In re Siemens Limited (GST AAR Maharashtra)
Question:-1. Whether the freight charges recovered by the Applicant under the aforesaid contract from the customer without issuance of consignment note will be eligible for exemption from CGST as prescribed in Serial no. 18 of Notification no. 12/2017 – Central Tax Rate F. No. 334/1/2017, dated 28 June 2017?
Answer: Answered is in negative.
Question: – 2. Whether the freight charges recovered by the Applicant under the aforesaid contract from the customer without issuance of consignment note will be eligible for exemption from SGST as prescribed in Serial no. 18 in Notification no. 12/2017 – State Tax (Rate) no. MGST 1017/C.R.103 (11)/ Taxation-1 dated 29 June 2017.
Answer– Answered is in negative.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, MAHARASHTRA
The present application has been filed under section 97 of the Central Goods and Services Tax Act, and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as “the CGST Act and MGST Act”] by Siemens Limited, the applicant, seeking an advance ruling in respect of the following questions.
a) Whether the freight charges recovered by the Applicant under the aforesaid contract from the customer without issuance of consignment note will be eligible for exemption from CGST as prescribed in Serial no. 18 of Notification no. 12/2017 – Central Tax Rate F. No. 334/1/2017, dated 28 June 2017?
b) Whether the freight charges recovered by the Applicant under the aforesaid contract from the customer without issuance of consignment note will be eligible for exemption from SGST as prescribed in Serial no. 18 in Notification no. 12/2017 – State Tax (Rate) no. MGST 10/ 7/C.R.103 (11)/ Taxation-1 dated 29 June 2017.
At the outset, it is made clear that since the provisions of both the CGST Act and the MGST Act are the same except for a few provisions, a reference to the CGST Act would also mean a reference to the MGST Act, unless specified otherwise.
2. FACTS AND CONTENTIONS — AS PER THE APPLICANT:
(i) M/s Siemens Limited (herein after referred as the “Applicant”) 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 Applicant is a leader in technology solutions for intelligent (smart), sustainable cities, smart grid, building technologies, mobility and power distribution.
(ii) The Applicant has a contract with one of the major Public Sector Undertakings in the State of Haryana (herein after referred as “the Customer”).
(iii) In terms of the said contract, the Customer has placed an order thru their “Notification of Award” (NOA) vide reference no.CC-CS/698-SR2/HVDC-3249/7/6/ 0/R/N0A- V/7217 dated 22 03-2017 for 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.
(iv) The subject NOA is awarded to the Joint Venture (JV) of M/s Siemens AG, Germany (Lead Partner) and M/s Sumitomo Electric Industries Ltd. Japan (other Partner).
(v) The scope of the contract is divided into six contracts covering specific and detailed nature of supply of various goods and services. The ‘On shore service contract (VSC part)” (herein after referred as “Service Contract”) needs to be executed by the Applicant as JV’s Associate.
(vi) The query is relates to the ‘service activities’ involved in their ‘fifth contract’ termed as “On shore service contract (VSC part) (NOA-V)” – copy attached. The scope of work under this contract as referred at 3.1 is as follow:
a. Local transportation, insurance and other incidental service
b. Installation charges
c. Training charges
(vii) With respect to on- shore supply of goods, the terms of the contract provide for supply of goods on “ex-works” basis. Attention is invited to clause 3.1 (i) of the supply Contract (NOA-III) – copy attached.
(viii) While the supply of goods is on “ex-works” basis under the “on-shore supply contract”, the Applicant, through a separate “Service Contract” is entrusted with the responsibility of delivery of the goods at Customer’s site. For this, the Applicant engages local transporters who issue consignment notes to the Applicant for such transportation of goods and issue their freight invoices on the Applicant.
(ix) In turn, the Applicant discharges the GST liability 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.
(x) The Applicant charges local transportation as referred in para 6(a) above from the customer as per the terms of the contract. However, since the consignment note is already issued by the transporters engaged by the Applicant, no subsequent additional consignment note is issued by the Applicant.
(xi) 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:
