In re NEC Technologies India Pvt. Ltd (GST AAR Gujarat)
Question 1: Whether the supply made by the applicant under the Automatic Fare Collection (AFC) project would qualify as: (a) ‘works contract’ defined under section 2(119) of the CGST Act, 2017; or (b) ‘composite supply’ defined under section 2(30) of the CGST Act, 2017?
Answer: The supply made by the applicant under the Automatic Fare Collection (AFC) project would qualify as ‘composite supply’ defined under section 2(30) of the CGST Act, 2017.
Question 2: Whether the supply made by the applicant under the AFC project would qualify as an original works meant predominantly for use other than for commerce, industry, or any other business or profession, thereby attracting GST rate of 12% provided in the Notification No. 24/2017-Central Tax (Rate) dated 21st September, 2017?
Answer: The supply made by the applicant under the AFC project does not qualify as an original works meant predominantly for use other than for commerce, industry, or any other business or profession, thereby GST rate of 12% provided in the Notification No. 24/2017-Central Tax (Rate) dated 21st September, 2017 would not be applicable.
Question-3 Whether the HSN classification of supply made by the applicant would fall under ‘8470’ or ‘9954’?
Answer: The HSN classification of the supply made by the applicant is to be ‘8470 The Rate of GST for the same is 18%.
Question-4: Whether the maintenance and management services post implementation would qualify as composite supply as defined under section 2(30) of the CGST Act, 2017? Further, whether such supply would be eligible for exemption under Notification No.12/2017-Central Tax (Rate) dated 28th June, 2017 in case value of supply of goods constitutes not more than 25% of the value of the said composite supply?
Answer: The maintenance and management services to be provided post implementation of the AFC system under proposed contract would qualify as “composite supply” with the AFC system, being the principle supply, as defined under section 2(30) of the CGST Act, 2017. Further, such supply would not be eligible for exemption provided under Notification No.12/2017-Central Tax (Rate) dated 28th June, 2017 as amended by the Notification No.02/2018-Central Tax (Rate) dated 25th January, 2018, as (i) the value of the supply of all goods (i.e. hardware for AFC System & spares for its repairs) under the proposed contract constitutes more than 25% of the value of the said composite supply; and (ii) the said composite supply is to be made to the SMC and M/s SSCDL, which is a company incorporated under the Companies Act, 2013 and, hence, not fall under the definition of the local authority or a Governmental authority or a Government Entity.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, GUJARAT
The applicant is engaged in providing of solutions and services in multiple areas in public safety, private network, retail, IT, logistics, engineering services etc.. They are registered under GST vide GSTN Number-24AACCN3496J1Z8. They have preferred an application seeking Advance Ruling in respect of the following questions:-
(A) Whether the supply made by NEC under the Automatic Fare Collection (AFC) project would qualify as: a. ‘works contract’ defined under section 2(119) of the CGST Act, 2017; or b. ‘composite supply’ defned under section 2(30) of the CGST Act, 2017?
(B) Whether the supply made by NEC under the AFC project would qualify as an original works meant predominantly for use other than for commerce, industry, or any other business or profession, thereby attracting GST rate of 12% provided in the Notification No. 24/2017-Central Tax (Rate) dated 21st September, 2017?
(C) Whether the HSN classification of supply made by NEC would fall under ‘8470’ or ‘9954’?
(D) Whether the maintenance and management services post implementation would qualify as composite supply as defined under section 2(30) of the CGST Act, 2017? Further, whether such supply would be eligible for exemption under Notification No.12/2017-Central Tax (Rate) dated 28th June, 2017 in case value of supply of goods constitutes not more than 25% of the value of the said composite supply?
2. The applicant in the Statement of the Facts stated that they have been awarded a comprehensive Contract by the Surat Municipal Corporation (‘SMC’) (a Municipal body incorporated under the Bombay Provincial Corporation Act, 1949) and the Surat Smart City Development Limited (SSCDL) (a Company incorporated under the Companies Act, 2013) for design, development, implementation, maintenance and management of open loop solution based ‘Automatic Fare Collection (‘AFC’) System’ for Bus Rapid Transit System (‘BRTS’) and City Bus Operation in Surat City (‘the City’).
2.1 The objective of the AFC system is to provide seamless travel with single smart card/ ticket on city’s BRTS and City Bus Services. The AFC system is typically implemented in the following:-
