GST on Transmission Line Projects: Single Works Contract Ruling
The West Bengal Authority for Advance Ruling decided that transmission line construction is a single works contract, not separate supply and service contracts.
- Ruling
- 22/WBAAR/2018-19 dated 26/11/2018
- 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
- Skipper Ltd asked if transmission line projects qualify for specific tax exemptions.
- The authority ruled the project is an indivisible composite supply.
- GST applies to the total value, including materials and erection services.
In short
The company asked if they could split a transmission line project into separate contracts for materials and services to claim a tax exemption. The authority looked at whether these parts were truly independent or part of one larger project. They decided that because the tower is fixed to the ground, the entire project is a single works contract.
What has changed
How it worked before
Businesses often tried to split large infrastructure contracts into separate parts for goods and services to lower their tax burden or claim specific exemptions.
What has changed
The authority confirmed that transmission line projects are treated as a single works contract. This means you cannot separate the supply of materials from the installation services to apply different tax rules; the entire project is taxed as one service.
Who this affects
Construction companies and contractors involved in building transmission lines or similar infrastructure projects.
An example
A construction firm builds a power substation and splits the contract into 'supply of equipment' and 'installation services' to save on GST. Based on this ruling, the tax department would likely view this as one single works contract. The firm would be required to pay GST on the total value of the entire project rather than treating the equipment supply separately.
What you should do
Review your current contracts to see if they mirror this structure. Remember that an advance ruling only binds the company that asked and their specific tax officer; it is not a law that applies to your business automatically.
If you do nothing
If you assume this ruling applies to you and structure your taxes accordingly, you risk a tax audit and penalties. A tax officer may disagree with your classification and demand the full tax amount plus interest. Relying on another company's ruling without professional advice is a significant financial risk.
The terms explained
- Works contract
- A contract for building, construction, or improvement of immovable property where both goods and services are provided together.
- Composite supply
- A package of two or more goods or services that are naturally bundled and sold together as a single transaction.
- Immovable property
- Property that cannot be moved, such as land, buildings, or structures permanently attached to the earth.
The ruling in detail
Authority for Advance Ruling
Skipper Ltd
22/WBAAR/2018-19 dated 26/11/2018 · West Bengal
Questions before the authority
- Applicability of Serial No. 18 of Notification No. 12/2017-Central Tax (Rate) dated 28/06/2017 to the applicant.
Facts
The applicant, in a joint venture, entered into a contract with PGCIL for the construction and commissioning of a transmission line project, referred to as the Tower Package. The contract was split into two parts: one for the ex-factory supply of materials and another for allied services like erection, testing, and commissioning. The applicant contended that these were separate supplies and sought to claim the benefit of an exemption notification for the service portion.
Ruling
| Question | What the authority ruled |
|---|---|
| Applicability of Serial No. 18 of Notification No. 12/2017-Central Tax (Rate) | Not applicable The arrangement is a single works contract service |
The Authority held that the contract constitutes an indivisible composite supply of works contract service. Consequently, the exemption under Serial No. 18 of the notification is not applicable. GST must be paid on the entire value of the works contract, including materials, transportation, insurance, and erection services.
Reasoning
The Authority determined that the Tower Package is an **immovable property** because the towers are erected on foundations and intended for use in perpetuity. It found that the two contracts are interdependent and cannot be executed independently, making them an **indivisible composite supply**. The ruling relied on the definition of works contract under Section 2(119) of the GST Act and the classification of such activities as service under Schedule II. It concluded that transportation and insurance are merely components of the bundled works contract service.
Provisions relied on
- Section 97(2)(b) of the CGST/WBGST Acts, 2017
- Section 2(52) of the GST Act
- Section 2(119) of the GST Act
- Section 7(1)(d) of the GST Act
- Section 10(1)(a) and (d) of the IGST Act, 2017
- Schedule II to the GST Act
- Notification No. 12/2017-Central Tax (Rate) dated 28/06/2017
For the practitioner
This ruling confirms that splitting a transmission line project into separate supply and service contracts does not prevent it from being classified as a **single works contract**. Practitioners should note that such projects are treated as immovable property, precluding the separate taxation of goods and services. It settles the issue of bundling for transmission tower projects but does not apply to scenarios where the contract is genuinely separable.
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/wbaar-22-2018-19_26.11.18-sl.pdf
Legibility of the scan, as read: high.
Prepared 21-10-2026.
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