In re Siemens Limited (GST AAAR Maharashtra)
The Appellate Authority for Advance Ruling held as under:
From the conjoined and harmonious reading of various clauses of Third contract and Fifth contract awarded to the appellant and their interdependency under the whole contract comprising of six contracts, it can be safely concluded that the agreement for setting up for + 320KV, 2 X1000MW VSC based HVDC Terminals and DC XLPE Cable system between Pugalur and North Trichur associated with HVDC Bipole link between Western region (Raigarh, Chhattisgarh) and Southern region (Pugalur, Tamil Nadu-North Trichur, Kerala) is a composite works contract as defined u/s 2(119) of GST Act and taxable @ 18% and hence –
i. The transportation services provided by the appellant being part of the whole works contract will be taxable @ 18% as works contract services and will not be eligible for the exemption as provided in Serial no. 18 of the Notification No. 12/2017-Central Tax (Rate) dated the 28th June, 2017 and Notification No. 12/2017-State Tax (Rate) dated the 29th June, 2017.
ii. Order passed by the Maharashtra Advance Ruling Authority Order No. GST-ARA-69/2018-19/B-164, Mumbai dated December 19, 2018 is confirmed.
FULL TEXT OF ORDER OF BEFORE THE AUTHORITY OF ADVANCE RULING,
PROCEEDINGS
(Under Section 101 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017)
At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the MGST Act.
The present appeal has been filed under Section 100 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as “the CGST Act and MGST Act”] by Siemens Limited (herein after referred to as the “Appellant”) against the Advance Ruling No. GST-ARA-69/2018-19/B-164 dated 19.12.2018.
Brief Facts of the Case
A. M/s Siemens Limited (hereinafter referred as the ‘Appellant’) is registered under the Central and State GST legislations vide GSTIN 27AAACS0764L1Z6 and is situated at Plot No 2, Siemens Limited, Sector 2, Kharghar Node, Navi Mumbai 410210, Maharashtra. The Appellant is a leader in technology solutions for intelligent (smart), sustainable cities, smart grid, building technologies, mobility and power distribution.
B. The Appellant has entered into six contracts with one of the major Public Sector Undertakings in the State of Haryana (herein after referred as ‘the Customer’) for on – shore and offshore supply of goods and services on a joint venture (‘JV’) basis with M/s Siemens AG, Germany as the Lead Partner and M/s Sumitomo Electric Industries Ltd. Japan as another Partner.
C. The six contracts cover specific and detailed nature of supply of various goods and services. Out of which two contracts are required to be executed by the Appellant as a JV’s Associate. The Third Contract vide Ref. No. CC-CS/698 -SR2/HVDC – 3249/7/G10/R/NOA-111/7215 dated 22.03.2017 (hereinafter referred to as ‘on-shore Supply Contract/ Third Contract’) provide for supply of goods on ‘ex-works’ basis. The Third Contract is in relation to placing of orders by customers for supply of VSC (Voltage Source Converters) based HVDC Terminals between Pugalur and North Trichur. This involves supply of equipment and services, both on off-shore as well as on-shore basis.
D. The Fifth Contract vide Ref. No. CC-CS/698 – SR2/HVDC -3249/7/G10/R/NOA-V/7217 dated 22.03.2017 termed as ‘on shore Service Contract (VSC part) (NOA-V)’ (hereinafter referred to as ‘on-shore Service Contract/ Fifth Contract’). The scope of work under this contract as referred at 3.1 Clause of the Fifth Contract is as follows:-
a. Local transportation, insurance and other incidental services
b. Installation charges
c. Training charges
E. The present query relates to the ‘service activities’ involved in their Fifth Contract. The Appellant, through an independent ‘Service Contract vide Ref. RPT-HVDC/C&M/3429/CA-V/7217/BBU-03/18/533 dated 14.03.2018 (hereinafter referred to as ‘Service Contract’) is entrusted with the responsibility of delivery of the goods at Customer’s site. For this, the Appellant engages local transporters who issue consignment notes to the Appellant for such transportation of goods and issue their freight invoices on the Appellant.
F.In turn, the Appellant discharges the GST liability under reverse charge mechanism on such freight amount being paid by it to these transporters as provided under Notification no, 13/2017 – Central Tax Rate F. No. 334/1/2017, dated 28 June 2017.
G. The Appellant charges local transportation from the customer as per the terms of the Service Contract. However, since the consignment note is already issued by the transporters engaged by the Appellant, no subsequent additional consignment note is issued by the Appellant.
H. In terms of Serial no. 18 of Notification no. 12/2017 – Central Tax Rate F. No. 334/1/2017, dated 28 June 2017, an exemption from Central GST has been provided for services by way of transportation of goods. The relevant extract of the notification is given below:
