In re Vertiv Energy Private Limited (GST AAR Maharashtra)
Whether the contract entered into with DMRC for supply, erection, installation, commissioning and testing of UPS system qualifies as a supply of works contract under Section 2(119) of the CGST Act?
From the discussions made above we find that in the contract submitted by the applicant the major part of the contract is supply of goods. i.e. UPS Units, etc. These goods are delivered to the client by the applicant and such goods that are supplied are used by the applicant to provide services of installation, testing and commissioning of the substations. Without these goods the services cannot be supplied by the applicant and therefore we find that the goods and services are supplied as a combination and in conjunction and in the course of their business where the principal supply is supply of goods. Thus we find that there is a composite supply in the subject case.
Now that we have found that there is no works contract involved in the subject case and the supply is nothing but a composite supply with supply of goods being the principal supply we come to the second question raised by the applicant which is, whether their taxable at the rate of 12% in terms of Sr. no. 3(v) of Notification No. 11/2017 , as amended w.e.f. 25.1.2018?
The principal supply as mentioned above in this case is a supply of goods and therefore the GST will have to be paid on the goods at the appropriate rate after classification under the appropriate heading. The principal goods in the subject case is UPS units which are most important for the applicant to render supply as per the contract.
We find from the submissions made by the applicant that UPS is classified under Heading 8504 and attracts GST @18% as supply of goods. Hence the principal supply in their composite supply being goods as described under heading 8504, the applicant is liable to pay GST on the whole contract @ 18%.
AAAR Order- Supply cannot be treated as Composite merely because it was based on Single Contract
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING,MAHARASHTRA
(Under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017)
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” respectively ] by M/s.Vertiv Energy Private Limited, the applicant, seeking an advance ruling in respect of the following questions.
1. Whether the contract entered into with DMRC for supply, erection, installation, commissioning and testing of UPS system qualifies as a supply of works contract under Section 2(119) of the CGST Act?
2. If yes, whether such supply made to DMRC would be taxable at the rate of 12% in terms of Sr. no. 3(v) of Notification No. 11/2017 – C.T. (Rate), as amended w.e.f. 25.1.2018?
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 reference is specifically made to any 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, the expression `GST Act’ would mean COST Act and MGST Act.
2. FACTS AND CONTENTION – AS PER THE APPLICANT
The submissions, as reproduced verbatim, could be seen thus-
“A. STATEMENT OF THE RELEVANT FACTS HAVING A BEARING ON THE QUESTION (ON WHICH THE ADVANCE RULING IS SOUGHT)
1. Vertiv Energy Private Limited (hereinafter referred to as “the applicant”) having its corporate head office at Mumbai is, inter-alia, engaged in the manufacture of various types of UPS systems, which serve as an alternate source of power for a specific period of time in the event of power failure. The applicant also supplies installation commissioning and maintenance and other services to its customers.
2. An UPS is typically used to protect hardware such as computers, data centers, telecommunication equipment or other electrical equipment where an unexpected power disruption could cause injuries, fatalities, serious business disruption or data loss. UPS units range in size from units designed to protect a single computer without ideo monitor to large units powering entire data centers or buildings:
3. The applicant is manufacturing UPS and its components at its manufacturing unit located at Ambernath and Pune in the state of Maharashtra. Some components like battery and cables are either manufactured by the applicant or purchased by the applicant from third party vendors. The applicant has obtained GST registration in the state of Maharashtra.
4. Further, the applicant has also obtained GST registration in other states where the applicant is rendering supply of Goods and services to its customers,
5. UPS is classified under Heading 8504 and attracts GST @18% as supply of goods. Contract with DMRC for supply of UPS
6. The applicant entered into a contract with Delhi Metro Railway Corporation (“DMRC”) for Supply, installation, testing, and commissioning of UPS systems (hereinafter referred to as “the said contract”) on 20.1.2014. The said contract, though entered in the pre-GST regime, is an on-going contract and the applicant has been making supplies to DMRC in the GST regime as well.
7. The scope of work agreed with DMRC provides the detailed description of various goods and services to be supplied by the applicant. The relevant portion of the contract with DMRC is extracted as under;
“3. SCOPE OF THE WORKS; SUPPLY AND SERVICES
3.1 General
3.1.1 The scope of the works includes but not limited to supply, manufacture, inspection, packing, shipping, transportation, storage, delivery, handling, insurance, installation, interfacing, integration, testing & commissioning, maintenance support, spares, special tools, test equipment, training, documentation and providing DLP for the UPS system.
3.2 Scope of supply
3.2.1 The Uninterruptible Power Supply (UPS) system shall include, but not be limited to the following: –
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