The Karnataka Authority of Advance Ruling (AAR) in the case of M/s KMV Projects Limited in Advance Ruling No. KAR ADRG 35/2022 dated 16.09.2022, has ruled that 18% GST is payable on the work contract services executed for the state government for the construction of the airport terminal building and greenfield airport.
In this case, the applicant is a public limited company registered under the provisions of the Central Goods and Services Tax Act, 2017 as well as the Karnataka Goods and Services Tax Act, 2017. The applicant is involved in the construction of government works (buildings) rather than private parties.
The applicant sought an advance ruling regarding the applicable GST rates on government work contract services for the Airport Terminal Building; the development of Greenfield Airport; the construction of a High-Security Prison; the construction of Basava International Centre and Museum; and the construction of the government school buildings and hostels.
The AAR has observed that work contract services executed for Karnataka State Police Housing and Infrastructure Corporation Limited for the Construction of High-Security Prison are liable to tax at 18% GST with effect from 01.01.2022.
The authorities ruled that work contract services performed for the Kudala Sangama Development Board for the construction of the Basava International Center and Museum in Kudalasangama are subject to 18% GST beginning January 1, 2022.
The AAR found that work contract services provided to Karnataka Residential Educational Institutions Society for the construction of a residential school complex in Chittapur are subject to 9% CGST beginning January 1, 2022.
“The works of the construction of airport terminal buildings & associated works at Sogane village in Shivamogga Taluk & District, Karnataka and the work of Development of Greenfiled Airport at Vijaypur in Karnataka State are the works awarded by the Public Works Department of Government of Karnataka. Thus these are works supplied to the State Government. However the said works for construction of airport terminal building or greenfield airport are predominantly meant for commerce,” the AAR observed.
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