Facts –

• The Applicant, Purple Distributors Pvt Ltd, on being awarded a sub-contract from M/s Patil Rail Infrastructure Pvt. Ltd., undertakes the work of conversion of Short Welded Rails (“SWR”) to Long Welded Rails (“LWR”) by Flash Butt Welding process. The work also includes supply of all assistance of labour for welding of rail joints.

Issue –

• Whether the services provided by the applicant is that of a works contractor or Job worker?

Order –

• The AAR held that instant supply would not be treated as works contract as the supply doesn’t involve transfer of property in goods as per Section 2(119) of CGST Act. The railway tracks, for its permanent characteristic and in absence of mobility like other goods, would be regarded as immovable property and therefore fail to qualify to be goods. As a result, it cannot be treated as “job work”, in absence of any treatment or process.
• The services of welding of railway track along with labour services are naturally bundled and supplied in conjunction with each other and therefore would fall under the ambit of “composite supply” as defined in clause (30) of section 2 of the GST Act.
• Thus, the instant service is supplied by the applicant for construction of railways and therefore would be treated as “General construction services of civil engineering works‟ under Tariff Code 995429 and to be taxed @ 18% vide serial number 3(xii) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended from time to time.