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TMI Blog2018 (12) TMI 649X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions, a reference to the CGSI* Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / MGST Act would be mentioned as being under the "GST Act". 02. FACTS AND CONTENTION - AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus - STATEMENT OF RELEVANT FACTS HAVING A BEARING ON THE QUESTION(S) ON WHICH ADVANCE RULING IS REQUIRED. 1. This Application is being filed by EMCO Ltd.('the Applicant'/the Company'), having Goods and Services Tax ('GST') Registration No.27AAACE2764Q1Z6. The Applicant is engaged in the business of manufacturing and selling various products and solutions as required in Power Transmission and Distribution Sector. The Company has two divisions namely (i) Transformer division and (ii) Project division. The Transformer division manufactures widest range of transformers which are used in the power industry. The Project division has two Strategic business units (i) Sub-station SBU (ii) Manufacturing Tower and Transmission Line SBU. Sub-station SBU focuses on turnkey projects in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... THE APPLICANT'S INTERPRETATION OF LAW AND/OR FACTS, AS THE CASE MAY BE, IN RESPECT OF THE QUESTION(S) ON WHICH THE ADVANCE RULING IS REQUIRED 2. ISSUE FOR DETERMINATION 2.1 The question/ issue before Your Honor is whether GST is leviable on the transportation charges levied by the Applicant on PGCIL? 2.2 In case the GST is payable, what would be the rate of GST to be charged on such charges? 2.3 The he question / issue placed for determination before Your Honor has to be appreciated in light of the following position of law and its applicability to the activity by the Applicant, discussed hereunder. 3. POSITION OF LAW AND SUBMISSIONS OF THE APPLICANT At the outset, the Applicant would like to refer to Notification 12/2017-Central Tax (Rate) dated 28th June 2017 which exempts various services from the levy of GST. EXEMPTION NOTIFICATION 12/2017-CENTRAL TAX (RATE) 28TH JUNE. 2017 3.1. Entry no. 18 of the Notification No. 12/2017 dated 28th June 2017 exempts services by way of transportation of goods by road except inter alia by a GTA. The relevant extract of the entry is reproduced below: S.No. Chapter, Section or Heading Description of Service Rate (per cent.) Condi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upply, shall be treated as a supply of such principal supply; and b) a mixed supply comprising two or more supplies shall be treated as a supply of that particular supply which attracts the highest rate of tax, 3.8. Upon reading of the above provisions, it can be seen that in cases where two or more taxable supplies of goods or services or both are naturally bundled in the course or furtherance of business the supply would qualify as Composite supply. Further, as per Section 8 of CGST Act, the Composite supply would be treated as a supply of 'Principal supply' for the purposes of CGST Act and would be taxed accordingly. 3.9. A 'Principal supply' would mean the predominant element of supply involved in the Composite supply. The Composite supply can, therefore, be broadly divided into two parts (i) Principal Supply i.e. predominant element (ii) other ancillary supplies. 3.10. As observed from above, a supply would qualify as a Composite supply only in cases where such supply consists of two or more taxable supplies. Therefore, it is crucial to analyze the term 'Taxable supply' as defined under Section 2(108) of CGST Act. The same is reproduced hereunder: "taxable supply" means ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce, delivery, , unloading, handling, Storage, erection (of all equipment and material) including associated Civil works, detailed survey including route alignment, profiling, tower spotting, optimization of tower locations, soil resistivity measurement and geotechnical investigation (including special foundation locations viz. pile/well foundation locations, whenever applicable and covered under BPS), Check survey, classification of foundation for different type of tower and casting of foundation for tower as per POWERGRID's foundations drawing, tack welding of bolts and nuts including supply and application of zinc rich plant, fixing of insulator strings, stringing of conductors and earth wires/OPGW along with all necessary line accessories; Stringing Power line crossing section under Live Line Condition (wherever applicable); painting of towers & supply and erection of span markers, obstruction lights (wherever applicable) for aviation requirements (as required), testing and commissioning of all equipment and materials supplied under Ex-Works Supply Contract for the Complete execution of Tower Package for TW05 for +-800kV Raigarh - Pugalur Transmission Line Part-V associated wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tract. The break-up the Contract Price is as under: Sr.No. Price Component Amount (INR) 1. Transportation, Insurance and other incidental Services 5,95,56,644 2. Installation Charges 78,48,33,923 Total Service Contract Price 80,43,90,567 5. PRAYER In the light of the above background and facts, a Ruling is sought from the Hon'ble Authority on the following: * Whether GST is leviable on invoice raised by Applicant towards freight and other incidental expenses outsourced by the Applicant? * If GST is payable, applicable rate of tax on the said transportation service? 03. CONTENTION - AS PER THE CONCERNED OFFICER The submission, as reproduced verbatim, could be seen thus- 1. Issue for determination- 1.1 The question/ issue before Your Honor is whether GST is leviable on the transportation charges levied by the Applicant on PGCIL? 1.2 In case the GST is payable, what would be the rate of GST to be charged on such charges? Dealer's Contention: As per notification No. 12/2017 dated 28.06.2017 Entry No. 18, exempt services by way of transportation of goods by road except inter alia by GTA. As understood from above, supply of services by way of transporta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... associated with HVDC Bipole link between Western Region (Raigarh, Chhattisgarh) and Southern Region (Pugalpur, Tamilnadu) - North Trichur (Kerala) and made with contract for supply and also service on 08.06.2017. The contract is supply of material, supply of accessories and installation commissioning, etc. Another contract is service contract which includes performance of all services inter alia including inland transportation, insurance, delivery, unloading, handling, storage, etc. Citation:- 1. Advance Ruling No. KAR ADRG 03/2018 Dated: 21st March, 2018 Skill tech Engineers & Contractors Pvt Ltd. = 2018 (6) TMI 111 - AUTHORITY FOR ADVANCE RULINGS, KARNATAKA 