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2020 (7) TMI 475 - AAR - GSTClassification of supply - Works Contract or Composite supply - principal supply - work relating to supply, installation and fixing of customized furniture in a building - applicable rate of GST - HELD THAT - The supply, installation and fixing of furniture, customized or customized cannot be a works contract, as the items of furniture have been made or manufactured at the supplier's place which have been installed or fixed at the place of the recipient. Such installed or fixed items of furniture can be removed/ moved to any place without damage to the furniture. Thus, supply, installation and fixing of furniture cannot be covered under works contract, as it does not result in immovable property or it is not going to be part of immovable property - As per the view point and interpretation of law and facts of the case, the supply, installation and fixing of furniture, either customized or not customized, is not composite supply of works contract by way of construction etc of civil structure or other original works to the Government .and therefore, is not chargeable to concessional rate of 12% as per the Notification No.11/2017 dated, 28.06.2017. The contract in questions i.e. work order relating to supply, installation and fixing of customized furniture in a building conform to the COMPOSITE SUPPLY as provided in section 2(30) of CGST Act, 2017. The supply made by the applicant to the Capital Project Administration consists of Two taxable supplies of Goods and Services, which are naturally bundled and supplied in conjunction with each others, where the supply of goods viz. Furniture is the principal supply. Thus, the work order in question shall merit classification under Chapter Head 9403 of GST Tariff and shall be liable to GST at the rate applicable at the time of supply.
Issues Involved:
1. Whether the work relating to "supply, installation, and fixing of customized furniture in a building" is a composite supply of goods or in the nature of works contract. 2. Applicable rate of GST on the above supply if it is a supply of goods or supply in the nature of works contract. Issue-wise Detailed Analysis: 1. Nature of Supply: Composite Supply of Goods or Works Contract - The applicant contended that the contract for supply, installation, and fixing of customized furniture should be considered a works contract as per Section 2(119) of the CGST Act, and thus eligible for a concessional tax rate of 12% as per Notification No. 11/2017-Central Tax (Rate). - As per Section 2(119) of the CGST Act, a "works contract" involves a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement modification, repair, maintenance, renovation, alteration, or commissioning of any immovable property. - The authority clarified that the supply, installation, and fixing of furniture do not result in immovable property. The furniture items are manufactured at the supplier's place and installed at the recipient's location, and these items can be moved without damage, thus not qualifying as immovable property. - The authority concluded that the supply, installation, and fixing of furniture do not fall under the definition of a works contract because it does not result in immovable property. 2. Applicable Rate of GST - The applicant argued that the supply should be taxed at 12% under the works contract provisions. - The authority examined the classification of services under Notification No. 11/2017-Central Tax (Rate) and found that the supply in question does not fit under the construction services heading 9954. - The authority referred to Section 2(30) of the CGST Act, defining "composite supply" as a supply consisting of two or more taxable supplies of goods or services or both, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, with one being the principal supply. - The authority determined that the supply of furniture is the principal supply, and the installation and fixing are ancillary, making it a composite supply of goods. - As per Section 8(a) of the CGST Act, the tax liability on a composite supply is determined by the principal supply, which in this case is the supply of furniture. - The applicable rate of GST for furniture, classified under HSN 9403, is 18% as per Sl.No.438 of Schedule III of the CGST Act. Conclusion and Ruling: - The activities of supply, installation, and fixing of furniture cannot be classified under Heading 9954 - Construction services. - The contract conforms to a composite supply as provided in Section 2(30) of the CGST Act, 2017, where the supply of goods (furniture) is the principal supply. - The goods shall merit classification under Chapter Head 9403 of the GST Tariff and shall be liable to GST at the rate of 18% applicable at the time of supply. - The ruling is valid subject to the provisions under Section 103(2) until declared void under Section 104(1) of the GST Act.
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