In re M/s. Tag Solar System (GST AAR Rajasthan)
Whether Supply, Commissioning, Installation and maintenance of Solar Water Pumping System would attract 5% GST and if such transaction is Work Contract. Further, if the applicant can raise sepertae bills for Supply of goods and Supply of Services.
Held by AAR
1. As per the statement of facts submitted by the applicant, the scope of work includes procurement, supply, development, testing , commissioning and providing maintenance service for 10 years in respect of supply of a Solar Photovoltaic (SPV) water pumping system. Accordingly it is not getting covered under supply of ‘Solar Power Generating System’ under Entry 234 of Schedule I of the Notification no. 1/2017 – Central Tax (Rate), dated 28th of June, 2017 under HSN code 84 or 85. “Supply, installation, commissioning and maintenance of Solar Water Pumping Systems” falls under the purview of Works Contract as per Section 2(119) of GST Act.
2. The applicant has sought a clarification on division of contract in two, one for supply of material and other for installation, commissioning and maintenance of Solar Water Pumping Systems. In this regard it is opined that in instant case as per terms and conditions of agreement, it is a single contract of supply, installation, commissioning and maintenance of Solar Water Pumping Systems and hence cannot be split in two separate contracts. Hence in instant case separate bills for supply of goods and supply of services cannot be raised.
3. The contract for “supply, installation, commissioning and maintenance of Solar Water Pumping Systems” falls under the ambit of ” Works Contract Services” which comes under the purview of Works Contract as per Section 2(119) of CGST Act and attracts 18% rate of tax under 1GST Act, or 9% each under the CGST and SGST Acts, aggregating to 18%.
FULL TEXT OF ADVANCE RULING
Note: Under Section 100 of the RGST Act 2017, an appeal against this ruling lies before the Appellate Authority for Advance Ruling constituted under section 99 of RGST Act 2017, within a period of 30 days from the date of service of this order.
The Issues raised by the applicant are fit to pronounce advance ruling as they fall under ambit of the Section 97(2) (e), it is as given under:
(e) Determination of the liability to pay tax on any goods or services or both
Further, the applicant being a registered person, GSTIN: 08AAKFT3688D1ZT, as per the declaration given by him in Form ARA-01, the issue raised by the applicant is neither pending for proceedings nor proceedings was passed by any authority. Based on the above observations, the application is ‘admitted’ to pronounce advance ruling.
1. Submission of the Applicant:
Statement of relevant facts having a bearing on the question(s) raised.
1. M/s. Tag Solar System, a partnership firm which is engaged in Supply, Commissioning, Installation, Maintenance of Solar Water Pumping System within a stipulated time period.
2. Such Supplies are given on the instructions of the Rajasthan Horticulture Development Society under subsidy scheme wherein the Solar Water Systems are required to be installed at the farmer’s field. The scope of work is reproduced hereunder:
“supply, installation, commissioning and maintenance of Solar Water Pumping Systems “
3. Accordingly the Applicant Supplies, Installs, Commissions and Maintains the said systems and perfonn end to end activities in this regard.
4. There may be a consolidated price for all the activities undertaken by the Applicant which involves both the Supply of Goods and Supply of Services.
5. Applicant has no clarity with respect to the rate of tax on such Supply. As per their understanding it will be taxable at the rate of 5% being covered under Chapter 84 / 85 under the item “Solar Power Generating System”. Applicant has confusion that whether it would be treated as a Supply of goods and taxable at 5% or will it be treated as a works contract and charged at 18%.
2. Applicant’s interpretation of law and/or facts:
RATE OF SOLAR POWER GENERATING SYSTEM
The item “Solar Power Generating Systems and parts for their manufacture” are taxable @ 5% under GST Act, 2017 vide Notification No. 01/2017-CT (Rate) dated 28.06.2017. The entry is reproduced herein below for your kind perusal:
