2019 (5) TMI 902 - AAR - GST

Classification of supply - supply of equipment - design, fabrication, procurement, instrumentation and control and commissioning of Trisonic Wind Tunnel with Ejector System - works contract or not - concessional rate of GST - Sl.No. 243A of First Schedule of Notification No.01/2017-Integrated Tax (Rate) dated 28.062017 as inserted by Notification No. 07/2018 Integrated Tax (Rate) dated 25.01.2018 - Entry at SI No. 3 (vi) of Notification No. 08/2017 Integrated Tax (Rate) dated 28.06.2017 as amended by Notification No.24/2017 Integrated Tax (Rate) dated 21.09.2017 - HELD THAT - The work of design, realisation, integration and commissioning of Trosonic Wind Tunnel as a turnkey project will fall under the definition of works under Section 2 (119) of the CGST Acts 2017. The Service provided to the Central Government by way of construction, erection, commissioning. installation, completion, fitting out, of a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession will attract 12% GST as per Sl.No.3(vi) of Notification No. 08/2017 Integrated Tax (Rate) dated 28.06.2017.

Summary

Issues involved:
1. Whether the supply can be considered as supply of equipment eligible for the concessional rate of GST of 5% under Notification No.01/2017-Integrated Tax (Rate).
2. Whether the supply is considered a works contract covered under Entry at SI No. 3 (vi) of Notification No. 08/2017 Integrated Tax (Rate) attracting GST at the rate of 12%.

Analysis:
1. The Authority for Advance Rulings, Kerala, examined a contract between a government department and a private company for the design, fabrication, procurement, and commissioning of a Trisonic Wind Tunnel with Ejector System. The contract involved various components, including civil work and machinery, forming an immovable system for Research and Development purposes. The question arose whether this supply qualified for the concessional GST rate of 5%. The authorized representative clarified that it was a works contract and sought a ruling only on the applicability of GST at 12%.

2. The Authority determined that the work of design, realization, integration, and commissioning of the Trisonic Wind Tunnel constituted a works contract under the CGST Act. As the project involved construction, erection, commissioning, and installation of a civil structure predominantly for non-commercial use, it fell under the category attracting GST at 12% as per the relevant notification. Therefore, the ruling stated that the supply in question was considered a works contract attracting 12% GST as per the specified entry in the notification.

This judgment clarified the classification of the supply contract and the applicable GST rate based on the nature of the work involved, highlighting the distinction between supply of equipment and works contract under the GST regime.