The Madurai Bench of Madras High Court has held that contracts awarded by Rail Vikas Nigam Limited (RVNL) for railway infrastructure development works are eligible for the concessional rate of 12% GST.
Justice Mohammed Shaffiq passed the order recently on the petitions filed by a joint venture between Stroytech Service LLC, Russia, and KEC International Limited, challenging the orders of state tax officer imposing 18% GST on the contracts awarded by Rail Vikas Nigam Limited for the track doubling works between Vanchi Maniyachchi and Nagercoil.
The work included construction of roadbed, minor bridges, platforms, buildings, water and effluent treatment facilities, wagon or coaching maintenance infrastructure, supply of ballast, installation of tracks and other electrical, signalling and telecommunication infrastructure in Madurai and Thiruvananthapuram divisions of Southern Railway.
The petitioner claimed that as per central government notifications, supply of works such as construction, erection, commissioning or installation, pertaining to railways, including mono rail and metro rail, is liable to be taxed at 12%.
However, tax authorities refused to provide the concession on the ground that RVNL is not directly under the control of Indian Railways and hence the GST rate of 18%.
Hearing both sides, Justice Shaffiq observed that the functions of RVNL and Indian Railways are inseparable and both work in tandem to develop rail transport infrastructure.
The judge also rejected the stand of authorities that the definition of ‘railway’ under Indian Railways Act, 1989, is limited to Indian Railways alone.
