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TMI Blog2022 (2) TMI 714X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the queries raised by the applicant fall within the ambit of Section 97 of the GST ACT. The Applicant enclosed copies of challans as proof of payment of Rs. 5,000/- for SGST and Rs. 5,000/- for CGST towards the fee for Advance Ruling. The concerned jurisdictional officer also raised no objection to the admission of the application. The application is therefore, admitted 4. Brief facts of the case: M/s. Kernex TCAS JV is executing a contract for South Central Railways for design, supply, installation, testing and commissioning of onboard train collision avoidance system (TCAS). The applicant is desirous of ascertaining the liability to tax under GST law on the execution of this contract on various counts including place of supply. Hence this application. 5. Questions raised: 1. (A) Whether the subject work falls under Works Contract? (B) What is the applicable rate of GST for this contract? 2. Whether AMC services fall under the same category of principal supply i.e., setting up of TCAS since both are under one work order? 3. (A) If this contract is not to be considered as works contract then what should be the rate of GST for supply of goods under TCAS and supply of g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the TCAS system has been given in detail. It is expressively stated that this system has been designed and implemented to prevent 'Signal Passing at Danger (SPAD) cases, unsafe situations arising due to over speed and train collisions in station as well as block sections'. It is mentioned in the introduction to overview that this includes automatic break application and display of information like speed, location, distance to signal ahead, signal aspects etc., in the loco pilots cabin and generation of auto & manual SOS messages from LOCO in case of emergency situation. In the system overview of this handbook, it is seen that the entire system is based on signaling equipment and RFID tags. The principal goods in the system is electrical signaling equipment enumerated as HSN 8530 i.e., 'Electrical signaling, safety or traffic control equipment for railways, tramways, roads, inland waterways, parking facilities, port installations or airfields'. The illustration of the working of the system based on signals is available in this handbook in the following diagram: As seen from the description and illustration, supply of this system is a naturally bundled supply of various goods w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;ble Supreme court of India in a catena of case law has ruled that illustrations in a statute are part of the statute and help to elucidate the principle of the Section (Dr. Mahesh Chandra Sharma Vs Smt. Raj Kumari Sharma - AIR 1996 SC 869). Therefore a composite supply should be similar to a supply mentioned in the illustration to the definition in Section 2(30), where two or more taxable goods or services are supplied along with each other to constitute a composite supply. Further Para 6 of the Schedule II to the CGST Act, 2017 states that composite supply involving works contract as defined under clause 119 of Section 2 of CGST Act and supply of food, drink etc., shall be treated as services. Therefore a composite supply involving goods and services other than the above will be assessed as a naturally bundled supply and will be taxed at the rate applicable to the principal supply therein. Therefore in view of the above discussions 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 co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Therefore the liability of the executing partner will also remain the same as discussed. 8. The ruling is given as below: In view of the above discussion, the questions raised by the applicant are clarified as below: Questions Ruling 1. (A) Whether the subject work falls under Works Contract? The subject work is a composite supply and not works contract under GST (B) What is the applicable rate of GST for this contract? 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 as discussed above. 2. Whether AMC services fall under the same category of principal supply i.e., setting up of TCAS since both are under one work order? The AMC contract is a separate contract from the original contract as discussed above. 3 (A) If this contract is not to be considered as works contract then what should be the 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? As discussed above, this contract is a composite contract and the rate of tax applicable to principal supply is the rate applicable to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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