Case Law Details

Case Name : In re Giriraj Renewables PVT. LTD ( AAR Maharashtra)
Appeal Number : GST-ARA-01/2017/B-01
Date of Judgement/Order : 17/02/2018
Related Assessment Year :
Courts : AAR Maharashtra (16) Advance Rulings (219)

In re Giriraj Renewables PVT. LTD (AAR Maharashtra)

Question  1

Whether supply of turnkey Engineering, Procurement and Construction (`EPC’) Contract for construction of a solar power plant wherein both goods and services are supplied can be construed to be a Composite Supply in terms of Section 2(30) of the Central Goods and Services Tax Act, 2017?

The applicant poses for us to decide if the Engineering, Procurement and Construction (‘EPC’) Contract falls within the definition of ‘composite supply’ as found in the GST Act. Since we have elaborately discussed and observed above that the impugned transaction is a “works contract” u/ s 2(119) the GST Act, we need not even enter into the discussion as to whether the impugned transaction is a ‘composite supply” u/s 2(30) the GST Act. In view thereof, we are constrained, with reasons, to answer the first question in the negative. We move on to the second question.

Question 2

If yes, whether the Principal Supply in such case can be said to he ‘solar power generating system’ which is taxable at 5% GST?

This question arises from the assumption of the applicant that the impugned transaction is a transaction of supply of ‘goods’. We have elaborately dealt with earlier as to how the impugned transaction is a ‘works contract’ u/s 2(119) the GST Act and further that, that para 6 of SCHEDULE II [ACTIVITIES TO BE TREATED AS SUPPLY OF GOODS OR SUPPLY OF SERVICES] treats “works contracts” u/s 2(119) as supply of ‘services’. In view thereof, there arises no occasion to visit the entries prescribing tax rates for ‘goods’. Since the transaction is treated as a “works contract” and not as a “composite supply”, there would be no relevance of “principal supply”. And therefore, there arises no occasion to answer the question as to what would be the “principal supply” in the impugned transaction. We proceed to the third question.

Question 3

Whether benefit of concessional rate of 5% of solar power generation system and parts thereof would also be available to sub-contractors?

We find that the applicant has informed that in certain cases, the contractor engages various sub-­contractors (manufacturers/ supplies/ sub-contractors) who further supply the goods to such contractor or engage in provisioning of certain portion of the contract. It is also informed that there may be cases wherein the Developer divides the contract between two separate contracts of construction of solar power generation system. in this regard, the applicant argues that since the concessional rate of 5% [as clarified to be under Notification no. 1/2017-Integrated Tax (Rate)] is provided to renewable energy products and parts thereof, the same should be applicable to all suppliers providing such products as long as it can be established (through certification or otherwise) that these are to be used in solar power generation system.

The applicant has laid claim to sr. no. 234 of Schedule I of Notification No. 1/2017-Central Tax (Rate) which states thus

234 84,85 or 94 Following renewable energy devices & parts for their manufacture

(a)      Bio-gas plant

(b)     Solar power based devices

(c)      Solar power generating system

(d)     Wind mills. Wind operated Electricity Generator (WOEG)

(e)      Waste to energy plants / devices

(f)    Solar lantern / solar lamp

(g) Ocean waves/tidal waves energy devices/plants

 

As can be the seen, the above entry is under the notification prescribing the tax rate on `goods’. We have to observe that the facts of the transactions have to be seen in terms of what the sub-contracting agreement says, what has been supplied, whether the item supplied is a part. Such and many other questions have to be answered. No details have been brought before us. If the transaction is a supply of “goods” then the applicable Schedules (exempt or taxable) would have to be seen. In the absence of any documents before us, we would not be able to deal with this question in the present proceedings.

05.   In view of the extensive deliberations as held hereinabove, we pass an order as follows :

ORDER

(under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017)

NO.GST-ARA-01/2017/B-05                                             Mumbai, dt. 17/02/2018

For reasons as discussed in the body of the order, the questions are answered thus –

Q.1 Whether supply of turnkey Engineering, Procurement and Construction (‘EPC’) Contract for construction of a solar power plant wherein both goods and services are supplied can be construed to be a Composite Supply in terms of Section 2(30) of the Central Goods and Services Tax Act, 2017?

A.1 The question is answered in the negative.

Q.2  If yes, whether the Principal Supply in such case can be said to be ‘solar power generating system’ which is taxable at 5% GST?

A.2 Since the transaction is treated as a “works contract” and not as a “composite supply”, there would be no relevance of “principal supply”. And therefore, there arises no occasion to answer the question as to what would be the “principal supply” in the impugned transaction.

Q.3 Whether benefit of concessional rate of 5% of solar power generation system and parts thereof would also be available to sub-contractors?

A.3 In the absence of any documents before us, we would not be able to deal with this question in the present proceedings.

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