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2018 (8) TMI 282 - AAR - GSTWorks contract - Composite supply - natural bundling of supply of goods and services - What is HSN in which the service of construction of new 33/220 kV Pooling i Substation at Badwar, REWA along with associated 220 kV DCDS Transmission Line and associated feeder bay work on total Turnkey basis against Bid Identification No. RUMS/2016-17/372/014 (Lot-I) under World Bank Financing shall fall? - What is HSN in which the service of construction of new 33/220 kV Pooling Substation at Barsita Desh, REWA along with associated 220 kV DCDS Transmission Line and associated feeder bay work on total Turnkey basis against Bid Identification No. RUMS/2016-17/372/014 (Lot - II) under World Bank Financing shall fall? - What is HSN in which the service of construction of new 33/220 kV Pooling Substation at Ramnagar Pahad, REWA along with associated 220 kV DCDS Transmission Line and associated feeder bay work on total Turnkey basis against Bid Identification No. RUMS/2016-17/372/014 (Lot - III) under World Bank Financing shall fall? - What shall be the applicable rate of CGST and SGST on the supply being made under the contract? Held that - On a reading of the scope of work, it is clear that the work involves both supply of goods and supply of services, which are naturally bundled. Accordingly, the under this agreement, the applicant is providing a composite supply within the meaning of Section 2 of the CGST Act, 2017 - Perusal of the agreements that the applicant has entered into with RUMS shows that the scope of work in all the three agreements are identical, accordingly, all the three agreements shall have the same classification for the purpose of taxation under the GST Laws - applicability of SI.No. 6 of Schedule II of the CGST Act, 2017 and MPGST Act, 2017, to the work being done by the applicant. The work being done by the applicant being a Composite Supply and Works Contract u/s 2 is clearly a supply of service. Ruling - The HSN Code for the supply of composite service in the nature of Works Contract under the all the three agreements entered into with RUMS, shall be 9954/995423 - The rate of CGST on the supply being made under the contract shall be according to Notification No. 11/2017 - Central Tax (Rates) - The rate of MPGST on the supply being made under the contract shall be also 9 percent as per the corresponding Notification to the Notification No. 11/2017- Central Tax (Rates), issued under MPGST Act,2017.
Issues:
1. Determination of HSN code for construction services under multiple agreements. 2. Applicable rate of CGST and SGST on the supply made under the contract. Analysis: Issue 1: Determination of HSN Code The applicant, engaged in construction services for solar power projects, sought clarification on the appropriate HSN code for their work under three agreements with a solar park developer. The applicant contended that the work involved a composite supply of goods and services, falling under the category of a Works Contract as per the CGST Act. The Authority examined the agreements and confirmed that the services provided were a composite supply within the meaning of the CGST Act. The construction of Pooling Sub-stations on a Turnkey Basis qualified as a Works Contract under the Act. The Authority determined the HSN code for the services as 995423, pertaining to general construction services of long-distance underground/overland/submarine pipelines, communication and electric power lines, and related works. Issue 2: Applicable Rate of CGST and SGST Regarding the applicable rate of CGST and SGST on the supply made under the contract, the Authority referred to Notification No. 11/2017 - Central Tax (Rates) to ascertain the rates. The notification specified a rate of 9% for a composite supply of works contract as defined in the CGST Act. Therefore, the Authority ruled that the rate of CGST on the supply made under the contract would be 9%. Similarly, the rate of MPGST on the supply under the contract was also determined to be 9% in accordance with the corresponding notification under the MPGST Act, 2017. In conclusion, the Authority for Advance Rulings, Madhya Pradesh, provided a detailed analysis and ruling on the determination of the HSN code for construction services and the applicable rates of CGST and SGST for the supply made under the contract with the solar park developer.
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