In re Shri Kailash Chandra (GST AAAR Rajasthan)
We find that the Appellant had produced copies of the Volume-I and Volume-II of the Tender-Document No. 17/2016-17 dated 23.08.2016 issued by the Additional Chief Engineer , Public Health Engineering Department (PHED) , Region-II, Jodhpur inviting tenders for designing, providing, installation, commissioning, of 118 Nos. Solar Energy based bore well water pumping systems (with De-fluoridation unit of capacity moo LPH) including comprehensive operation and maintenance for a period of seven years in various fluoride affected villages/habitations in district of Pali , Jaisalmer and Jalore . They had submitted that they are in the process of bidding for the similar tender floated by PHED for designing, providing, installation, commissioning, operation and maintenance of solar energy based bore well water pumping systems , Reverse Osmosis Plant and operation and maintenance of Fluoride Control Project on ESCO and O & M contract.
On careful consideration of the above mentioned entries of the said notifications, we find that the Solar Energy based bore well water pumping system (hereinafter also referred to as “the System”) deserve classification under entry No. 234 of the Notification No. 01/2017-Central Tax (Rate) as ‘Solar Power based devices’ . The Appellant has contended that benefit of Notification Nos. 24/2018-Central Tax(Rate) and 27/2018- Central Tax(Rate) inserting ‘Explanation’ in the entry No. 234 ibid and inserting entry No. 38 ibid respectively should be available to them . After going through the amended entries 234 and 34 ibid , we find that the benefit is available only when the Solar Power based devices’ i.e. the System is supplied along with other goods and Services , one of which being a taxable service specified in the entry at S. No. 38 ibid . We find that a standard Solar Energy based bore well water pumping system comprises SPV panels, Structures, Storage tank, Controller, Pipe and Cables. The Appellant is also adding De-fluoridation unit (DFU) and also accomplishing the task of installation, commissioning, operation and maintenance of the System including DFU. DFU qualifies for other goods while Installation and Commissioning of the System are the Services which are not only taxable but are also being provided in relation to setting up of the System , a requirement of the ‘Explanation to entry No. 234 ibid and entry No.38 ibid. Thus, we find that the condition precedent to availment of the benefit of these entries i.e. “supply of other goods and Services also, one of which should be a taxable service specified in the entry No. 38 “, stands fulfilled .
In view of above, we hold that, with respect to a Tender, identical to the Tender-Document No. 17/2016-17 ibid, which has been enclosed with the application dated 14.11.2018 filed by the Applicant/Appellant before the AAR, in terms of supply of Goods and Services , the activities of supply, design, installation, commissioning and testing of solar energy based water pumping systems, whose time of supply falls after 31.12.2018, are both supply of Goods and supply of Services in terms of entry No. 234, read with entry No. 38 ibid with rate of GST as prescribed under these entries.
FULL TEXT OF ORDER OF APPELLATE AUTHORITY OF ADVANCE RULING, RAJASTHAN
At the outset, we would like to make it clear that provisions of both the Central GST Act, 2017 and Rajasthan GST Act, 2017 are same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central GST Act, 2017 would also mean a reference to the same provisions under Rajasthan GST Act, 2017.
2. The present appeal has been filed under Section 100 of the Central GST Act, 2017 (hereinafter also referred to as `CGST Act’) read with Section 100 of the Rajasthan GST Act, 2017 (hereinafter also referred to as `RGST Act’) by Sh. Kailash Chandra , Proprietor of Mali Construction, Mali Vas, Maandava, Mandwa, Sirohi-307001, Rajasthan, against the Advance Ruling No. RAJ/AAR/2018-19/32 dated 31.01.2019.
