RVNL works contracts eligible for 12% concessional GST, says Madras HC

Settling yet another classification issue related to works contracts for railways involving services given to Rail Vikas Nigam Limited (RVNL), the Madurai Bench of the Madras High Court has clarified that any services given to railways will be charged at 12% GST under a special concessional rate and not at 18%, even when the direct purchasing entity is not Indian Railways.

A judgment pronounced on January 28, with the detailed order copy issued today, highlights that the petitioner, STS-KEC(JV), a joint venture engaged in railway infrastructure projects, had provided services for Rail Vikas Nigam Limited (RVNL) and should be taxed at the concessional 12% GST rate rather than the 18% rate imposed by tax authorities.

The judgment, delivered by Justice Mohammed Shaffiq, quashed as many as five GST orders issued by the State Tax Officer and reaffirmed that the works executed for RVNL qualify for the lower tax rate under the relevant GST notifications. The tax demanded by the Tamil Nadu GST authorities was Rs.100 crore, including interest and penalties, for the period between April 2018 and March 2023.

The petitioner, STS-KEC(JV), challenged five tax orders in Form GST DRC-07 issued by the State Tax Officer, Nanguneri, in February 2024 by filing five separate writ petitions for each financial year.

These orders levied an 18% GST on the company’s works contract services related to railway infrastructure projects executed for RVNL. The petitioner contended that its projects should be subject to a 12% GST rate, in accordance with Notification No. 11/2017 (CGST Rate), which provides a concessional rate for “original works pertaining to railways, including monorail and metro.”

Source : https://www.cnbctv18.com/business/rvnl-works-contract-gst-12-percent-madras-hc-19564650.htm