The Authority of Advance Ruling (AAR) in Karnataka ruled that a 12% tax is applicable to street lightning activity and is not eligible for exemption.
In an application filed before the Authority of Advance Ruling (AAR) ruled that street lightning activity under Energy Performance Contract amounts to composite supply where principle supply is of goods. The applicant is liable to pay 12% of the tax and is not entitled to any exemption under Entry 3 or 3A of Notification No. 12/2017.
The applicant, M/s Karnataka State Electronics Development Corporation Ltd. (KEONICS) is a Karnataka State government entity, engaged in providing street lighting services under Energy Performance Contract to the Thane Municipal Corporation (TMC) for a period of 7 years. The main task of the applicant is to operate and maintain 12,000 street lighting fixtures and respective feeder panels i.e. installation of LED fixtures, smart electric panels for automation, metering and comprehensive maintenance.
The applicant sought advance ruling on the issue of whether the street lighting activity under the Energy Performance Contract is covered under the ambit of supply of goods or supply of service under the CGST/ SGST Act, 2017? If in case it is a supply of service how much should be the period of service?
The Authority of Advance Ruling (AAR) in Karnataka consisting of Dr. Ravi Prasad and Mashhoodur Rehman Farooqui ruled that street lightning activity under Energy Performance Contract amounts to composite supply where principle supply is of goods. The applicant is liable to pay 12% of the tax and is not entitled to any exemption under Entry 3 or 3A of Notification No. 12/2017.
The authority observed that the instant transaction amounts to composite supply, where the supply of goods being principal supply, the issue pertaining to the time period of service is reductant to mention here.
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