2018 (9) TMI 546 - AAR - GST

Classification of Services - Construction, Erection, Commissioning and Installation of projects - Electrical Transmission Lines, Sub-Stations and Line Shifting - service of construction of new 33/220 kV Pooling Sub-station along with associated 220 kV DCDS Transmission Line and associated feeder bay work on total Turnkey basis under World Bank Financing - 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, under this agreement, the applicant is providing a composite supply within the meaning of Section 2 of the CGST Act, 2017 - The HSN Code for the supply of composite service in the nature of Work Contract under the all the three agreements entered into with RUMS, shall be 9954/995423 - Under the CGST and SGST Acts, Rules and Notifications issued till the date of making of the application, no provision has been made for carving out an exception in case of supply of service in the nature of a Works Contract for creating infrastructure which is to be exclusively used for Solar Power or in a Solar Park for or by a Solar Project Park Developer - The rate of CGST on the supply being made under the contract shall be according to N/N. 11/2017-Central Tax (Rates). Ruling - The rate of MPGST on the supply being made under the contract referred to in para 3.3 supra shall be also 9 per cent as per the corresponding Notification to the Notification No. 11/2017-Central Tax (Rates), issued under MPGST Act, 2017.

Summary

Issues:
1. Classification of services for construction of new 33/220 kV Pooling Sub-station and associated works under GST.
2. Applicable rate of CGST and SGST for the supply under the contract.

Detailed Analysis:
1. Classification of Services:
The applicant, engaged in construction projects for Solar Parks, sought clarification on the Harmonized System of Nomenclature (HSN) code for their services. The applicant contended that the work involved a composite supply of goods and services, falling under Works Contract as per the CGST Act. The Authority analyzed the agreements and determined that the work indeed constituted a composite supply within the meaning of the CGST Act. The services provided by the applicant were classified under Group 99542, specifically under service code 995423 for general construction services of long-distance underground/overland/submarine pipelines, communication and electric power lines, among others.

2. Applicable Rate of CGST and SGST:
Regarding the applicable GST rate, the applicant referred to Notification No. 11/2017-Central Tax (Rates) for the rate of GST on Works Contract services. The Authority noted that the rate for such services was 18% as per the notification. However, the applicant argued for a lower rate based on the nature of the work being part of evacuation infrastructure exclusively for Solar Power. The Authority clarified that no provision existed under the CGST and SGST Acts for a reduced rate in such cases. The determined rate for CGST and SGST on the supply under the contract was 9% each, as per the relevant notifications issued under the CGST and MPGST Acts.

In conclusion, the Authority classified the services provided by the applicant under the Works Contract category and specified the applicable HSN code. Additionally, the Authority established the rate of CGST and SGST for the supply made under the contract, emphasizing the absence of provisions for a reduced rate based on the nature of the infrastructure being developed.