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2018 (11) TMI 1826 - AAR - GSTClassification of goods - rate of GST - solar powered robotic cleaning systems (RCS)/ E4 supplied by the Applicant - Whether classified as solar power based device in terms of sub-clause (b) of Entry no. 234 of Notification no. 1/2017-Integrated Tax (Rate) dated 28 June 2017? - supply of RCS along with provision of ancillary services erection and commissioning services) by the Applicant - Composite supply as per Section 2(30 of the CGST Act or not - HELD THAT - The functioning of the said robotic cleaning systems as is apparent from the submissions made by the applicant it is observed that the applicant is engaged designing supplying and installation of solar powered Robotics Cleaning System for cleaning photovoltaic solar panel arrays in solar parks. Elaborate working and functioning of the said systems have been discussed in the preceding paras on the basis of submissions made by the applicant. From the submissions of the applicant it is observed that the said product is working on solar power and thus the same merits classification chapter heading 8479 and also qualifies as a solar power based device in terms of sub-clause (b) of Entry no 234 of Notification no. 1/ 2017 integrated Tax (Rate) dated 28 June 2017 (as amended from time to time) liable to GST @ 5% - Apart from supply of robotic cleaning system the applicant Is also engaged in installation of same. Hence the applicant has also raised the question as to whether the supply of RCS along with provision of ancillary services erection and commissioning services) by the Applicant construes as a Composite supply as per Section 2(30) of the CGST Act. In the instant case indeed there are two supplies. Firstly there being a supply of goods i.e. robotic cleaning systems which qualifies as solar power based device in terms of sub-clause (b) of Entry no 234 of Notification no. 1/2017 integrated Tax (Rate) dated 28 June 2017 (as amended from time to time) liable to GST @ 5%. Secondly it is supply of service also related to installation erection commissioning services of the said robotic cleaning systems supplied by the applicant. Therefore the same comprises of two supplies and one of which that is supply of robotic cleaning systems is a principal supply. We agree with the contentions of the applicant that supply of RCS and its erection installation and commissioning services are naturally bundled - that in order to make the RCS operational it is essential that the same be erected and installed atop the solar panels by way of nuts and bolts - in the instant case the rate of tax applicable to this composite supply shall be the rate applicable on the principal supply i.e. 5%.
Issues Involved:
1. Classification and GST rate applicable on Robotic Cleaning Systems (RCS). 2. Determination of whether the supply of RCS along with ancillary services constitutes a composite supply under Section 2(30) of the CGST Act. Issue-wise Detailed Analysis: 1. Classification and GST Rate Applicable on Robotic Cleaning Systems (RCS): The applicant is engaged in the business of designing, supplying, and installing solar-powered Robotic Cleaning Systems (RCS) for cleaning photovoltaic solar panel arrays in solar parks. The RCS is a water-free cleaning system that uses a combination of microfiber, controlled airflow, and gravity to remove soiling from solar panels. The applicant sought a ruling on whether the RCS qualifies as a 'solar power based device' under sub-clause (b) of Entry no. 234 of Notification no. 1/2017-Integrated Tax (Rate) dated 28 June 2017, which attracts a GST rate of 5%. The relevant GST Rate Notification lists renewable energy devices and parts for their manufacture under Chapter Headings 84, 85, or 94, including solar power-based devices. The RCS operates entirely on solar power, with each robot using a dedicated solar panel to charge its onboard batteries, making it fully energy-independent. The components of the RCS include a control and power supply unit, main structure, cleaning apparatus, winch assembly, horizontal drive assembly, and docking system. The applicant argued that the term 'solar power based device' is not defined under the GST Act, Customs Tariff, or HSN Explanatory Notes. Therefore, dictionary meanings should be referred to, which define solar-powered devices as those powered by sunlight directly or through electricity generated by solar panels. The RCS fits this definition as it is powered by solar energy. The Authority for Advance Ruling (AAR) agreed with the applicant's contention and concluded that the RCS qualifies as a 'solar power based device' under sub-clause (b) of Entry no. 234 of Notification no. 1/2017-Integrated Tax (Rate) dated 28 June 2017, and is liable to GST at 5%. 2. Determination of Composite Supply: The applicant also sought a ruling on whether the supply of RCS along with ancillary services of erection, commissioning, and installation constitutes a composite supply under Section 2(30) of the CGST Act. Section 2(30) defines a composite supply as a supply consisting of two or more taxable supplies of goods or services or both, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, with one being the principal supply. The applicant typically enters into supply agreements that involve the supply and delivery of RCS and the erection, commissioning, and installation of the RCS at the customer's premises. The principal supply in such contracts is the supply of RCS, with ancillary services being incidental. Section 8 of the CGST Act states that the tax liability on a composite supply shall be determined based on the principal supply. The applicant argued that the supply of RCS is the principal supply, and the ancillary services are incidental, making the entire transaction taxable at the rate applicable to the principal supply. The AAR agreed with the applicant's contention and concluded that the supply of RCS and its erection, installation, and commissioning services are naturally bundled. The rate of tax applicable to this composite supply shall be the rate applicable to the principal supply, which is 5%. Conclusion: 1. The Robotic Cleaning System (RCS) merits classification under Chapter Heading 8479 and qualifies as a 'solar power based device' under sub-clause (b) of Entry no. 234 of Notification no. 1/2017-Integrated Tax (Rate) dated 28 June 2017, liable to GST at 5%. 2. The supply of RCS along with erection, commissioning, and installation services constitutes a composite supply under Section 2(30) of the CGST Act, with the principal supply being the RCS. The rate of tax applicable to this composite supply is 5%.
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