In Advance Ruling No. KER/08/2023 -AAR- Cochin Port Trust's services to Indian Navy for North Jetty reconstruction fell under the category of ‘Works Contract’, subject to GST at concessional rate: AAR (Kerala)
Members S.L. Sreeparvathy (IRS) & Abraham Renn S. (IRS) [03-04-2023]

Read Order: In Re: Cochin Port Trust

Chahat Varma

New Delhi, July 19, 2023: The Kerala Authority for Advance Rulings has ruled that the services provided by M/s. Cochin Port Trust (applicant) to the Indian Navy, the Central Government for the reconstruction of North Jetty at Naval Base, Kochi fell under the category of ‘works contract’ services under the Central Goods and Services Tax Act (CGST Act). The ruling stated that a concessional rate of GST at 12% was applicable for the services supplied as per the Memorandum of Understanding (MoU) between the parties, with the time of supply falling between 21.09.2017 and 17.07.2022. However, services supplied after 18.07.2022 will be subject to GST at the rate of 18%, as per the provisions of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017.

In the present matter, the Indian Navy and the Board of Trustees of Port of Cochin (CoPT) had entered into an MoU for the reconstruction of the North Jetty at Naval Base, Kochi. The applicant had sought an advance ruling on the nature of the services rendered by the applicant under the MoU, whether it should be treated as a works contract, a composite supply of services, or a mixed supply. The applicant also inquired about the applicability of a notification issued under the provisions of the CGST Act.

The bench comprising of S.L. Sreeparvathy (IRS) and Abraham Renn S. (IRS) determined that the services provided by the applicant for the reconstruction of the North Jetty at Naval Base, Kochi for the Indian Navy fell within the definition of a ‘works contract’, as per Section 2(119) of the CGST Act. The terms and conditions of the MoU clearly indicated that the activity undertaken by the applicant qualified as a works contract.

However, the bench observed that the exemption under entry no. 9C of Notification No. 12/2017-Central Tax (Rate) was not applicable as there was no evidence of consideration received in the form of grants from the Central Government.

The bench ruled that services provided by the applicant was eligible for the concessional rate of GST of 12%. However, it was noted that the entry at item (vi) of Sl. No. 3 was omitted by Notification No. 03/2022-Central Tax (Rate) dated 13.07.2022, with effect from 18.07.2022. Therefore, it was held that the concessional rate of 12% GST was applicable only to the services supplied as per the MoU between 21.09.2017 and 17.07.2022.