In re Dinesh Kumar Agrawal (GST AAR Andhra Pradesh)
Note: Under Section 100 of the APGST Act, 2017, an appeal against this ruling lies before the appellate authority for advance ruling constituted under section 99 of APGST Act, 2017, within a period of 30 days from the date of service of this order.
Mr.Dinesh Kumar Agrawal, R/o #501, ACME Regency, 5th floor, SV Road, Vile Parle (West), Mumbai, Maharashtra (hereinafter also referred as an applicant), is an unregistered taxpayer, is engaged in erection and supply of solar power generating system by making an agreement with his customers, has filed an application on 09th February 2018, Vide acknowledgement number VPG736416, for seeking advance ruling for the tax rates applicable to the supplies made by him.
On scrutiny of the application, it is noticed that the applicant is an unregistered person, he paid Rs.10,000/-(5000/- against fee under CGST and Rs.5000/- against fee under SGST) vide CPIN Number 18013700040367, dated; 12-01-2018, and found the payment paid by the applicant is genuine as per common portal. As the applicant is an unregistered person, the application is not fonwarded to any jurisdictional authority. To admit and to pronounce advance ruling on this application, this authority feels it is necessary to hear the applicant. Accordingly a personal hearing fixed on 04th April 2018, requested the applicant to attend with all relevant data.
The applicant attended himself before this authority on 04th April, 2018 and made oral submissions on the issue, where advance ruling sought by him. On perusal of application, oral submissions made by the applicant, and read with the provisions of the law, the following are the observations by this authority.
1. The Issues raised by the applicant is as follows.,
Issue .No 1
Whether supply of solar power plant under ‘Turnkey EPC Contract’ is supply of ‘solar power generating system’ under Entry 234 of Schedule I of the Notification No. 1/2017- Integrated Tax (Rate), Entry 234 of Schedule I of the Notification No. 1/2017-Central Tax (Rate) both dated 28 June 2017 and Entry 234 of Schedule I of the Notification No. 1/2017-State Tax (Rate) dated 29 June 2017?
Issue .No 2
Whether supply of solar power plant under ‘Other EPC Contract’ is supply of ‘solar power generating system’ under Entry 234 of Schedule I of the Notification No. 1/2017- Integrated Tax (Rate), Entry 234 of Schedule I of the Notification No. 1/2017-Central Tax (Rate) both dated 28 June 2017 and Entry 234 of Schedule I of the Notification No. 1/2017-State Tax (Rate) dated 29 June 2017?
Issue No.3
Whether supply of solar power plant under ‘Supply Contract’ is supply of ‘solar power generating system’ under Entry 234 of Schedule I of the Notification No. 1/2017- Integrated Tax (Rate), Entry 234 of Schedule I of the Notification No. 1/2017-Central Tax (Rate) both dated 28 June 2017 and Entry 234 of Schedule I of the Notification No. 1/2017-State Tax (Rate) dated 29 June 2017 where the assembly, erection, and commissioning of the solar power plant is undertaken by the Applicant under a separate contract?
lssue.No.4
Whether supply of solar power plant under ‘Supply Contract’ is supply of ‘solar power generating system’ under Entry 234 of Schedule I of the Notification No. 1/2017- Integrated Tax (Rate), Entry 234 of Schedule I of the Notification No. 1/2017-Central Tax (Rate) both dated 28 June 2017 and Entry 234 of Schedule I of the Notification No. 1/2017-State Tax (Rate)
Issue.No.5
Whether supply of solar power plant under ‘Balance of Plant Supply Contract’ is supply of ‘solar power generating system’ under Entry 234 of Schedule I of the Notification No. 1/2017- Integrated Tax (Rate), Entry 234 of Schedule I of the Notification No. 1/2017-Central Tax (Rate) both dated 28 June 2017 and Entry 234 of Schedule I of the Notification No. 1/2017-State Tax (Rate) dated 29 June 2017?
lssue.No.6
If the Clarification to Issue No. 5 is negative, what would be nature of supply i.e. composite supply or mixed supply?
lssue.No.7
Whether contract for assembly, erection, and commissioning of the plant undertaken by the Applicant under a separate contract would be a service contract liable to be taxed under Service heading 9954?
lssue.No.8
Whether the time of supply of power plant shall be determined under Section 31 (4) of the CGST Act/SGST Act read with Section 12(2) thereof?
