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2023 (1) TMI 786 - AAAR - GSTClassification of supply - rate of GST - solar project - supply of goods alongwith services - Aluminium Foil Type Winding Inverter Duty Transformer - parts of Transformer supplied/to be supplied for initial setting up of solar project - recipient of service - classifiable under Chapter Heading 8504 or not - falls under Sr. no. 234 in Schedule-I to Notification No. 01/2017-Central Tax (Rate) dated 28,th June, 2017 or not? - HELD THAT - The name of M/s Adani Solar Energy Chitrakoot One Limited had never appeared before GAAR as the 'recipient of service' and therefore the contention of the appellant that GAAR has erred in its finding that there is only one recipient of supply, is misleading and far from truth. The appellant had solely relied and discussed the clauses mentioned in the Technical Specification issued by M/s AGEL in support of their arguments. Since no other documents were produced before GAAR, there are no error found in the findings given by GAAR that there was only one recipient of supply which was M/s AGEL. The Technical Specification issued by M/s. AGEL contains details relating to both supply of goods viz. Aluminium Winding Inverter Duty Transformers and supply of services viz. Supervision of Erection, Testing Commissioning of Aluminium Foil Type Winding Inverter Duty Transformers. The signature of the 'Authorized Signatory' appearing on the Purchase Order and Service Order appears to be the same for both M/s AGEL and M/s Adani Solar Energy Chitrakoot One Ltd. The supply in question is a one involving both supply of goods and associated services and are to be supplied by the appellant. From the above discussion, it is found that the supply of goods and the supply of services are single and connected and to be used for the same purpose viz. for supply and effective functioning of the IDT and trouble free operation of Solar Power Plant. The appellant has been harping on the fact that they had received two separate purchase orders from two distinct entity. It is seen that the purchase order PO No. 4500315135 for the supply of Aluminum Foil Type Winding Inverter duty Transformer along with their parts issued by M/s. AGEL to the appellant is dated 08.11.2019 and the PO No. 5700280769 for supervision of erection, testing and commissioning charges for the Transformer from M/s Adani Solar Energy Chitrakoot One Limited is dated 23.12.2019. Further it is seen that the 'Technical Specification for Aluminum Winding Inverter Duty Transformers bearing No. 5353-E-SEP-EES-TE-S-L 002' bears the date as 15.7.2019 and the same is issued by M/s. AGEL - the aforesaid artificial splitting of the contract into two separate orders being placed by two different entities is merely an afterthought so as to circumvent the explanation inserted in entry No 234 of Notification No 01/2017 CT according to which, of the value of gross consideration 70% shall be deemed to be on account of goods and 30% deemed to be on account of service. Thus, the activities relating to supply of the transformers and the supervision of the erection, testing and commissioning of the transformers supplied by the appellant are inextricable and for the purpose of supply of transformer which would be used in initial setting up of the Solar Power Plant - the explanation provided is supplier based and not recipient based. Here, on examination of the purchase orders of supply of goods and services and the technical specification for the said supply of goods and services it is found that the supply of goods is made alongwith the supply of services and it therefore fulfills the conditions laid down under the said explanation. The appellant is liable for payment of GST in terms of Explanation inserted in Entry No. 234, appearing under Schedule-I to Notification No.01/2017- Central Tax (Rate) dated 28.06.2017, vide Notification No. 24/2018-Central Tax (Rate) dated 31.12.2018 and in terms of Serial No. 38 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 in respect of services, considering the total value of both the orders i.e. order for supply of goods and order for related supply of services upto 30.09.2021. Thereafter the same will be covered in terms of Explanation inserted in entry Sr.No. 201A appearing under Schedule-II to the Notification No.01/2017-Cental Tax (Rate) dated 28.06.2017 amended vide Notification No. 08/2021-Central Tax (Rate) dated 30.09.2021 w.e.f. 01.10.2021.
Issues Involved:
1. Classification of Aluminium Foil Type Winding Inverter Duty Transformer under Chapter Heading 8504. 2. Applicability of Sr. No. 234 in Schedule-I to Notification No. 01/2017-Central Tax (Rate) dated 28th June 2017. 3. Rate of GST applicable on the supply of goods and services. 4. Determination of composite supply and whether the contracts should be treated as one single indivisible contract. 5. Applicability of the explanation inserted in Entry No. 234 of Notification No. 01/2017-CT (Rate) dated 28.06.2017. 6. Validity of separate contracts for supply of goods and services. Detailed Analysis: 1. Classification of Aluminium Foil Type Winding Inverter Duty Transformer under Chapter Heading 8504: The appellant, M/s Shilchar Technologies Limited, manufactures electronics and telecom, power & distribution transformers. They supplied Aluminium Foil Type Winding Inverter Duty Transformers to M/s Adani Green Energy Limited (AGEL) for a solar project. The appellant classified these transformers under Chapter Heading 8504, arguing they are parts of a Solar Power Generating System. 2. Applicability of Sr. No. 234 in Schedule-I to Notification No. 01/2017-Central Tax (Rate) dated 28th June 2017: The appellant sought an advance ruling on whether the supply of transformers falls under Sr. No. 234 in Schedule-I to Notification No. 01/2017-Central Tax (Rate) dated 28th June 2017, which would subject the supply to a GST rate of 2.5% CGST and 2.5% SGST. The Gujarat Authority for Advance Ruling (GAAR) affirmed that the transformers are essential parts of the Solar Power Generating System and thus fall under the specified notification. 3. Rate of GST applicable on the supply of goods and services: GAAR ruled that the appellant is liable for GST on the total value of both the purchase order for goods and the service order for supervision of erection, testing, and commissioning. The explanation inserted in Entry No. 234 of Notification No. 01/2017-CT (Rate) dated 28.06.2017 states that 70% of the gross consideration is deemed to be on account of goods and 30% on account of services, leading to an effective GST rate of 8.9%. 4. Determination of composite supply and whether the contracts should be treated as one single indivisible contract: The appellant argued that the contracts for supply of goods and services were separate, with goods supplied to M/s Adani Green Energy Limited and services provided to M/s Adani Solar Energy Chitrakoot One Limited. However, GAAR found that the contracts were linked and should be treated as a single composite supply. The technical specifications issued by AGEL included both supply of goods and supervision services, indicating an integrated contract. 5. Applicability of the explanation inserted in Entry No. 234 of Notification No. 01/2017-CT (Rate) dated 28.06.2017: GAAR noted that the appellant artificially bifurcated the contract to avoid the GST implications of the explanation inserted in Entry No. 234. This explanation mandates that 70% of the gross consideration is deemed for goods and 30% for services, applicable when goods and services are supplied together. The appellate authority upheld this view, emphasizing that the supply of goods and services were interconnected and intended for the initial setting up of the Solar Power Generating System. 6. Validity of separate contracts for supply of goods and services: The appellant contended that they received separate purchase orders from two distinct entities, but GAAR found that the technical specifications and purchase orders indicated a single, comprehensive contract. The appellate authority supported this finding, noting the artificial nature of the contract split and the consistent involvement of AGEL in both orders. Conclusion: The appellate authority modified the GAAR ruling to clarify that the appellant is liable for GST on the total value of both purchase orders. The effective GST rate was determined to be 8.9% until 30.09.2021, after which the rate changed to 13.8% due to amendments in the relevant notifications. The explanation provided in Entry No. 234 is supplier-based, not recipient-based, and applies to the appellant's supply of goods and services for the initial setting up of the Solar Power Generating System.
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