GST Rate for Utility Shifting in Highway Projects: RAJ/AAR/2019-20/34
The Rajasthan Authority for Advance Ruling decided that independent utility shifting work does not qualify for concessional road construction GST rates.
- Ruling
- RAJ/AAR/2019-20/34 dated 05.03.2020
- Authority
- Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- G K Enterprises asked if utility shifting qualifies for concessional GST rates.
- The authority ruled the work is independent, not part of the main contract.
- Concessional rates for road construction do not apply to this specific activity.
In short
The company asked if moving electrical lines for a highway project counts as a road construction service, which carries a lower Goods and Services Tax (GST) rate. The authority looked at whether this work was part of the main highway contract or a separate task. They decided that because the utility shifting is handled as an independent job, it does not qualify for the special tax benefits meant for road builders.
What has changed
How it worked before
Many businesses assumed that any work performed on a highway project site, including utility shifting, would automatically qualify for the same concessional GST rates as the main road construction contract.
What has changed
The authority clarified that utility shifting is a distinct service. In practice, this means businesses cannot claim the lower tax rate for road construction unless their work is explicitly part of the main highway contract and meets all specific conditions of the tax notification.
Who this affects
Contractors and subcontractors involved in utility shifting, electrical line relocation, or site preparation for infrastructure projects.
An example
A company called PowerRelocate Pvt Ltd is hired to move water pipes for a new highway project. They want to charge the lower GST rate reserved for road construction. Based on this ruling, their tax officer would likely deny this, as the pipe relocation is an independent service and not part of the main road construction contract.
What you should do
If you perform similar work, do not assume you qualify for concessional rates based on this ruling. An Advance Ruling only binds the business that asked and their specific tax officer. You should review your own contract terms with a tax professional to determine your correct GST liability.
If you do nothing
If you apply a lower tax rate without a valid legal basis, you risk a tax demand notice for the unpaid GST plus interest and penalties. A tax officer may view this as an underpayment of tax, which can lead to lengthy audits and financial strain on your business.
The terms explained
- Works contract
- A contract that involves both the supply of goods and services, typically used in construction or infrastructure projects.
- Concessional rate
- A lower tax rate offered by the government for specific types of goods or services to encourage certain industries.
- Direct nexus
- A clear and immediate connection between two things, such as your specific work and the main highway construction contract.
The ruling in detail
Authority for Advance Ruling
Gaurish Sharma (M/s G K Enterprises)
RAJ/AAR/2019-20/34 dated 05.03.2020 · Rajasthan
Questions before the authority
- Whether in the facts and circumstances of the case, does the activity carried out by the Applicant falls under Entry No. (iv)(a) of Notification No. 11/2017-CT(R)?
- Alternatively, whether in the facts and circumstances of the case, does the activity carried out by the Applicant falls under Entry No. (ix) of Notification No. 11/2017-CT(R)?
Facts
The applicant is a proprietorship concern proposing to bid for a contract involving the shifting and erection of 11 KV and LT electrical lines. This work is part of a larger highway development project awarded by NHAI to a main contractor. The applicant sought to determine if their specific activity of utility shifting qualifies for concessional GST rates under specific entries of the Rate Notification.
Ruling
| Question | What the authority ruled |
|---|---|
| Applicability of Entry (iv)(a) of Notification No. 11/2017-CT(R) | Does not fall under the entry The activity is restricted to shifting/erection of electrical lines and is not construction of a road |
| Applicability of Entry (ix) of Notification No. 11/2017-CT(R) | Does not fall under the entry The activity is independent and lacks the required nexus to the main contract awarded by NHAI |
The Authority ruled that the applicant's proposed activity does not fall under either of the requested entries. It concluded that the shifting of electrical lines is an independent activity and does not constitute a works contract for the construction of a road or a sub-contract related to the main highway project.
Reasoning
The Authority reasoned that the cost of the utility shifting is borne separately by the authority or the utility-owning entity, establishing that it is not part of the main highway construction contract. Consequently, the applicant cannot be treated as a sub-contractor to the main contractor for the purpose of the cited notifications. The ruling turned on the interpretation of the scope of work defined in the agreement and the specific conditions required to qualify for concessional rates under Notification No. 11/2017-Central Tax (Rate).
Provisions relied on
- Section 97(2) of the CGST/RGST Act, 2017
- Section 2(119) of the CGST Act
- Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017
For the practitioner
This ruling clarifies that **utility shifting activities** performed independently of the main construction contract do not automatically qualify for the concessional GST rates applicable to road construction works contracts. It serves as a warning that sub-contractors must demonstrate a **direct nexus** to the main contract to avail of specific concessional entries. It does not decide the taxability of the service under other headings not specifically requested.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/AAR/raj_aar_34_2019-20_05.03.2020_gke.pdf
Legibility of the scan, as read: high.
Prepared 20-10-2026.
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