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2022 (11) TMI 784 - AUTHORITY FOR ADVANCE RULING, RAJASTHANClassification of supply - works contract - pure supply of goods or pure supply of services or composite supply of goods and services - activity of operation and maintenance of Mansi Wakai dam - PHED, a unit of Government of Rajasthan - benefit of exemption under entry 3 A of Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017 - HELD THAT:- The nature of contract is such that initial activities under ESCO model is the main service and the other services under O&M contact combined with such service are in the nature of ancillary services which help in better operation of main activities under ESCO model and make the model successful. As per contract agreement, stipulated date of start is 11.02.2022 and stipulated date of completion of project/ work order No. SE(proj)/BSW/2021-22/1405-09 dated 11.02.2022 is 10.02.2025 - 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. 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? - HELD THAT:- Under the General Clauses Act 1897 the term immovable property has been defined under Section 3(26) as “immovable property” shall include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth - According to definition of works contract under GST regime, the supply of goods and services are done by the supplier simultaneously which is for immovable property. Hence in works contract supply of goods and services together is compulsory. The activities to be undertaken by the applicant in respect of Operation & Maintenance of Mansi Wakai dam is a single supply and cannot be treated as distinct supplies, the given work is a contract for improvement of the pumping system under the Mansi Wakai project, wherein transfer of property in goods in the form of new pumping machinery and mechanical/electrical equipment shall be involved in the execution of such contract. It is understood that the properties for which improvement works has been assigned like pump houses, DAM, campus etc. cannot be moved from one site to another - The activities to be undertaken by the applicant in respect of Operation & Maintenance is for an immovable property i.e. Mansi Wakai dam and thus the given work is held as works contract. Further, since all the conditions of composite supply are satisfied, therefore it is a composite supply of works contract - the applicant is eligible for exemption under entry No. 3 A of Notification No. 12/2017-CT (R) dated 28.06.2017. In this activity of Composite supply of goods and services if supply of goods is below 25% out of total value of supply then GST will be NIL in consonance with entry No. 3A of Notification No.12/2017-CT (R) dated 28.06.2017 (as amended) and if more than 25% of the total value of supply then GST will be @12% in consonance with entry No. 3(iii) of Notification No. 11/2017-CT (R) dated 28.06.2017(as amended).
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