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2021 (4) TMI 565 - AAR - GSTClassification of supply - rate of tax for the scope of supplies - independent supplies or composite supply with principal supply of goods - supplies made by different Cost Centres - naturally bundled services - Time of supply - HELD THAT - It is seen that the applicant was a successful bidder to the tender invited by the BMRCL and the tender is for Supply of 150 numbers of Standard Gauge Intermediate Cars compatible with and suitable for integration with the existing trains of Bangalore Metro Rail Project Phase-I . The applicant has applied and been allotted the work and the applicant has entered into the contract with BMRCL vide Contract No.3 RS-DM dated 25th March, 2017. It is clear that the contract is for manufacture and supply of Standard Gauge Intermediate Cars along with integration with installation and commissioning of cars supplied, including training, supervision and maintenance, supply of spares, preparation of manuals etc. - the contract was for supply of intermediate cars which are compatible with the existing trains and for integration with installation and commissioning of cars supplied, including training, supervision and maintenance and supply of spares and preparation of manuals etc. and this is a single contract. The contract is verified and found that the contract is a single contract for both supply of goods and also for services related to those goods supplied, like installation, integration, commissioning, training and maintenance and splitting of the entire contract is for the purposes of milestones in the completion of the contract and is a single continuous chain. The Contract agreement also clearly states that the contract is a single contract involving supply of goods and services. Further, it is also seen that the contract cannot be separated and awarded to different persons and since the nature of the spares and services are exclusive to the main supply, it cannot but be awarded to the same person. It is seen that the Total Contract Price is split up into separate Contract Prices cost centre wise and one of the cost centre H is optional, and is incidental but integral part of the Supply contract. Further, it is also important to note that there is no option on the supplier as far as supplies of spares are concerned - it can be seen that supply covered under Cost Centre H, being optional, cannot be treated as a part of the contract of supply of 150 cars and integration and other services, until that option is exercised by the contractee. This cost centre would be operative only on the request of the contractee and when such request is made by the contractee, the applicant is bound to provide such services at the agreed upon rates. The Cost Centre C to G would form a composite supply as the supply involves supply of intermediate cars and also integration, commissioning etc. There would be supply of goods and supply of services involved in this activity and hence would form a naturally bundled supply - The supplies made by the applicant under Cost Centres C, D, E and G form a composite supply and since the supply of intermediate cars is the principal supply, would be treated as the supply of intermediate cars as per section 8 of the CGST Act, 2017 and section 12 of the CGST Act, 2017 is applicable to the issues related to the time of supply.
Issues Involved:
1. Whether the supplies made by Cost Centres C, D, E, and G are independent supplies or a composite supply with the principal supply of goods. 2. Determination of the applicable GST rate for the supplies made by each Cost Centre. 3. Determination of the time of supply for each Cost Centre. 4. Eligibility for refund of excess tax payment if the supplies are considered composite. Issue-wise Detailed Analysis: 1. Nature of Supplies (Independent or Composite): - The applicant, a Public Sector Undertaking, entered into a contract with BMRCL for the supply of 150 Standard Gauge Intermediate Cars along with related services like installation, commissioning, training, and maintenance. - The applicant argued that each Cost Centre (C, D, E, and G) makes separate supplies based on their scope and should be treated independently. - The contract was analyzed and found to be a single contract for both goods and services, with milestones for completion but forming a continuous chain. - The contract cannot be separated and awarded to different persons due to the exclusive nature of the spares and services. - The contract price is split into separate Cost Centres, but the total contract price is variable and dependent on actual supplies. - The supplies under Cost Centre H (optional) and Cost Centre G (spares) were considered separate from the main supply but related to it. - The supplies made under Cost Centres C (goods), D and E (services), and G (spares) were found to form a composite supply as they involve naturally bundled goods and services supplied in conjunction with each other. - The principal supply was identified as the supply of intermediate cars, making the entire supply a composite supply under Section 8 of the CGST Act, 2017. 2. Applicable GST Rate: - The supplies made under Cost Centres A and C (goods) were taxed at 5%/12% as per the applicable notifications. - The supplies made under Cost Centres D and E (services) were taxed at 18%. - The supplies made under Cost Centre G (spares) were taxed based on the nature of the spares, typically at 18%/28%. - Since the supplies were deemed composite with the principal supply being intermediate cars, the GST rate applicable to the principal supply (intermediate cars) would apply to the entire composite supply. 3. Time of Supply: - For independent supplies, the time of supply was determined based on Section 12 (goods) and Section 13 (services) of the CGST Act, 2017. - For composite supplies, the time of supply was determined based on the completion of each milestone and the issuance of invoices as per Section 12 and Section 31(4) of the CGST Act, 2017. - The time of supply for the composite supply was identified as the date of issuance of the invoice. 4. Eligibility for Refund: - The applicant queried whether they would be eligible for a refund of excess tax paid if the supplies were considered composite. - This query was deemed outside the scope of Section 97(2) of the CGST Act, 2017, and therefore, no ruling was provided on this matter. Ruling: - The supplies made by the applicant under Cost Centres C, D, E, and G form a composite supply with the principal supply being the intermediate cars. - The entire supply is treated as the supply of intermediate cars as per Section 8 of the CGST Act, 2017. - The time of supply issues are governed by Section 12 of the CGST Act, 2017, based on the issuance of invoices.
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