The Kerala Authority for Advance Ruling has held that centage charges received by the Kerala Road Fund Board (KRFB), acting as a Special Purpose Vehicle for implementing KIIFB-funded infrastructure projects, are taxable at 18% GST under SAC 998339 (Project management services for construction projects) and are not exempt under Serial No. 3 of Notification No. 12/2017-CT (Rate). The ruling by Members Jomy Jacob and Mansur M.I. in KER/12/2026 (M/s Kerala Road Fund Board, decided 04.08.2026) additionally holds that the invoice must be raised on the Administrative Department of the Government (the project owner and true recipient under Section 2(93)), not on KIIFB which merely acts as the funding conduit.
While the services qualify as ‘pure services’ provided to the State Government (satisfying the first condition of Entry 3), the projects listed in the Tripartite Agreement — state highways, coastal highways, tourism corridor roads, ring roads, hill highways and flyovers — are not functions entrusted to Panchayats or Municipalities under Articles 243G/243W. The AAR drew a critical distinction between ‘roads and bridges’ as envisaged for Panchayats/Municipalities and state-level highway and infrastructure projects. On the recipient question, the AAR analysed the Tripartite Agreement to conclude that KIIFB’s role was limited to review, monitoring and funding, and that the conscious statutory use of ‘liable to pay’ in Section 2(93)(a) — as opposed to ‘the person who pays’ — meant the Administrative Department was the recipient regardless of which entity disbursed the funds.
- 2026-juristway.com-2582-AAR(Kerala)-GST | AAR Kerala | KER/12/2026 | 04.08.2026