In re Shapoorji Pallonji and Company Pvt. Ltd. (GST AAR Karnataka)
i. Whether the combined service of setting up of Wet Limestone FGD plant and operation and maintenance be considered as a composite supply?
The combined service of setting up of Wet Limestone FGD plant and operation & maintenance of the said plant can’t be considered as a composite supply.
ii. If answer to question (a) above is yes then, whether the supply provided by the applicant is a composite supply of works contract as per Section 2(30) and Section 2(119) of CGST Act, 2017 and what would be the principal supply?
The question (ii) above is answered in negative and hence this question is redundant.
iii. If the supply is considred as a composite supply of works contract services, whether the said supply to be provided by the applicant would fall under the entry No.3(iv)(e) of the Notification No.11/2017-Central Tax (Rate) dated 28-06-2017, as amended time to time?
The impugned supply is not considered as a composite supply and hence this question is also redundant.
iv. What would be the applicable GST rate and SAC/HSN?
The setting up of FGD plant merits classification under SAC 995429 and attracts GST at the rate of 12%, in terms of entry No.3(iv)(e) of the Notification No.11/2017-Central Tax (Rate) dated 28-06-2017. Further the Operation & Maintenance of the FGD plant merit classification under SAC 9985, as “Business Support” service and attracts GST at the rate of 18%, in terms of entry No.23(iii) of the Notification No.11/2017-Central Tax (Rate) dated 28-06-2017
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, KARNATAKA
M/s. Shapoorji Pallonji and Company Pvt. Ltd., (herein after referred as Applicant), 7th Floor, 124, Surya Chambers, HAL Airport Road, Murugeshpalya, Bengaluru – 560 017, having GSTIN 29AAACS6994C1Z1, filed an application for Advance Ruling under Section 97 of CGST Act,2017 read with Rule 104 of the KGST Rules, 2017 and Section 97 of the KGST Act, 2017 read with Rule 104 of KGST Rules 2017 in form GST ARA-01 discharging the fee of Rs.5,000/- each under the
2. The applicant submitted that they are engaged in the construction business and providing works contracts services to various customers including the Government, Public Sector Undertakings, Government Entities and Private Sector entities. The applicant got the order from M/s Raichur Power Corporation Limited (herein after referred to as `RPCL’), on winning the tender, for setting up of Wet Limestone Flue Gas Desulphurisation (referred as FGD) and operation 8; maintenance of the said plant. The applicant stated that they have initiated the work for setting up of the FGD plant; received the mobilization advances from M/s RPCL 85 discharged GST @ 12% on the said advances. In view of this the applicant sought advance ruling in respect of the following questions.
a) Whether the combined service of setting up of Wet Limestone FGD plant and operation & maintenance be considered as a composite supply?
b) If answer to question (a) above is yes then, whether the supply provided by the applicant is a composite supply of works contract as per Section 2(30) and Section 2(119) of CGST Act, 2017 and what would be the principal supply?
c) If the supply is considered as a composite supply of works contract services, whether the said supply to be provided by the applicant would fall under the entry no.3(iv)(e) of the Notification No.11/2017-Central Tax (Rate) dated 28-06-2017, as amended time to time?
d) What would be the applicable GST rate and SAC/ HSN?
3. The applicant furnished the following relevant facts having bearing on the questions raised, in Annexure A, which are as under:
3.1 M/s RPCL floated a tender vide NIT No.KPCL/2018- 19/PS/WORK_INDENT8463 dated 09.03.2019 for providing two Wet Limestone Flue Gas Desulphurisation (FGD) plant for Unit-1 and Unit-2 of Yaramarus Thermal Power Station (800MW), Raichur District, Karnataka (herein after referred to as ‘Project’) and the applicant got the order, on winning the said tender, for setting up and operation 85 maintenance of the said FGD plant.
3.2 The clients, in general, are not interested only in awarding the contract for installing the plant but also, for smooth running of the plant, want to make the supplier responsible for operation of the plant to achieve the desired results. Therefore, normally the operation & maintenance of the plant for certain period is awarded to the supplier who is setting up the plant.
3.3 The scope of work, as provided in clause 1.0, 2.0 8; 3.0 of the Notice inviting Tender and also in the Letter of Award dated 17.08.2020, is to carry out the entire activity of setting up of Wet Limestone FGD plant and operation 85 maintenance of the said system for three years, although the bid documents specify the period of ten years.
3.4 Clause 1.1 in Section 1 of the Bid document, specifies that the emission limit is laid down in Notification No. S.0.3305, issued by the Ministry of Environment, Forest and climate change and the details of said emission limit are given in Schedule-I of Environment (Protection) Rules, 1986, which are as detailed below:
