GST dated 25.01.2018 clarificationregarding supplies made to the Indian Railways classifiable under any chapter, other than Chapter 86 .

Circular No.: 30/4/2018-GST
Date of Circular: 25th January 2018
Relevant Sections and Rules:

• Central GST Act, 2017: General provisions regarding classification and rate of tax
• Relevant Notifications:
  • Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017
  • Notification No. 2/2017-Central Tax (Rate) dated 28.06.2017
  • Notification No. 5/2017-Central Tax (Rate) dated 28.06.2017
• GST Council Reference: 25th GST Council Meeting held on 18.01.2018

Summary of Circular:

The circular addresses the confusion regarding the applicable GST rate on supplies made to Indian Railways, especially for goods not classified under Chapter 86 of the Customs Tariff.

1. Misclassification by Suppliers:
   Some suppliers were charging 5% GST on all goods supplied to Indian Railways, irrespective of their correct classification, assuming a uniform concessional rate.
2. Clarification Issued:
   Based on the 25th GST Council recommendation, it is clarified that:
   • Only goods classified under Chapter 86 (railway locomotives, coaches, rolling stock, etc.) are eligible for 5% GST with no refund of unutilised ITC.
   • Supplies of goods falling under any other chapter attract GST at the normal applicable rates as notified under Notification No. 1/2017 or 2/2017, even when supplied to Indian Railways.

This clarification ensures correct tax classification and prevents misuse of concessional tax rates intended specifically for Chapter 86 goods.

Source: Circular No.: 30/4/2018-GST