The Tamil Nadu Appellate Authority of Advance Ruling (AAAR) while upholding the ARR’s Ruling held that 12% GST on supply of machine, plant, and equipment including commissioning of spares, erection, commissioning of all civil structures, supply of electrical equipment.
The appellant, HYT Sam India is engaged in the construction of Shed, Provision of P’s in ICF Shell/ Furnishing Division/ retro-fitment/ re-conditioning/ re-sitting/ disposal of obsolete M&P’s of Shell division including wet leasing of M&P’s and associated Electrical Works on turnkey basis at ICF Chennai.
The applicant has sought the advanced ruling on the issue whether the works awarded to the applicant is composite supply of services, whether the benefit of sl.No.3(v) of notification no.11/2017- Central Tax (Rate) is applicable to subject works.
The AAR ruled that with respect to supply of machine, plant and equipments including commissioning of spares in Schedule 1, erection and commissioning of all civil structures in Schedule II, supply of electrical equipment including commissioning of spares in Schedule III, the same is a composite supply of works contract for original works pertaining to railways and is taxable at 6% CGST as per sl. No. 3(v)(a) of Notification No. 11/2017-C.T.(Rate) dated 28.06.2017 as amended.
The AAR further ruled that the supply in the agreement for wet leasing of Robotic spot welding machine and laser cutting and welding machine as per Schedule V(a) &V(b) are composite supply of services and not Works Contract’ and therefore not eligible for serial no. 3(v)(a) of the notification.
“The agreement for a comprehensive Annual Maintenance Contract under Schedule VI(a) and VI(b) is not eligible for serial no. 3(v)(a). d. The value of supply for each invoice raised should be as per section 15(2) of the CGST Act, 2017,” the AAR ruled.
The AAAR consisting of M.A.Siddiqui and G.V.Krishna Rao while affirming the order of the AAR held that entry Sl.No. 3 (vi)(a) of the Notification No. 11/2017-C.T. (Rate) dated June 28, 2017, is applicable in the case of composite supply of works contract of maintenance of a civil structure or any other original works meant predominantly for use other than for commerce, industry or any other business or profession to the class of receivers specified. ICF is a Production unit of Railways and belongs to the Central Government’ and manufacturing steel coaches is not an activity where the Government is engaged as public authorities. As per the Explanation to the said entry, it is evident that when the activity is not in the capacity of Public authority’, then the activity is for business’ only. ICF is putting up the said Plant to manufacture Stainless Steel coaches, which is not an activity undertaken as a Public Authority, and therefore, the benefit of the above entry is not applicable to the appellant in respect of CAMC as claimed by them.