Setting of Naval Communication Network attracts 18% GST: AAR

Setting of Naval Communication Network attracts 18% GST_ AAR.

The Authority for Advance Ruling (AAR) Maharashtra ruled that Setting of naval communication networks attract 18% GST.


Applicant manufactures telecom products such as optic fiber, optic fiber cable, etc.; lays the optic fiber cables (either underground or hung overhead) to create a network, sets up control centers, installs equipment necessary to operate network for desired purpose, commissions network and any other ancillary activity that may be necessary for creation of network infrastructure for its customers in telecom industry by way of ‘turnkey contracts’. To establish countrywide IP/MPLS based multiprotocol converged network, Naval Communication Network, as core infrastructure for supporting strategic and operational needs, the Indian Navy has entrusted the setting up of these networks to Bharat Sanchar Nigam Limited (“BSNL”), which in-turn has contracted the work to the applicant who has to supply all material and services required; training services to operate the same and supply of satellite connectivity vehicles for ensuring seamless connectivity during breakdown of network.

Issue raised 

The applicant has sought the advance ruling on the issue of what is the rate of rate of tax applicable to the supplies made under the contract.


The coram of Rajiv Magoo, Additional Commissioner of Central Tax, (Member) and T. R. Ramnani, Joint Commissioner of State Tax, (Member) stated that it is seen from the amendments made, the activities which were earlier covered by the Entry 3(ii), after deletion of said sub-clause (ii), would get covered under respective residual entry i.e Sr. No. 3 (xii) of the Notification No. 11/2017 CTR-dated 28.06.2017 as amended by Notification No 03/2019 CGST (Rate) dated 29th March, 2019. The Authority, vide its earlier order had classified the subject activities under the Entry 3(ii) of Notification No. 11/2017 CTR- dated 28.06.2017, after considering all the headings of the said notification including Sr. No. 3 (vi) (a). 

The coram added that remaining headings are still in existence today and no new headings have been incorporated in the said notification after Notification No 3/2019 Dated 29th March, 2019, which can be considered to be relevant to the applicant’s subject activities. 

The coram felt that the subject activity of the applicant will be covered under Since Entry No 3 (xii) of Notification No. 11/2017 CTR- dated 28.06.2017 as amended till date.  Therefore, activities of the applicant were covered under entry 3(ii) of the Notification No. 11/2017 CTR- dated 28.06.2017 and thereafter with effect from 01.04.2019, the said activities are covered under Sr. No. 3 (xii) as amended by Notification No 03/2019 CGST (Rate) dated 29th March, 2019, taxable at the rate of 18%.

The coram ruled that supplies of the Applicant are covered by sub-clause (xii) of Entry No. 3 of Notification No. 11/2017 —CTR- dated 28.06.2017 as amended and taxable @ 18% GST.

Case title: In re Sterlite Technologies Limited (GST AAR Maharashtra)

Citation: Advance Ruling No. GST-ARA- 80/2019-20/B-25

Click here to read the Order/Judgment 

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