GST Rate for Infrastructure Works Contracts: RAJ/AAR/2026-27/13
The Authority for Advance Ruling confirmed that a 12% GST rate applied to specific infrastructure works contracts as of June 1, 2022.
- Ruling
- RAJ/AAR/2026-27/13 dated 04.08.2026
- Dated
- 04 Aug 2026
- 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
- The company asked for the GST rate on Faecal Sludge Treatment Plants.
- The Authority confirmed the 12% rate applied before the July 2022 change.
- The Authority cannot settle disputes about recovering extra tax from clients.
In short
MTS-EIEL (JV) asked the Authority for Advance Ruling (AAR) to confirm the Goods and Services Tax (GST) rate for their infrastructure projects as of June 1, 2022. The company wanted to know if their work on treatment plants qualified for the 12% rate before a later government notification increased the tax burden. The Authority confirmed the 12% rate was correct for that date but refused to decide if the company could force their client to pay the difference caused by the later rate hike.
What has changed
How it worked before
Businesses generally assumed the 12% concessional rate applied to these infrastructure projects until the government issued a notification in July 2022 to change the tax structure.
What has changed
The ruling confirms that the 12% rate was legally applicable on June 1, 2022, for these specific works contracts. Practically, this provides clarity on the tax liability for that period, but it does not grant businesses the right to automatically recover the subsequent 6% tax increase from their clients.
Who this affects
Infrastructure contractors and joint ventures working on water supply, water treatment, or sewerage disposal projects.
An example
A construction firm builds a water treatment plant and faces a dispute with their client over who pays for a sudden GST rate hike. They might hope this ruling allows them to force the client to pay the extra tax. However, this ruling shows the Authority will only confirm the correct tax rate, not settle the private contract dispute over who covers the cost.
What you should do
If you are in a similar position, use this ruling as a reference for how the Authority interprets tax rates for your specific type of work. Remember that an Advance Ruling only binds the company that asked and its own tax office; it is not a law that automatically applies to your business or your specific contract.
If you do nothing
Assuming this ruling automatically protects your business can lead to costly legal mistakes. If you rely on this to withhold tax or demand payments from clients without a clear contract, your local tax officer may disagree with your interpretation. You could face penalties or interest charges if your tax payments are found to be incorrect.
The terms explained
- Works Contract Services
- A service that involves building, construction, or improvement of immovable property where both goods and labor are provided together.
- Advance Ruling
- A formal decision from the tax department that clarifies how tax laws apply to a specific business situation.
- Contractual Disputes
- Disagreements between two parties, such as a contractor and a client, regarding the terms or payments agreed upon in their private contract.
The ruling in detail
Authority for Advance Ruling
M/s MTS-EIEL (JV), 5/2, Shahid Amit Bhardwaj Marg, JAIPUR, Rajasthan-302017
RAJ/AAR/2026-27/13 dated 04.08.2026 · Rajasthan
Questions before the authority
- What is the applicable GST rate on Works Contract Services as on 01.06.2022? (HSN Code 9954: S. No. 3 / (iii) / (c) pipeline, conduit or plant for (i) water supply (ii) water treatment, or (iii) sewerage treatment or disposal.)
Facts
The applicant is a joint venture engaged in infrastructure projects involving the design, supply, construction, and maintenance of Faecal Sludge Treatment Plants (FSTP) for the Rajasthan Urban Infrastructure Development Project. The applicant sought a ruling on the applicable GST rate for these works contract services as of 01.06.2022, having initially bid based on a 12% GST rate. Subsequently, the GST rate was increased to 18% via notification, leading to a dispute regarding the tax burden.
Ruling
| Question | What the authority ruled |
|---|---|
| Applicable GST rate on Works Contract Services as on 01.06.2022 | 12% (6% CGST + 6% SGST) Relates to HSN Code 9954, S.No. 3(iii)(c) as it existed prior to 18.07.2022 |
The Authority ruled that the applicable GST rate for the specified works contract services as of 01.06.2022 was 12%. It clarified that the rate was governed by the entry existing prior to its omission by Notification No. 03/2022-Central Tax (Rate). The Authority declined to rule on whether the additional 6% tax burden constitutes a recoverable statutory liability, stating it falls outside its jurisdiction.
Reasoning
The Authority examined the entry at S. No. 3(iii)(c) of Notification No. 11/2017-Central Tax (Rate) as it stood on 01.06.2022. It concluded that the services provided by the applicant fell squarely within the scope of this entry, which prescribed a **concessional rate of 12%**. The Authority noted that this entry was only omitted effective 18.07.2022 by Notification No. 03/2022-Central Tax (Rate). Regarding the ancillary issue of tax reimbursement, the Authority held that Section 97(2) of the CGST Act does not empower it to adjudicate on **contractual disputes** between parties regarding the recovery of tax increases.
Provisions relied on
- Section 97(2) of the CGST/RGST Act, 2017
- Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017
- Notification No. 03/2022-Central Tax (Rate) dated 13.07.2022
For the practitioner
This ruling confirms the applicable GST rate for specific infrastructure works contracts prior to the July 2022 rate hike, providing clarity for contractors who bid under the 12% regime. However, it reinforces that the AAR is **not the appropriate forum** to resolve disputes regarding the recovery of additional tax burdens from contractees. Practitioners should note that the ruling is limited to the classification and rate determination under the GST law.
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/2-order_13_mts_eiel_jv.pdf
Legibility of the scan, as read: high.
Prepared 11-10-2026.
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