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TMI Blog2019 (2) TMI 917X X X X Extracts X X X X X X X X Extracts X X X X ..... (CGST@6%, SGST@6%). - ARN RAJ/AAR/2018-19/32 - - - Dated:- 31-1-2019 - J.P. MEENA AND HEMANT JAIN MEMBER Present for the applicant: Mr. Mudit Jain, (Authorised Representative) Note: Under Section 100 of the CGST/RGST Act, 2017, an appeal against this ruling lies before the Appellate Authority for Advance Ruling constituted under section 99 of CGST/RGST Act, 2017, within a period of 30 days from the date of service of this order. The issue raised by Mr. Kailash Chandra, (M/s. Mali Construction), situated at Mali Vas, Maandava, Mandwa, Sirohi, Rajasthan - 307001 (hereinafter called as the applicant) is fit to pronounce advance ruling as it falls under the ambit of the Section 97(2)(a) and (e), given as under : a. classification of goods and/or services or both e. determination of the liability to pay tax on any goods or services or both Further, the applicant being a registered person (GSTIN is 08ALVPC2862Q1ZA, as per the declaration given by him in Form ARA-01) the issue raised by the applicant is neither pending for proceedings nor proceedings were passed by any authority. Based on the above observations, the applicant is admitted to pronounce ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c structures of adequate strength and appropriate design, which can withstand load of modules, live loads if any and high wind velocities up to 200 km per hour. d) Support structure should be designed keeping in view local site conditions and generalized soil formation. All codes and provisions for RCC design should be followed. The minimum depth of foundation should be 1.50 metre. e) The structure is to be designed in such a way so as to allow easy replacement and inclusion of any additional module. f) PV water pumping system must qualify (enclose test reports/ certificate from IEC/NABL accredited laboratory) as per relevant IEC standard. The performance of PV water pumping system shall be tested at STC conditions by any laboratory approved by IEC / MNRE/ accredited by NABL / Solar Energy Centre. The material (of different makes) shall be acceptable only on receipt of satisfactory test report by the Engineer-In-charge. g) IEC activities like distribution of pamphlets/ posters/ paintings containing PHED al promotional Slogan for using fluoride free water and water saving on prime places like gram panchayat bhawan/ office, school/ govt. building/ main choraha as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be only responsible for providing, installation, erection and commissioning of the system but also for the smooth functioning of the system for a period of 7 years and any defect in the system during such period shall be rectified by the applicant. Therefore, the business operandi of the said transaction is such that the applicant is required to undertake the operation and maintenance of the installed system for a period of 7 years. 1.7. Thus, on the basis of above submissions, it is amply clear that these supplies are naturally bundled in the ordinary course of business and therefore same shall fall under the ambit of composite supply thereby liable to tax at the rate applicable on the principal supply. 1.8. Further to determine the principal supply in the given case, it has been explained through facts and the conduct of parties that the main intent of the supply is provision of the solar power based water pumping system which consists of various components such as SPV panels, structures, storage tank, Solar pumping sets, controller, pipe, cables and de-fluoridation units and thus it is the predominant element of the composite supply, to which its installation, commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Department, hence according to applicant the rate of tax applicable on given service (if it is a works contract service) shall fall under Entry 3(iii) with HSN Code 99544 and it should be 12%. That based on the above submission, the applicant is of the understanding that in case of above transaction, the entire work to be awarded shall be composite supply wherein the principal supply shall be supply of goods i.e. solar power water pumping station and the same should be taxable at the rate of 5%. If in case, it is considered as composite supply of works contract, then it should be classified under S. No. 3(iii) of the Notification No. 11/2017-CT (Rate) and should be taxable at the rate of 12%. 2. QUESTIONS ON WHICH THE ADVANCE RULING IS SOUGHT Whether the activity of supply, design, installation, commissioning and testing of solar energy based water pumping systems supply of goods or supply of services and what shall be the rate of GST on it? 3. PERSONAL HEARING In the matter personal hearing was given to the applicant on 11.01.2019 at Room no. 2.22 NCRB, Statue Circle, Jaipur. Mr. Mudit Jain (Authorised Representative) of applicant appeared for PH. Durin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxable supplies is a principal supply. g. However, since composite supply of works contract has been explicitly classified as supply of service under Schedule Il, the concept of works contract follows that:- 1. Works contract in itself is a composite supply in which construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning etc are involved along with transfer or property in goods. 2. In GST, as per definition of works contract service if construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning is for immovable property only, then it will classify as works contract. Hence it means that aforesaid activities if they are undertaken for a movable property then it will not be works contract service. 3. Now whether a supply is a works contract or not is dependent on whether the plant or device or property is a movable or immovable property. To decide whether a property is movable or immovable, the given terms have not been defined under the Act and hence the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... simultaneously which is for immovable property. Hence in works contract supply of goods and services together is compulsory. Thus, based on above facts and concept such contract shall be a single supply and cannot be treated as distinct supplies. Since all the conditions of composite supply are satisfied, it is a composite supply. J. We observe that the activity proposed to be undertaken is a composite supply of works contract, the rate of tax in given service shall be determined in accordance with the Notification No 11/2017-CT (Rate) dated 28.06.2017, as amended from time to time. On perusal of said Notification under S. No. 3(iii), for schedule of rate of Tax on works contract Services, following is mentioned:- Heading 9954 (Construction services) CGST Rate % SGST Rate % IGST Rate % Remarks (iii) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied to the Central Government, State Government, Union territory, a local authority, a Governmental Author ..... X X X X Extracts X X X X X X X X Extracts X X X X
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