GST Rate for Loading Railway Ballast: Karnataka Advance Ruling
Loading railway ballast into wagons is a separate service taxed at 18%, not part of the 5% ballast supply.
- Ruling
- Order No. KAR.ADRG/42/2026 Dated 29.07.2026
- Dated
- 29 Jul 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 if loading ballast is part of the ballast supply.
- The Authority ruled that loading is a separate cargo handling service.
- Loading services are taxed at 18% GST, not the 5% rate for ballast.
In short
The company asked the Karnataka Authority for Advance Ruling (AAR) whether loading ballast into railway wagons using a JCB is part of the ballast supply. They argued that because the ballast itself is taxed at 5%, the loading service should also be taxed at that lower rate. The Authority disagreed, ruling that the two activities are separate.
What has changed
How it worked before
Many businesses assumed that services performed as part of a larger railway contract were naturally bundled with the goods supplied, allowing them to apply the lower tax rate of the main product to the entire project.
What has changed
The Authority decided that loading is a distinct 'cargo handling service' because it happens after the ballast is already delivered and owned by the Railways. In practice, this means you cannot group these activities together for tax purposes if they are invoiced and executed as separate tasks. You must now charge 18% GST on the loading portion of your contract.
Who this affects
Businesses that provide loading or handling services for goods, especially those working on railway or infrastructure contracts.
An example
Imagine a construction firm, 'BuildTrack Infra', that supplies sand to a site and later charges a separate fee to move that sand into trucks. Under this ruling, BuildTrack cannot claim the sand's tax rate for the moving service. They must charge the higher service tax rate for the loading work because it is a distinct, independent activity.
What you should do
If you perform similar services, review your contracts to see if your loading activities are billed separately from your supply of goods. Remember that an Advance Ruling only binds the company that asked and its specific tax officer; it is not a law that automatically applies to your business. If your tax officer disagrees with your current tax treatment, you may need to seek your own ruling or professional advice.
If you do nothing
If you incorrectly apply a lower tax rate to your services, you risk a tax demand for the unpaid difference plus interest and penalties. A tax officer may view this as an underpayment of GST, leading to audits and potential legal disputes. Do not assume this ruling protects you if your specific contract terms differ from those in this case.
The terms explained
- Composite supply
- A package of two or more goods or services that are naturally bundled and sold together, where one is the main item and the others are secondary.
- Works contract
- A contract for building, construction, or improvement of immovable property where both goods and services are transferred.
- Cargo handling service
- A service involving the loading, unloading, or moving of goods, which is treated as a distinct taxable activity under GST.
The ruling in detail
Authority for Advance Ruling
M/s S.K. Swamy and Company
Order No. KAR.ADRG/42/2026 Dated 29.07.2026 · Karnataka
Questions before the authority
- What is the output GST rate for loading of ballast which is stacked adjacent to the railway tracks into the railway wagons which is stationed on the railway track by using JCB loader (Machinery)?
Facts
The applicant is a partnership firm engaged in works contracts for Indian Railways, including the supply and stacking of ballast. The applicant sought a ruling on whether the activity of loading ballast into railway wagons, performed after the supply of ballast, constitutes a composite supply with the supply of ballast or an independent service. The applicant argued that since the supply of ballast is taxed at 5%, the loading charges should also be taxed at 5%.
Ruling
| Question | What the authority ruled |
|---|---|
| GST rate for loading of ballast into railway wagons | 18% GST (9% CGST + 9% SGST or 18% IGST) Classified under SAC 996719 as Other cargo and baggage handling services |
The Authority held that the supply of ballast and the loading of ballast into railway wagons are separate and independent supplies. The loading activity is classified as a cargo handling service under SAC 996719. Consequently, the loading service is liable to GST at the rate of 18%.
Reasoning
The Authority determined that the activities are not naturally bundled because they are executed separately, supported by separate consideration, and invoiced independently. The supply of ballast is completed upon delivery, and the loading activity is performed subsequently on goods already owned by the Railways. Therefore, the transaction does not qualify as a works contract under Section 2(119) of the CGST Act, 2017, nor as a composite supply under Section 2(30). The activity is classified under Heading 9967 as **Supporting services in transport** based on the nature of the service.
Provisions relied on
- Section 2(119) of the CGST Act, 2017
- Section 2(30) of the CGST Act, 2017
- Section 2(90) of the CGST Act, 2017
- Section 97 of the CGST Act, 2017
- Section 98(4) of the CGST Act, 2017
- Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017
For the practitioner
This ruling clarifies that loading services performed independently of the supply of goods are **distinct taxable supplies** even if they relate to the same project. Practitioners should note that the Authority strictly separates activities that are invoiced and executed independently, rejecting the composite supply argument. It does not decide on the taxability of the supply of ballast itself, only the subsequent loading activity.
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/s_k_swamy_and_compay_1.pdf
Legibility of the scan, as read: high.
Prepared 11-10-2026.
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