9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (2) TMI 714 - AAR - GSTWorks Contract - applicable rate of GST - AMC services - principal supply or not - Composite supply or not - bundled supply or mixed supply - setting up of TCAS since both are under one work order - rate of GST for supply of goods under TCAS and supply of goods and services under AMC as the quantity and prices are provided in the work order separately - rate of GST for services (erection and commissioning) under TCAS and AMC involving civil works as the prices for the same are provided in the work order separately - requirement for separate registration in other states - levy of GST on the supply of goods like components, parts, spares etc., to SCR, Secunderabad, Telangana as a part of whole contract of supply, installation commissioning in Maharashtra and Karnataka State - applicable rate of GST to sub-contractors and sub-suppliers of goods. HELD THAT - As seen from the counter offer issued by south central railway dated 13.11.2019 the contract is for design, supply, installation, testing and commissioning of onboard TCAS equipment in locomotives and track side. The counter offer also contains schedule of description mentioning various items to be utilized quantity and value wise in it. There is also a payment schedule for the contract. There is a specific clause 7 regarding GST which mentions that the contractee i.e., South Central Railway shall reimburse the GST if a higher rate is determined even after completion of the contract - the definition of works contract under the CGST Act at Section 2(119) is restricted to supplies of goods services pertaining to immovable property only. This contract being an agreement for installation of equipment onboard the locomotives which are movable property, the said supply does not qualify to be a works contract under the GST law. A composite supply is essentially a naturally bundled supply where two or more different supplies invariably exist along with each other. As against this a mixed supply is a bundled supply is not a bundled supply where the goods / services though supplied together are distinct and separately identifiable. However a supply can be a mixed supply only if it is a single price - As seen from the illustration the supply of service i.e., insurance and goods go alongside each other. As against this the illustration given in the context of mixed supply clearly indicates that each of the items therein can be supplied separately and are not dependant of any other. The supply made by the applicant against the counter offer of the South Central Railway is a composite supply and the rate of tax applicable is the rate at which the principal supply has to be taxed i.e., Electrical signalling equipment with HSN code 8530 - AMC is clearly a different contract and will be enforced separately so that the failure to perform the promises under AMC will not put the promises under main contract in breach, more so because the main contract would have been completed by the time AMCs are separately entered with the authorities indicated. Therefore mere mentioning of a future AMC in the original contract will not make such future AMC contracts a part of the original contract. Further the details of Annual Maintenance Contract are not provided by the applicant, however the applicant submitted that the AMC involves the same services and goods for the maintenance of the TCAS system. In view of the submissions, AMC is also a composite contract and GST payable will be the GST applicable to the principal supply i.e., 9% under CGST SGST respectively on Maintenance service of Electrical signalling equipment - It is also informed by the applicant the South Central Railway has awarded the supply contract to their joint venture firm and that one of the partners of the Joint venture M/s. Kernex Microsystems (I) ltd will execute the contract for the Joint venture. In this connection it is observed that if the entire contract is executed all the attributes of the contract discussed above will remain the same for the executing partner. Therefore the liability of the executing partner will also remain the same as discussed. Thus, to conclude, the subject work is a composite supply and not works contract under GST - Being a composite supply, the rate applicable to principal supply is the rate applicable to the entire contract i.e., 9% CGST and also SGST - the AMC contract is a separate contract from the original contract - this contract is a composite contract and the rate of tax applicable to principal supply is the rate applicable to the entire contract i.e., 9% CGST and also SGST - this contract is a composite contract and the rate of tax applicable to principal supply is the rate applicable to the entire contract i.e., 9% CGST and also SGST - As the applicant makes supplies in other States and is liable to pay CGST SGST in those states as he is required to take separate registration in other States - applicant is making a composite supply other than supply of works contract or food and beverage. Therefore it is a naturally bundled supply where in the liability to pay tax on the entire consideration will be the liability relatable to the principal supply. If the applicant is delivering goods to the recipient in other State that State will be the place of supply and the liability to pay tax will arise in such State where the delivery is made - the executing partner of Joint Venture will have the same liability as the Joint Venture firm which was allotted the contract by South Central Railways.
Issues Involved:
1. Classification of the subject work as a Works Contract. 2. Applicable rate of GST for the contract. 3. Classification and GST rate for AMC services. 4. Requirement for separate registration in other states. 5. Applicability of CGST & SGST or IGST on the supply of goods to different states. 6. Applicable rate of GST for sub-contractors and sub-suppliers of goods. Detailed Analysis: 1. Classification of the Subject Work as a Works Contract: The contract for the design, supply, installation, testing, and commissioning of onboard Train Collision Avoidance System (TCAS) equipment does not qualify as a works contract under GST law. The definition of works contract under Section 2(119) of the CGST Act is restricted to supplies pertaining to immovable property. Since the equipment is installed on locomotives, which are movable property, it does not fall under the category of a works contract. Instead, it is classified as a composite supply. 2. Applicable Rate of GST for the Contract: The supply of TCAS to South Central Railway is considered a composite supply, where the principal supply is electrical signaling equipment classified under HSN code 8530. As per Notification No. 1/2017 dated 28.06.2017, amended by Notification No. 41/2017 dated 14.11.2017, the applicable rate of GST for this equipment is 9% under CGST and 9% under SGST. 3. Classification and GST Rate for AMC Services: The Annual Maintenance Contract (AMC) is considered a separate contract from the original contract, even though it is mentioned in the original contract. The AMC involves the maintenance of TCAS systems and is also classified as a composite supply. The GST rate applicable to the principal supply, which is the maintenance service of electrical signaling equipment, is 9% under CGST and 9% under SGST. 4. Requirement for Separate Registration in Other States: The applicant is required to take separate registration under CGST and the respective SGST in the states where they make supplies. This is in accordance with the place of supply rules enumerated under Sections 10 and 12 of the IGST Act. 5. Applicability of CGST & SGST or IGST on the Supply of Goods to Different States: The supply of goods like components, parts, and spares to South Central Railway as part of the whole contract is considered a composite supply. The principal supply is electrical signaling equipment, and as per Section 10 of the IGST Act, the place of supply is the place where the goods are delivered by the supplier. If the goods are delivered to another state, the place of supply will be that state, and the liability to pay tax will arise in the state where the delivery is made. 6. Applicable Rate of GST for Sub-Contractors and Sub-Suppliers of Goods: The executing partner of the Joint Venture will have the same GST liability as the Joint Venture firm that was awarded the contract by South Central Railways. The applicable rate of GST for sub-contractors and sub-suppliers will be the same as that for the principal supply, which is 9% under CGST and 9% under SGST. Ruling: 1. The subject work is a composite supply and not a works contract under GST. 2. The applicable rate of GST for the contract is 9% CGST and 9% SGST. 3. The AMC contract is a separate contract from the original contract. 4. The rate of GST for supply of goods and services under AMC is 9% CGST and 9% SGST. 5. Separate registration is required in other states where supplies are made. 6. The place of supply for goods delivered to other states will be the state where the delivery is made, and the tax liability will arise in that state. 7. The executing partner of the Joint Venture will have the same GST liability as the Joint Venture firm.
|
