In re Emco Limited (GST AAR Maharashtra)
Question: -1. The question/ issue is whether GST is leviable on the transportation charges Levied by the Applicant on Power Grid Corporation of India Limited (PGCIL)?
Answer: – Answered is in the affirmative.
Question: -2. In case the GST is payable, what would be the rate of GST to be charged on such charges?
Answer:- GST in the present case would be liable at 18% as per entry at Sr. no. 3(ii) of the Notification No. 1/2017 of Central Tax (Rate) dt. 28/06/2017 and corresponding notification under the MGST Act.
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, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as “the CGST Act and MGST Act” ] by EMCO LIMITED, the applicant, seeking an advance ruling in respect of the following questions:
1.1 The question/ issue before Your Honor is whether GST is leviable on the transportation charges levied by the Applicant on PGCIL?
1.2 In case the GST is payable, what would be the rate of GST to be charged on such charges?
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 provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / MGST Act would be mentioned as being under the “GST Act”.
02. FACTS AND CONTENTION – AS PER THE APPLICANT
The submissions, as reproduced verbatim, could be seen thus –
STATEMENT OF RELEVANT FACTS HAVING A BEARING ON THE OUESTION(S) ON WHICH ADVANCE RULING IS REQUIRED.
1. This Application is being filed by EMCO Ltd.(‘the Applicant’/’the Company’), having Goods and Services Tax (‘GST’) Registration No.27AAACE2764QlZ6. The Applicant is engaged in the business of manufacturing and selling various products and solutions as required in Power Transmission and Distribution Sector. The Company has two divisions namely (i) Transformer division and (ii) Project division. The Transformer division manufactures widest range of transformers which are used in the power industry. The Project division has two Strategic business units (i) Sub-station SBU (ii) Manufacturing Tower and Transmission Line SBU. Sub-station SBU focuses on turnkey projects in the Transmission & Distribution area strengthening the substation and distribution network and Transmission Line SBU offers a wider portfolio of products and solutions for Transmission and Distribution of Power.
2. The Applicant, as part of its activities under the Project division has entered into following contracts with Power Grid Corporation of India Limited (hereinafter referred to as ‘PGCIL’) as under:-
(i) Supply of Towers and Transmission line Products; (referred to as ‘Supply contract’/’First Contract’)
(ii) Services contract (referred to as ‘Service contract’/’Second Contract’); and
Supply contract
As per the Supply contract, the Applicant has agreed to supply various equipment, materials, transmission line towers, insulators, accessories and other spares which are required for commissioning the transmission line. All the materials would be supplied on ex-works basis. The detailed scope of supply is given at Appendix 6 of the Supply contract which is annexed hereto as Exhibit A.
As per the Supply contract, PGCIL agrees to pay the Applicant the Contract price along with all the taxes and duties as applicable on the same.
Service contract
The Applicant has entered into a Service contract with PGCIL in respect of various services to be undertaken for commissioning of the Transmission line. The Service contract inter alia includes planning, survey, transportation of goods, loading and unloading at site, installation and commissioning of the Transmission line. Separate consideration has been decided for various services specified in the contract.
As per the Service contract, PGCIL agrees to pay the Applicant the contract price along with all the taxes and duties as applicable on the same.
The Applicant issues separate invoices to PGCIL for (i) for the supply of goods (ii) supply of services. With respect to the services, the Applicant issues separate invoice for each service.
3. The Applicant, for the purposes of transportation of goods, avails the service of a Goods Transport Agency (GTA) who transports the said goods to the location of PGCIL. The Applicant also pays tax under reverse charge on the said services availed from a GTA.
4. In view of the above, the issue for determination before tire Authority for Advance Ruling (‘AAR’) is whether GST is leviable on such freight charges being recovered and if so at what rate.
STATEMENT CONTAINING THE APPLICANT’S INTERPRETATION OF LAW AND/OR FACTS, AS THE CASE MAY BE, IN RESPECT OF THE QUESTION(S) ON WHICH THE ADVANCE RULING IS REQUIRED
2. ISSUE FOR DETERMINATION
2.1. The question/ issue before Your Honor is whether GST is leviable on the transportation charges levied by the Applicant on PGCIL?
2.2 In case the GST is payable, what would be the rate of GST to be charged on such charges?
2.3 The question / issue placed for determination before Your Honor has to be appreciated in light of the following position of law and its applicability to the activity by the Applicant, discussed hereunder.
3. POSITION OF LAW AND SUBMISSIONS OF THE APPLICANT
At the outset, the Applicant would like to refer to Notification 12/2017-Central Tax (Rate) dated 28th June 2017 which exempts various services from the levy of GST.
EXEMPTION NOTIFICATION 12/2017- CENTRAL TAX (RATE) DATED 28th JUNE 2017
3.1. Entry no. 18 of the Notification No. 12/2017 dated 28th June 2017 exempts services by way of transportation of goods by road except inter alia by a GTA. The relevant extract of the entry is reproduced below:
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