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2021 (4) TMI 143 - AAR - GSTRate of tax - Composite supply of Works Contract or not - supply of erection, commissioning and installation of ZLD plant along with O&M services for a period of 5 years - taxable at 12% of GST in terms of N/N. 11/2017 Central Tax (rate) Dated 28/ 06/2017 - HELD THAT:- It could be inferred from the definition of the works contract that any contract for erection, installation, commissioning, repair and maintenance of immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract qualifies as works contract transaction as per entry No.6 (a) of the Schedule II. In the instant case applicant has undertaken erection, installation, commissioning of the ZLD plant which is permanently fastened to earth and hence the ZLD plant becomes immovable property. Construction, supply of relevant goods, assembly, commissioning of such immovable structure qualifies as a ‘works contract’ transaction. It is observed that service of supply, erection, commissioning and installation of waste-water pretreatment plant qualifies as Composite supply of Works Contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017. The service of setup of ZLD plant is supplied to the KPCL which is Government Entity. Thus all the conditions of Entry No.3(iii) of the Notification No.11/2017 - Central Tax (Rate) dated 28.06.2017 as amended by the Notification No.20/2017- Central Tax (Rate) dated 22.08.2017 and Notification No. 31/2017 - Central Tax (Rate) dated 13.10.2017 are satisfied. Hence the services of setting up of ZLD plant supplied to KPCL by the applicant are classified under SAC 9954 and liable to tax at the rate of 6% under the CGST Act, 2017 and similarly taxable at the rate of 6% under the KGST Act, 2017. Whether the O&M of said ZLD plant for a period of 5 years qualifies to be a composite supply of works contract or not? - HELD THAT:- The O&M service is inclusive of supply of spares as well as maintenance service, which are taxable supplies. Supply of spares arises consequent to maintenance and hence the said supply is ancillary to the supply of service of maintenance of the ZLD plant. Thus these taxable supplies are naturally bundled and supplied in conjunction with each other where the maintenance service is predominant and hence becomes principal supply. Therefore the O&M service qualifies to be a composite supply of maintenance service. Whether the setting up of ZLD plant, a composite supply of works contract and the supply of O&M service, a composite supply of maintenance service are a composite supply of works contract or not? - HELD THAT:- The definition of works contract as per Section 2 (119) of CGST Act, 2017 includes repair and maintenance of any immovable property. In the instant case the O&M services are meant for maintenance of the ZLD plant, an immovable property and hence the O & M services are covered under Sr. No. 3 (iii) of Notification No. 11/2017-Central Tax (Rate) dated June 28, 2017 as amended and attracts GST @ 12%.
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