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2019 (7) TMI 812 - AAR - GSTClassification of supply - composite supply or not - Whether supply of Engineering, Procurement and Construction (EPC) contract for establishment of Fluids Servicing System where in both goods and services are supplied can be construed to be a composite supply in terms of Section 2(30) of CGST Act, 2017? - Establishment of Fluids Servicing System (FSS) - principal supply or not - rate of tax. Whether their supply to the ISRO under contract for establishment of FSS can be construed to be a Composite supply; on the applicability of Notification No. 45/2017-Central Tax (Rate) dated 14/11/2017 to the supply provided to ISRO; and the rate of GST applicable to the entire transaction? HELD THAT:- TPL is contracted with IPRC to provide Fluid Servicing systems to supply propellants (ISROSENE, Liquid Oxygen) and service fluids (Liquid Nitrogen, Gaseous Nitrogen, Gaseous Helium, Water) to the test bed facility for semi-cryogenic engine at IPRC , Mahendragiri. Each of these systems (for each fluid) involves various tanks, pressure, and venting, cooling/heating, circulation, collection & drain circuit. TPL should erect these fluid systems at the site along with their piping circuits and instrumentations by means of minor civil works done with concrete, brick masonry, grouting, bolts etc. TPL should fabricate and procure the relevant materials, instruments and equipment as defined in the contract. Along with these, TPL should also manage the complete project, plan, review the design, and give detailed engineering drawing for all these systems. They should also ensure inspection, transportation, construction and commissioning of the FSS, though various activities are to be done with assistance of IPRC. TPL supplies Goods and Services as required in the contract. It is to determine if the supply of goods and services by the applicant under contract to ISRO can be considered as a composite supply. Mere supply of the equipment, instruments, pipes and fluid tanks is not enough, the same has to be integrated and erected and finally commissioned at the test - bed facility. The Contract itself shows that the supply of these equipment and instruments are necessarily to be given with a host of services such as designing, engineering, inspection, construction, commissioning. Further, the payment schedule in the contract also shows that the billing / invoicing is indivisible. Thus, the whole contract for ‘Establishment of Fluid Servicing System(FSS) of Semi-Cryo Integrated Engine Test (SIET) Facility’ at ISRO Propulsion Complex (IPRC), Mahendragiri is a composite contract as various supplies of goods and services are naturally bundled together. In the case at hand, the applicant has a contractual obligation to supply the materials and also to Erect the entire FSS including the various tanks, piping systems, instruments, electrical circuits etc. Such erection and installation is to be done to the test bed facility for testing the semi cryogenic engine system by means of minor civil works done with concrete, brick masonry, grouting, bolts etc. It involves the transfer of ownership of these goods involved in the erection, construction and installation of the fluid systems. The test-bed facility itself is an immovable structure erected at the site in Mahendragiri. The fluid systems and piping circuits provided by TPL are to erected, fixing them to the test-bed facility which is embedded in earth. The erection of the System at site makes the system a permanent fixture, i.e. immovable property. Thus it is clear that in the case at hand, the applicant supplies materials and in conjunction provides the service of erection of the System into at the test-bed facility making all the FSS together as an immovable property. Therefore, the whole contract for ‘Establishment of Fluid Servicing System (FSS) of Semi-Cryo Integrated Engine Test (SIET) Facility’ at ISRO Propulsion Complex (IPRC), Mahendragiri is also a ‘Works Contract’. The present supply is a composite supply to be treated as a supply of services. As it is a supply of service, Notification No .45/2017- Central Tax (Rate) dated 14/ I I / 2017 and corresponding SGST notification G.O. (Ms) No. 161, dated 14.11.2017 which provides for concessional rate of tax for a supply of goods is not applicable. The applicable rate of tax for the supply will be the rate of tax of applicable for this supply of works contract.
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