2026-VIL-129-AAR
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SGST Advance Ruling Authority

GST – Karnataka AAR - Classification of Service of loading of Ballast into Railway Wagons – Works Contract or Composite Supply – Applicant engaged in executing contracts for Indian Railways including supply and loading of ballast stacked adjacent railway tracks into railway wagons using JCB loader - Whether activity of loading ballast already owned by Railways into railway wagons constitutes works contract or composite supply with ballast, or is independent service subject to separate classification and rate – HELD – The definition of works contract under Section 2(119) of CGST Act, 2017 requires activity to involve building, construction, fabrication, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of immovable property with transfer of property in goods. Activity of supplying and loading ballast does not involve any such activity in relation to immovable property and therefore does not satisfy essential conditions of works contract - Supply of ballast and loading activity are separate and independently identifiable supplies since Letter of Acceptance prescribes separate rates for each item, separate invoices are raised at different points in time – The ownership of ballast transferred to Railways at delivery after which applicant has no custody or liability for ballast, and loading activity is executed subsequently only on separate instructions from Railways – The Composite supply under Section 2(30) requires supplies to be naturally bundled and supplied in conjunction with each other in ordinary course of business and one to be principal supply. In the present case, the supplies fail to satisfy requirement of being naturally bundled as contractual arrangement itself treats activities as separate obligations with distinct rates, separate consideration, and separate execution – The activity of ballast at Railway depot or nominated location and loading of Railway’s ballast collected at yard/depot into Railway wagons using Mechanical Loader constitute separate and independent supplies and cannot be regarded as a composite supply merely because both activities emanate from the same work order - From the nature of the activity, the scope of Heading 9967, and the Explanatory Notes to Group 99671 relating to cargo handling services, the activity of loading ballast into Railway wagons by using JCBs is appropriately classifiable under SAC 996719– “Other cargo and baggage handling services” falling under Heading 9967 as “Supporting services in transport”. The said service is liable to GST at the rate of 18% in terms of Entry No. 11 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended – Ordered accordingly
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