Authority for Advance Ruling-Bihar (Tata Projects Ltd.)

Question – Whether services covered under Sl. No.3(v)(a) of notification No.20/2017-CT(R) Dated 22.08.2017 and What is The Rate of GST Applicable for the Project?

Fact of the Ruiling

  • Tata Projects Ltd. (TPL) receives a Works Contract from Madhepura Electric Locomotive Private Limited (MELPL) for construction of Factory Building
  • Madhepura Electric Locomotive Private Limited (MELPL) is a Joint Venture of ALSTOM MANUFACTURING INDIA LIMITED and Indian Railways, established for SPV (Special Purpose Vehicle) for manufacturing and maintenance of Electric Locomotive.
  • MELPL provides all manufactured locomotives to Indian Railways for Valuable Consideration.
  • TPL wants to Consider MELPL as Supply of Service to Indian Railways and apply the rate of 6% as per Sl. No 3(V)(a) 0f N/N 20/2017 CT (rate)
  • In respect of his context TPL gives the definition of “Railway” as per Indian Railway Act because definition of Railway not mentioned in GST Law.

Analysis of the Ruiling

  • AAR Stated that in Notification only “railways” is mentioned not Indian Railways and also stated as per Supreme Court that In taxation Method, the meaning of a word should be found only in a language which is understand in common parlance not imported from other act
  • AAR stated that meaning of “Railway” should be as per Common Parlance or Oxford Dictionary. In Oxford Dictionary “Railway” Means “A track made of steel rails along which train runs”
  • AAR stated that MELPL only a Joint Venutre and sold goods to “Indian Railways” on valuable consideration.
  • AAR stated that Construction ownership only transferred to MELPL and MELPL would not resale/supply the same to Indian Railways
  • Works Contract between TPL and MELPL is Supply of Services whereas Contract between MELPL and Indian Railway is Supply of Goods for Valuable Consideration. Although certain Services will also be supplied to MELPL, Such Services will not be an “Original Work” as per N/N 20/2017 of CGST Act


AAR stated that Services provided by applicant  is Works Contract Services as per Sec. 2(119) of CGST Act, 2017 but not related to Railways.

So, rate as per Sl. No 3(v)(a) of N/N 20/20217-CT (Rate) will not applicable here and rate of 9% CGST and 9% SGST will be applicable on this transaction.

Original Decision Copy –


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