Supply and Installation of artificial turf/artificial grass in nature of works contract exigible to18% GST: AAR [Read Order]

The Karnataka Authority for Advance Ruling(AAR) has ruled that supply and installation of artificial turf/artificial grass in nature of works contract and are exigible to18% GST.

M/S New Horizon Development Company private Limited ('Applicant), filed an application for Advance Ruling under Section 97 of CGST Act, 2017. The applicant sought for ruling for the HSN Code and GST rate applicable, in case Of our proposed supply and installation Of Artificial Turf/Artificial Grass and other sports flooring which will be in the nature of works contract.

The works contract is defined under section 119) Of the CGST Act, 2017 'works contract" means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer ofproperty in goods (Whether as goods or in Some other form) is involved in the execution of such contract;"

It is relevant to note that the works contract is- Chargeable to tax at concessional rate of 18% (9% CGST & 9% SGST) as per Sl. No. 3 (xii) of notification no. 11/2017- Central Tax (Rate) dated. 2806.2017 and the notification NO. 20/2017 - central Tax (Rate) dated, 22.08.2017.

The supply and installation of the Artificial Turf / Artificial Grass / Other Sports flooring is classified under SAC Code 995427. The said classification of service as per the annexure to scheme Of Classification Of Services vide Annexure to Notification NO. 11 / 2017 -Central Tax (Rate) dated 2806.2017.

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In the instant case the impugned product is artificial turf/artificial grass. Artificial turf is a surface Of synthetic fibres made to look like natural grass, used in sports arenaS; residential lawns and commercial applications that traditionally use grass. It is much more durable than grass and easily maintained without irrigation or trimming, although periodic Cleaning is required. Stadiums that are substantially covered and/or at high latitudes Often use artificial turf, as they typically lack enough sunlight for photosynthesis and substitutes for solar radiation are prohibitively expensive and energy-intensive.

Further, disadvantages include increased risk of injury especially when used ill athletic competition, as well as health and environmental concerns about the petroleum and toxic Chemicals used in its manufacture.

It is an admitted fact that the impugned product is meant for use in sports complexes or in a ground/park. Thus the impugned products merits classification as tufted turf of other man-made textile materials under chapter heading 57.03 and specifically 5703.3100.

Entry number 144 of Schedule — Il to the Notification 1/2017-Centra1 Tax (Rate) dated 28.062017, as amended, specifies that the goods with the description "carpets and other textile floor coverings (including Turf), tufted, whether Or not made up", falling under chapter heading 5703 attracts GST @ 12% (COST 6% and SGST 6%),.

It is observed that the applicant intend to classi$• the supply Of the impugned product and its installation as works contract, under SAC code 995427. The issue involves classification of the service and thus; we invite reference to Explanation (ii) at para 4, of the Notification No. 11/2017- Central Tax (Rate), dated 28.06.2017,

The two member bench of Prathap Kumar S, Member (State) and Kalyanam Rajesh Rama Rao, Member (Central) held that the supply and installation of artificial turf/artificial grass and other sports flooring in the nature of works contract merits cloassification under SAC 9854 and is exigible to GST @ 18% in terms of entry No, 3(xii) of the Notification No. 1 1 / 2017-central Tax (Rate) dated 2806.2017.

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