EN 
This is the recent news regarding, “18% GST is payable on works contract service of constructing warehouse and cold storage godown for Govt. entity which will be rented out” dated 16/12/2022 Official source Live Law.in.
The Telangana AAR ruled that work contract services for constructing warehouses and cold storage for Telangana State Industrial Infrastructure Corporation Limited (‘TSIICL’) attract 18% GST.
TSIICL is a Government entity that rents out warehouses and cold storage facilities. The applicant is in the business of working contracts and constructing the building on the land provided by the TSIICL.
The applicant constructs warehouses and cold storage at the primary processing center. The applicant stated that TSIICL would rent out godowns, which amounts to business activity.
The Government of Telangana wholly owns the TSIICL; hence the supply of contract services to TSIICL would be considered services to a Government entity.
Accordingly, the applicant states that Notification No. 11/2017 allows charging a concessional tax rate of 12% for services provided to government entities and authorities. However, the construction is primarily for use other than industry, commerce, or any other business or profession.
Amid this, the applicant sought an advance ruling regarding the GST on the works contract provided to the TSIICL.
The AAR stated that the concessional tax rate is not applicable as the TSIICL rents the godowns, and the GST of 9% CGST and SGST each attracts to the transaction.
AAR also stated that the CBIC amended the entry w.e.f 1st January 2022 vide Notification No. 15/2021, deleting the phrases “government entity” and “government authority” from the entry at S.No. 3(vi) of Notification No. 11/2017.
Thus, AAR ruled that the works contract services provided for the government entity or authority will attract 18% GST.
Source: Live Law
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