The Issues raised by the applicant is fit to pronounce advance ruling as they falls ambit of the Section 97(2)(a), (b) and (c), they are as given under:
(a) Classification of any goods or services or both;
(b) Applicability of a notification issued under the provisions of this Act;
(c) Determination of time and value of supply of goods or services or both
Further, the applicant being a unregistered person, as per the declaration given by him in Form ARA-01, the issue raised by the applicant is neither pending for proceedings nor proceedings were passed by any authority.Basing on the above observations, the application is ‘admitted’. to pronounce advance ruling.
As per the submissions given by the applicant
In Turnkey EPC Contract, the Applicant is required to undertake all activities, civil or otherwise, to supply the power plant in ready to operate condition. The scope of work typically involves;
(i) Civil works like leveling of ground and wall boundary, internal roads, building foundations for mounting of panel mounting structures, digging ditch for underground cabling etc, concrete flooring for inverter/transformer/battery pack, control room etc.
(ii) Designing, procurement and supply of all equipment / components for the power plant
(iii) Assembly, erection, and commissioning
(iv) Operations and Maintenance of the plant between 2 to 15 years
In Other EPC Contract, the Applicant is required undertake all activities of turnkey projects except civil work. The scope of work typically involves:
(i) Designing, procurement and supply of all equipment / components for the power plant
(ii) Assembly, erection, and commissioning
In Supply Contract, the Applicant is required to supply the power plant on complete knocked down condition in piecemeal at project site. Customer engages a third party contractor or the Applicant for assembly, erection, and commissioning of the plant under a separate contract.
In Balance of Plant Supply Contract, the Applicant is required to supply goods and services stated above, except solar panels. Solar panels procured by the customer are made available by the customer to the Applicant for assembly and erection.
Statement of facts as stated by the applicant in his submissions at the time of personal hearing are as follows..
For Issue number 1, The scope of supply includes:
a. Civil works
i. leveling of ground
ii. Wall boundary
iii. internal roads
iv. concrete foundations for mounting of panel mounting structures
v. digging ditch for underground cabling
vi. Concrete flooring for inverter/transformer/battery pack,
vii. Control room etc.
b. Detailed designing of power project
c. Procurement and supply at project site
i. Solar photovoltaic modules/panels/array
ii. Panel mounting structure
iii. Solar tracker
iv. Meteorological equipment
v. Cables
vi. Combiner box
vii. Solar power conditioning unit
viii. Inverter
ix. Isolator
x. Transformer
xi. Switchbox
xii. Conductor
xiii. Battery
xiv. Transmission tower
xv. Steel/plastic tubes & pipes
xvi. Pre-fabricated shelter
xvii SCADA Software
d. Assembly & erection
i. Assembly & erection
ii. Supply of nut, bolts, fasteners and other miscellaneous materials
e. Test & Commissioning
B. Equipment and components are delivered at project site and stored at the risk of the Applicant
C. Ownership is transferred on successful commissioning of the plant
D. Payment is as per milestone or monthly depending on the % of goods delivered at site
E. Full payment is released on successful commissioning of the plant with stipulated power generation.
F. Cost:
a. In the case of Ground Base Solar Project: 20% Civil & Erection & 80% Supply.
Roof Top Base Solar Project: 10% Civil & Erection & 90% Supply.
For Issue number 2, the statement of facts are as follows…
The scope of supply includes:
a. Detailed designing of power project
b. Procurement and supply at project site
i. Solar photovoltaic modules/panels/array
ii. Panel mounting structure
iii. Solar tracker
iv. Meteorological equipment
v. Cables
vi. Combiner box
vii. Solar power conditioning unit
viii. Inverter
ix. Isolator
x. Transformer
xi. Switchbox
xii. Conductor
xiii. Battery
xiv. Transmission tower
xv. Steel/plastic tubes & pipes
xvi. Pre-fabricated shelter
xvii. SCADA Software
c. Assembly & erection
B. Assembly & erection
a. Supply of nut, bolts, fasteners and other miscellaneous materials
b. Test & Commissioning
C. Equipment and components are delivered at project site and stored at the risk of the appliant
D. Ownership is transferred on succesful commissioning of the plant
E. Payment is as per milestone or monthly depending in the % of goods delivered at site
Full payment is released on successful commissioning of the plant with stipulated power generation
For Issue number 3, the statement of facts is follows…
Scope of supply of supply contract includes:
a. Procurement and supply at project site
i. Solar photovoltaic modules/panels/array
ii. Panel mounting structure
iii. Solar tracker
iv. Meteorological equipment
v. Cables
vi. Combiner box
vii. Solar power conditioning unit
viii. Inverter
ix. Isolator
x. Transformer
xi. Switchbox
xii. Conductor
xiii. Battery
xiv. Transmission tower
xv. Steel/plastic tubes & pipes
xvi. SCADA Software
b. Equipment and components are delivered at project site and risk is transferred to the customer
c. Payment is as per milestone or monthly depending on the % of goods delivered at site
d. Full payment is released on successful commissioning of the plant with stipulated power generation.
