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TMI Blog2021 (8) TMI 671X X X X Extracts X X X X X X X X Extracts X X X X ..... y the consortium bidder. The Applicant is primarily required to supply LED luminaires so as to replace the existing luminaries as part of the said project, dimming of switching point LUX during designated hours, and also to undertake measures to achieve guaranteed energy savings - the applicant contends that their supply includes LED luminaries etc., and operation maintenance of the same and thus the said supply qualifies to be a composite supply wherein the supply of LED luminaries becomes principal supply and hence the rate of GST would be the rate of tax applicable to supply of LED luminaries. Further the time of supply is date of invoice. The street lighting activity undertaken under the Energy Performance Contract dated 1st March 2019 (which involves supply of various goods and rendition of various services), is to be considered as a Composite Supply under the CGST / KGST Act 2017, where the principal supply is the service, classified under SAC 999112 - applicable rate of GST on supply made under this contract is 18% as per entry SI.No.29 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. O M of the installed equipments would constitute the principal su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supply of luminaires, without which there can be no energy conservation, and which is the primary deliverables, constituting approximately 70% of the total project cost, can be construed as the principal supply? What would be the applicable rate of GST on supply made under this contract? iii. If supply of services is held to be the principal supply, which of the various services being rendered would constitute the principal supply? What would be the applicable rate of GST on supply made under this contract? iv. Whether the Applicant is entitled to the benefit of exemption under Entry 3A of Notification No. 12/2017-Central Tax (Rate) dated 28-06-2017, as amended? v. If the transaction is treated as a supply of luminaires, what is the time of such supply? Whether Applicant ESCO would be liable to pay tax at the time when invoices are issued as envisaged in Explanation 1 to Section 12(2) of the CGST / KGST Act only at the time when the possession and ownership in goods are vested in BBMP at the end of tenure? vi. What would be the value of the aforesaid taxable supply given the fact that payments are to be received based on energy savings, which can be computed o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... least to the level of Guaranteed Energy savings. 5.4 The expression 'ECM' has been defined in the Energy Performance Contract to mean, energy conservation measures and when used in the context of the Project shall inter alia include replacement of existing luminaires forming part of Project Pubic Lighting Network with LED luminaires. In terms of clause 2.3 of the energy performance contract, the full ownership, rights and title to the Project Public Lighting Network, as upgraded, rehabilitated or installed by the consortium along with meters, underground cables and overhead conductors incorporated by the consortium therein, shall vest with BBMP. The property in the LED luminaires, feeder panels etc., shall be transferred from the Applicant ESCO to BBMP on expiry of the contract or termination thereof. 5.5 The Applicant ESCO estimates that out of the total cost of the project running into about ₹ 1100 crores, the cost of procuring LED luminaires would be around ₹ 700 crores, while the cost of all Equipment such as feeder panels, feeder panel cables, switch gears is about ₹ 100 crores. The cost of installing the entire network of the project is around ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In the Applicant's view, the supply of LED luminairesis thus the predominant element of the composite supply. 6.4 The supply of other equipment such as feeder panels, underground cables, meters, installation of the equipment, operation and maintenance of the project Public Lighting System are ancillary to the supply of LED luminaires, which are the sine qua non of any effort to achieve energy conservation. There could have been no energy conservation initiated without the supply of LED luminaires, which form the very edifice of the entire energy performance contract. Accordingly, in the Applicant's view, the principal supply under the composite contract is that of supply of LED luminaires. 6.5 Section 8 of the CGST Act Stipulates that a composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply. Thus, in terms of Section 8 of the CGST Act, the entire contract ought to be taxed as a supply of goods i.e. LED luminaires. 6.6 Insofar as the time of supply in the present case is concerned, Section 12(2)(a) of the CGST Act stipulates that the time of supply is the earlier of the date of is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Accountant Authorised Representative of the applicant appeared for personal hearing proceedings held on 30-06-202land reiterated the facts narrated in their application. FINDINGS DISCUSSION We have considered the submissions made by the applicant in their application for advance ruling. We also considered the issues involved on which advance ruling is sought by the applicant and relevant facts along with the arguments made by the applicant the submissions made by their learned representative during the time of hearing. At the outset, we would like to state that the provisions of both the CGST Act and the KGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the KGST Act. 9. The Applicant entered into an Energy Performance Contract dated 01.03.2019 with BBMP to install and implement energy conservation measures and also to operate and maintain the project Public Lighting Network, in the city of Bengaluru, for a period of ten years, through a special purpose vehicle incorporated by the consortium bidder ..... X X X X Extracts X X X X X X X X Extracts X X X X
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