2. Judgement of Supreme Court of India M/s. India Meters Ltd vs State of Tamil Nadu on 7th September, 2010 = 2010 (9) TMI 878 - SUPREME COURT OF INDIA 3. Judgement of Supreme Court of India Hindustan Sugar Mills Etc vs State of Rajasthan And Others on 22nd August, 1978 = 1978 (8) TMI 186 - SUPREME COURT OF INDIA 4. Advance ruling Judgment of M/s. Emc LTD dt.12.02.2018 In the light of the above, contract is a composite contract (indivisible) and GST should be levied on total contract price including material, sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioning of the project which includes planning, transportation of goods, loading and unloading etc for which seprate invoices and consideration has been stipulated. For the purpose of transportation of goods applicant avails the services of Goods Transport Agency Who transports the goods. Applicant also pays tax under reverse charge basis. Further applicant on back to back basis issues invoices and charges separate consideration for transportation services to PGCIL. It is this transportation charges/freight recovered by the applicant from PGCIL which is the subject matter of present application. Applicants submits that they do not issue any consignment note in the course of providing transport service to PGCIL This being the case, the applicant is of the view, that it does not qualify as a 'Goods Transport Agency' and thus transportation services provided by them may not be liable to GST. Thus applicants main contention is based on the premise that various services undertaken by them including transportation services as per second contract for which applicant issues separate invoice and separate consideration as has been decided in the contract shall be considered as stand alone s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Transmission Line Part-V associated with HVDC Bipole link between Western region (Raigarh, Chhattisgarh) and Southern region (Pugalur, Tamil Nadu)- North Trichur (Kerala) unless otherwise specifically excluded in the Bidding Documents or in this NOA. 2.2 The Notification for Award of Contract for performance of all other activities, as set forth in the Bidding Documents, viz. inland transportation, insurance, delivery, unloading, handling, storage, erection of all equipment and material) including associated civil works, detailed survey including route alignment, profiling, tower spotting, optimization of tower locations, soil resistivity measurement & geotechnical investigation (including special foundation locations viz. pile/ well foundation locations, whenever applicable & covered under BPS), check survey, classification of foundation for different type of tower and casting of foundation for tower footings as per POWERGRIDs foundations drawing, tack welding of bolts and nuts including supply and application of zinc rich paint, fixing of insulator strir stringing of conductors and earth wires/ OPGW along with all necessary accessories; Stringing of Power line crossing section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hattisgarh) and Southern region (Pugalur, Tamil Nadu - North Trichur (Kerala)Contract Agreement No. CC-CS/651-SRVIW-3573/3/G10/CA-II/7293 Scope of work ----- WHEREAS the Employer desires to engage the Contractor for providing all the services inter-alia including inland transportation, insurance, delivery, unloading, handling, storage, erection (of all equipment and material) including associated civil works, detailed survey including route alignment, profiling, tower spotting, optimization of tower locations, soil resistivity measurement & geotechnical investigation (including special foundation locations viz. pile/ well foundation locations, whenever applicable & covered under BPS), check survey, classification of foundation for different type of tower and casting of foundation for tower footings as per POVVERGRIDs foundations drawing, tack welding of bolts and nuts including supply and application of zinc rich paint, fixing of insulator strings, stringing of conductors and earth wires/ OPGW along with all necessary line accessories; Stringing of Power line crossing section under Live Line Condition (wherever applicable); Painting of towers & supply and erection of span markers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irst Contract. It is also expressly understood and agreed by you that the equipment/ materials supplied by you under this 'Second Contract', when installed & commissioned by the contractor under this 'Second Contract' shall give satisfactory performance in accordance with the provisions of the Contract. From the conjoined and harmonious reading of various clauses of first contract and second contact, it can be safely concluded that the agreement for setting up Tower Package TW05 for +800KV transmission Line Project is a single indivisible contract. As the contract consists of two or more taxable supplies of goods and services and their combination, is a composite supply as defined u/s 2(30) of the GST Act. For the proposition of law that the first contract and the second contract is one single individual contract, we may find support from the decision of Supreme Court of India in case of M/s. Indure Ltd. & Anr vs Commercial Tax Officer & Ors. on 20 September, 2010 C.A. NO. 1123 of 2003 = 2010 (9) TMI 883 - SUPREME COURT OF INDIA. Wherein Court held as below: 9. The total contract was agreed to be divided into two separate contracts, (i) supply contract, and (ii) erection contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that composite supplies in the nature works of contract as defined u/s 2(119) is declared as supply of services as per section 7r/w entry 6(a) Of Schedule Il of the GST Act. In view of above discussion we find that the impugned supply of transportation service is not supply of standalone service but integral component of composite supply in the nature of works contract as defined u/s 2 (119) and the entire contract is a supply of services as per entry 6(a) of schedule II of the GST Act and liable to pay GST as per entry at Sr. no. 3(ii) of the Notification No. 1/2017 of Central Tax (Rate) dt. 28/06/2017 and corresponding notification under the MGST Act. 6. In view of the deliberations as held hereinabove, we pass the order as under: ORDER (Under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) NO.GST-ARA-16/2018-19/B-74 Mumbai, dt. 25/07/2018 For reasons as discussed in the body of the order, the question is answered thus - Question: - 1. The question/ issue is whether GST is leviable on the transportation charges Levied by the Applicant on PGCIL? Answer:- Answered is in the affirmative. Question:- 2. In c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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