The Rajasthan Authority for Advance Ruling (AAR) ruled that the supply of precast manholes using the steel and cement within the scope of the recipient is a supply of goods and 18% Goods and Services Tax (GST) is applicable.
The applicant M/s Natani Precast, 22 Bajrang Colony Jhotwara Jaipur- 302012,Rajasthan) has intention to manufacture and supply Precast Manholes and Rises to various government and non government entities. The main inputs of precast Manhole are 1) Cement, 2) Steel (TMT & Bars), 3) Coarse Aggregate, 4) Fine Aggregate / Sand / Dust.
The applicant M/s Natani Precast LLP, has recently received request for quotation (hereinafter known as the RFQ) for supply of precast Manholes for a specific project site by M/s Larsen & Toubro Ltd which is to be supplied as per with standard terms and conditions to their project site. The applicant submitted that two basic ingredients i.e Cement, & Steel (TMT & Bars), used for manufacturing of precast manholes will be supplied by M/s Larsen & Toubro Ltd.
The main issue is to determine whether the supply of precast manholes by the applicant wherein main ingredients supplied by recipient, is supply of goods or services.
Yash Dhadda, C.A and Miss Shaifali Bang, Authorised Representatives, attended the personal hearing. They restated the written submission they had previously made. He requested that the application be dismissed as soon as possible.
The bench of Umesh Kumar Garg and Mahesh Kumar Gowla observed that it is imperative or any act to be of service should not be goods. It would be worthwhile to mention that the applicant himself stated that he has intention to manufacture and supply recast Manholes and Rises.
Further, from the definition of supply, services, the applicant is to manufacture and supply Precast Manholes and Rises as per specific order from recipient but cement and iron is to be supplied by recipient on free of cost whereas if the recipient will not supply these main ingredients then it will be borne by the applicant itself.
Moreover, the free of cost supply of main ingredients from recipient is nothing but mutual
understanding between both parties which do not debar them from the essence of supply of
goods and consideration received under GST.
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