A. Scope of Erection Contract includes:
a. Assembly & erection
i. Assembly & erection
ii. Supply of nut, bolts, fasteners and other miscellaneous materials
b. Test & Commissioning
B. Risk of Equipment and components are acquired by the Applicant during erection till successful handover of the plant to the customer
C. Payment is as per milestone or monthly depending on the % of goods delivered at site
D. Full payment is released on successful commissioning of the plant with stipulated power generation.
E. Supply contract and Erection contract are two independent contract. However,
a. Breach of one contract may be deemed to breach of both in the event of shortfall in timely completion and / or guaranteed performance
Liquidated Damage Charges will be applicable on the total contract value of Supply Contract + Erection contract.
For Issue number 4, the statement of facts is as follows.
A. Scope of supply includes procurement and supply at project site
i. Solar photovoltaic modules/panels/array
ii. Panel mounting structure
iii. Solar tracker
iv. Meteorological equipment
v. Cables
vi. Combiner box
vii. Solar power conditioning unit
viii. Inverter
ix. Isolator
x. Transformer
xi. Switchbox
xii. Conductor
xiii. Battery
xiv. Transmission tower
xv. Steel/plastic tubes & pipes
xvi. SCADA Software
B. Equipment and components are delivered at project site and risk is transferred to the customer
C. Payment is as per milestone or monthly depending on the % of goods delivered at site
Full payment is released on successful commissioning of the plant with stipulated power generation.
For Issue number 5, the statement of facts is as follows….
A. The scope of supply includes:
a. Civil works
i. leveling of ground
ii. Wall boundary
iii. internal roads
iv. concrete foundations for mounting of panel mounting structures
v. digging ditch for underground cabling
vi. Concrete flooring for inverter/transformer/battery pack,
vii. Control room etc.
b. Detailed designing of power project
c. Procurement and supply at project site
i. Panel mounting structure
ii. Solar tracker
iii. Meteorological equipment
iv. Cables
V. Combiner box
vi. Solar power conditioning unit
vii. Isolator
viii. Transformer
ix. Switchbox
x. Conductor
xi. Battery
xii. Transmission tower
xiii. Steel/plastic tubes & pipes
xiv. Pre-fabricated shelter
xv. SCADA Software
d. Assembly & erection
i. Assembly & erection
ii. Supply of nut, bolts, fasteners and other miscellaneous materials
e. Test & Commissioning
B. Equipment and components are delivered at project site and stored at the risk of the Applicant
C. Ownership is transferred on successful commissioning of the plant
D. Payment is as per milestone or monthly depending on the % of goods delivered at site
E. Full payment is released on successful commissioning of the plant with stipulated power generation.
F. Solar modules are procured /imported by customer and supplied to the Applicant for assembly and erection.
In some contract, scope of supply may not include civil works.
For Issue number 6, the statement of facts is same as given for Issue number 5
For Issue number 7, the statement of facts are as follows..
Scope of works may include:
a. Civil works
i. leveling of ground
ii. Wall boundary
iii. internal roads
iv. concrete foundations for mounting of panel mounting structures
v. digging ditch for underground cabling
vi. Concrete flooring for inverter/transformer/battery pack,
vii. Building of control room etc.
b. Assembly and Erection
i. Assembly & erection
ii. Supply of nut, bolts, fasteners and other miscellaneous materials
iii. Test & Commissioning
A. Risk of Equipment and components are acquired by the Applicant during erection till successful handover of the plant to the customer
B. Payment is as per milestone or monthly depending on the % of goods delivered at site
Full payment is released on successful commissioning of the plant with stipulated power generation.
And for Issue number 8, the statement of facts is as follows…
The contract stipulated successive payment against successive statements depending on the milestone stipulated in the contract.
On analyzing the Issues, with respect to the CGST/SGST Act, rules, and notifications released from time to time, it is to note Entry number 234 of Schedule I ( which are taxable @ 2.5% ) of Notification No. 1/2017-Central Tax (Rate), dated :28th June 2017, is relevant to the Issues raised by applicant, Entry 234 reads as…
