In re Methodex System Pvt. Ltd. (GST AAR Madhya Pradesh)
The supply, installation and fixing of furniture, customized or customized cannot be a works contract, as the items of furniture have been made or manufactured at the supplier’s place which have been installed or fixed at the place of the recipient. Such installed or fixed items of furniture can be removed/ moved to any place without damage to the furniture. Thus, supply, installation and fixing of furniture cannot be covered under works contract, as it does not result in immovable property or it is not going to be part of immovable property.
As per the view point and interpretation of law and facts of the case, the supply, installation and fixing of furniture, either customized or not customized, is not composite supply of works contract by way of construction etc of civil structure or other original works to the Government and therefore, is not chargeable to concessional rate of 12% as per the Notification No. 11/2017 dated, 28.06.2017.
Having regard to our observations and findings detailed in the foregoing paras, we conclude that the contract in questions i.e. work order relating to supply, installation & fixing of customized furniture in a building conform to the “COMPOSITE SUPPLY” as provided in section 2(30) of CGST Act, 2017. The supply made by the applicant to the Capital Project Administration consists of Two taxable supplies of Goods and Services,. which are naturally bundled and supplied in conjunction with each others, where the supply of goods viz. Furniture is the principal supply. We thus hold that the work order in question shall merit classification under Chapter Head 9403 of GST Tariff and shall be liable to GST at the rate applicable at the time of supply.
FULL TEXT OF ORDER OF THE AUTHORITY OF ADVANCE RULING, MADHYA PRADESH
1. The present application has been filed u/s 97 of the Central Goods and Services Tax Act, 2017 (hereinafter also referred to CGST Act and SGST Act respectively) by M/S METHODEX SYSTEMS PRIVATE LIMITED (hereinafter referred to as the Applicant), registered under the Goods & Services Tax.
2. The provisions of the CGST Act and MPGST Act are identical, except for certain provisions. Therefore, unless a specific mention of the dissimilar provision is made, a reference to the CGST Act would also mean a reference to the same provision under the MPGST Act. Further, henceforth, for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act or MP GST Act would be mentioned as being under the GST Act.
3. BRIEF FACTS OF THE CASE
3.1 The applicant is registered under the provisions of GST law in the State of Madhya Pradesh, vide GSTIN: 23AAACMl 924ElZ3 and the principal place of business is in Indore with the production facility at Pithampur.
3.2 The Executive Engineer, Construction Divisiön-2, Capital Production Administration (CPA), Bhopal – a Department of Government of Madhya Pradesh, floated a tender reference No.CPA/Tender No.2402 for supply, installation and fixing of customized furniture, as detailed below for newly constructed Mantralaya, Vallabh Bhawan Extension, Bhopal.
(a) Main Table + ERU
(b) Back Runner for Minister
(c) Minister Room Corner Table
(d) Conference Room Table
(e) Dining Table & Chair
(f) Conference Room 3 seater sofa
(g) Back Runner units
(h) Meeting Room Table
(i) Meeting Hall table etc.
3.3 The Executive Engineer, CPA, Bhopal has. issued to the applicant company the contract No. 12/DL 18-19/Work order No. 1941/SAC/C-11/18 dated, 02.05.2018.
3.4 The invoices were issued by the applicant charging therein tax @18% considering the supply of furniture •as composite supply of furniture, where item-wise price of furniture was charged in the invoice.
4. QUESTIONS RAISED BEFORE THE AUTHORITY:
4.1 Whether the work relating to “supply, installation and fixing of customized furniture in a building” is composite supply of goods or in the nature of works contract?
4.2 What is applicable rate of GST on the above Supply, if it is supply of goods or supply in the nature of works contract?
5. RECORD OF PERSONAL HEARING
5.1 Shri S, Krishnan, Chartered Accountant – Authorized Representative of the applicant appeared for personal hearing on behalf of the applicant and reiterated the submissions made in the application.
5.2 The applicant states that The contract placed by Capital Project Administration – a Department of Govt. of Madhya Pradesh, the awarding of contract is of the view that the same is of the nature of works contract as per section 2(119) of CGST Act and the concessional rate of tax of 12% (6% CGST & 6% SGST) is applicable as per Notification No. 11/2017-Centra1 Tax (Rate) dated, 28.06.2017 and the Notification No. 20/2017-Central Tax (Rate) dated, 22.08.2017.
5.3 As per SI.No.1 of Heading 9954 (Construction Services) of Notification No. 11/2017-Centra1 Tax (Rate) dated, 28.06.2017 amended from time to time, the rate of tax is as under:-
