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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 ..... fer 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 agai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upply 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. - A.R.Com/27/2021 TSAAR Order No.06/2022 - - - Dated:- 14-2-2022 - SRI B. RAGHU KIRAN, IRS, AND SRI S.V. KASI VISWESWARA RAO, MEMBER [ORDER UNDER SECTION 98(4) OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 AND UNDER SECTION 98(4) OF THE TEALANGANA GOODS AND SERVICES TAX ACT, 2017.] ****** 1. M/s. Kernex TCAS JV, Plot No 38 TO 41, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SCR, Secunderabad, Telangana as a part of whole contract of supply, installation commissioning in Maharashtra and Karnataka State? 6. What is the applicable rate of GST to sub-contractors and sub-suppliers of goods? 6. Personal Hearing: The Authorized representatives of the unit namely C V Suryam, CA and Mahesh Kumar, Admin officer attended the personal hearing held on 05-01-2022. The authorized representatives reiterated their averments in the application submitted and requested the AAR to dispose the case on merits based on their detailed submissions. 7. Discussion Findings: The applicant is seeking clarification regarding the classification and tariff on TCAS equipment in Railways. 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., Sou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply. Illustration : Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply. As seen from the above definitions 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. The Hon ble High Court of Kerala in the case of Abott Health Care Pvt. Ltd., (2020) 74 GSTR 37 (Kerala) held that a composite supply must take into account supplies as affected at a given point in time on as is where is basis. Therefore a naturally bundled supply should possess the following attributes (as mentioned in Education Guide on Taxation of Services published by CBE C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lause 9 followed by warranty AMC details at clause 10. Under clause 10, the applicant shall enter into AMC (Annual Maintenance Contract) after the expiry of warranty period for a period of one year separately for onboard and track side systems with respective Sr.DEE/Sr.DME of loco sheds for onboard system and Sr.DSTEs of Division for track side system. Thus 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. Therefore, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CAS and AMC involving civil works as the prices for the same 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 the entire contract i.e., 9% CGST and also SGST as discussed above. 4) Whether is there a requirement for separate registration in other states? Yes. 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. 5) Whether CGST SGST or IGST to be charged 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? The 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. In this case the principal supply is Electri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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