Brief Facts of the Case
3. Kailash Chandra , Proprietor of Mali Construction, Mali Vas, Maandava, Mandwa, Sirohi-307001, Rajasthan (hereinafter also referred to as ‘the Appellant’ ) is holding GSTIN 08ALVPC2862Q1ZA
4. The Appellant provides comprehensive water services to the clients both private and Government . At the time of applying before the Rajasthan Authority for Advance Ruling, GST, Jaipur, the Applicant ( now the Appellant) was in the process of bidding for tender floated by Public Health Engineering Department (PHED), a unit of Rajasthan Government, for Designing, Supply, Installation, Commissioning, Operation & Maintenance of Solar Energy based Bore Well Pumping Systems, Reverse Osmosis Plant and Operation & Maintenance of Fluoride Control Project on ESCO and 0 & M contract.
5. In relation to the said tender, the scope of the work included Designing, economically and efficiently best suited to site conditions including depth of water table and safe yield of Bore Well, finalizing alignment of SPV (Solar Photo Voltaic) Plant , Providing and Installation of complete Solar Power Operated Water Pumping System including De-Fluoridation unit and all other components & accessories as per specifications, Drawing & Design and making it operational and keeping operational upto complete 0 & M period for 7 years.
6. The Appellant shall provide the potable water to the villagers regularly free of cost at the site of SPV Plant during and upto the end of 0 & M period for 7 years .
7. On the expiry of the 0 & M period, the Appellant is free to remove the plant at its cost and vacate the land subject to the prior intimation to P.H.E.D. and will take the possession of the plant.
8. In relation to such Tender, the Appellant was required to quote a rate for undertaking all the aforesaid activities which shall be inclusive of all the costs of site visits on the part of the Appellant, packaging, forwarding, spare parts, insurance and taxes & duties as may be applicable.
9. The Rajasthan Authority for Advance Ruling, GST, Jaipur (`hereinafter also referred to as ‘AAR’) vide its Advance Ruling Order No.RAJ/AAR/2018-19/32 dated 31.1.2019, has classified the activities of Supply, Design, Installation, Commissioning and Testing of Solar Energy based Water Pumping Systems and 0 & M work by the Applicant as a Works Contract of Composite Supply and determined the rate of Tax at 12% ( CGST @ 6% and SGST @6%) under HSN CODE 9954, since the same is proposed to be undertaken for the Government Department .
10. Aggrieved by the rate of 12% of GST as determined under the Advance Ruling ibid, the Appellant has preferred the subject appeal under section 100 of the CGST Act/ RGST Act, 2017.
Grounds of Anneal
11. It has been submitted by the Appellant that the additional submissions made by them during the Personal Hearing held before the AAR, have not been considered and the Advance Ruling Order dated 31.1.2019 was passed in violation of provisions of Law and principles of natural justice.
12. The additional submissions pointed out the amendments made in the relevant Notifications having a direct impact on the case and non-consideration thereof resulted in an adverse effect .
13. The Notification No. 24/2018- Central Tax (Rate) dated 31.12.2018 reduced the rate of GST while inserting an Explanation against S. No.234 in the Entry in Column (3) of the Schedule-I of the Notification No. 1/2017- Central Tax (Rate) dated 28.06.2017 read with the Notification No. 27/2018- Central Tax Rate), dated 31.12.2018, inserting a new Entry at S. No. 38 in the Notification No. 11/2017- Central Tax (Rate), dated 28.06.2017.
14. The Notification No. 24/2018- Central Tax (Rate), dated 31.12.2018 inserted the following Explanation in Col. No. 3, against No. 234 of Schedule-I of Notification No. 01/2017- Central Tax (Rate) ibid : –
” Explanation : If the goods specified in this entry are supplied, by a supplier, along with supplies of other goods and services, one of which being a taxable service specified in the entry at S. No. 38 of the Table mentioned in the notification No. 11/2017-Central Tax (Rate), dated 28th June, 2017 [G.S.R. 690(E)], the value of supply of goods for the purposes of this entry shall be deemed as seventy per cent. of the gross consideration charged for all such supplies, and the remaining thirty per cent. of the gross consideration charged shall be deemed as value of the said taxable service.”
15. Similarly, the Notification No. 27/2018- Central Tax (Rate), dated 31.12.2018 inserted the following Entry No. 38 :-
