in electrification work of “System improvement project for erection of 2 Nos.33/11 KV Indoor sub-stations and their connected lines at Nellore Town on semi turnkey basis under IDPS” to Andhra Pradesh Southern Power distribution company.
Issue Involved
  • Whether APSPDCL is a Government authority/ Government company?
  • What will be the applicable rate of GST on the work agreement between applicant and APSPDCL?
  • Whether the value of materials recovered from our RA bills issued on a cost-recovery basis by APSPDCL is liable to tax under RCM ?
Observation/Judgment
  • APSPDCL is a government company i.e. wholly owned by the Government of Andhra Pradesh.
  • Work undertaken to be executed under the contract is for business purposes thereby concession rate of 12% tax would not be able on this transaction. The applicable rate of tax would be 18% for the services referred by the applicant.
  • The value of materials recovered on a cost-recovery basis by APSPDCL from the RA bills issued by the applicant is includible in the taxable value of supply.
Please click here for order.

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