In re Hyundai Rotem Company (GST AAR Karnataka)
Nature of activity determines the GST rate, separately identifiable cost center activities cannot be termed as composite supplies
The AAR, Karnataka in the matter of In Re: M/S. Hyundai Rotem Company [Advance Ruling No.- KAR ADRG 26/2022 dated August 12, 2022] held that the supplies made by all the Cost Centers of Delhi Metro Rail Corporation (“DMRC”) are not to be considered as a ‘composite supply’.
Facts:
M/s. Hyundai Rotem Company (“the Applicant”) is a foreign company incorporated in South Korea and is engaged in the manufacture, supply, testing, commissioning, and training in respect of rolling stock. The Applicant was a successful bidder to the tender invited by DMRC for design, manufacture, supply, testing, commissioning, and training. The Applicant entered into a contract with DMRC for the execution of the contract awarded.
The supply by the Applicant to the DMRC is an inter-state supply of the goods and services and is liable for the tax under the Integrated Goods and Services Tax Act 2017 (“the IGST Act”). Supply made by the Applicant under the contract is a ‘composite supply’ as defined under Section 2(30) of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) with the principal supply being the supply of rolling stock. The rate of tax on these supplies is at present levied based on the nature of the respective transaction for which the invoice is issued. The Applicant furnished the present status and treatment of different supplies under the cost centers. The DMRC has disputed the nature of the supply. However, the Applicant has borne the cost of differential Goods and Service Tax (“GST”) on its own and paid the said tax to the Government on time.
Thus, the Applicant has filed an instant advance ruling application.
Issue:
Whether or not the nature of goods or services is considered to be essential criteria to calculate GST?
Held:
The AAR, Karnataka in the matter of In Re: M/S. Hyundai Rotem Company [Advance Ruling No. – KAR ADRG 26/2022 dated August 12, 2022] held as under:
