In a letter to the MSME suppliers in West Bengal, Railways has clarified various details regarding payment of taxes under GST system for ongoing supply contracts as on July 1, 2017 to Railways.

Railway Board said in case of purchase order with Original Delivery Period before June 30, 2017 where the material is supplied (wholly or partly) after June 30, 2017 during extended Delivery period, “Such situations shall be dealt under Denial Clause with payment restricted to lower of contract tax rate or tax rate under GST regime with the stipulation that any additional Input Tax Credit (ITC) benefit, if becomes available to supplier, the same shall be passed on to purchaser without any undue delay.”

For Valid Purchase order with Delivery Period after 30.06.2017 where the material is supplied (wholly or partly of it) after 30.06.2017 within Original DP or extended DP, “Such contract shall be dealt under SVC clause and payment with prevailing GST rate (whether having positive or negative variation) shall be made with the stipulation that any additional Input Tax Credit (ITC) benefit, if becomes available to supplier, the same shall be passed on to purchaser without any undue delay.”

In contracts where SVC is specifically mentioned as Not Applicable”, the payment in such:, cases shall be restricted to lower of contract tax rate or tax rates under GST regime with the stipulation that any additional Input Tax Credit (ITC) benefit, if become available to supplier, the same shall be passed on to purchaser without any undue delay.

Also, the payment of taxes in such situations shall be released by paying authority without any formal amendment against individual contract / Purchase order.

Meanwhile, the Railways clarified that for supplies effected after 30.06.20, the firm shall – Submit the Invoice / bill clearly indicating the appropriate HSN and applicable GST rate thereon duly supported with documentary evidence; and Give a declaration that any additional Input Tax Credit benefit, if become available to supplier, the same shall be passed on to purchaser without any undue delay.