In re VAPS Knowledge Services Pvt. Ltd. (GST AAR Karnataka)
What is the HSN Code and rate of tax payable under GST Act for the e-campus solutions supplied by the applicant?
The supplies made by the applicant are covered under SAC 997329 and is liable to tax at 9% CGST under entry 17(iii) of Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 read with entry no. 453 of Schedule Ill of Notification No.1/2017 — Central Tax (Rate) dated 28.06.2017.
Similarly, the supplies are liable to tax at 9% under Karnataka Goods and Services Tax Act, 2019.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, KARNATAKA
1. M/s VAPS Knowledge Services Private Limited, (called as the ‘Applicant’ hereinafter), having GSTIN number 29AACCV7691K1ZJ, have filed an application for Advance Ruling under Section 97 of the CGST Act, 2017 & MGST Act 2017, in FORM GST ARA-01, discharging the fee of Rs.5,000/- each under the CGST Act and the MOST Act.
2. The Applicant is a Private Limited Company and is registered under the Goods and Services Act, 2017. The applicant has sought advance ruling in respect of the following question:
What is the HSN Code and rate of tax payable under GST Att for the e-campus solutions supplied by the. applicant?
3. The applicant furnishes some facts relevant to the stated activity inter alia stating that they are into the business of supplying c-campus solutions to various organisations and the consideration is received as a onetime investment and also running maintenance. The consideration is also inclusive Of software updation, training and staff for teaching. The entire solution is a single package and cannot be broken and supplied as there is no piece meal supply. The contract for supply is also a single contract.
PERSONAL HEARING: / PROCEEDINGS HELD ON 26.02.2019
4. Shyama Sagar, Chartered Accountant and the duly authorised representative of the applicant appeared for personal hearing proceedings held on 26.02.2019 and reiterated the facts narrated in their application.
5 FINDINGS & DISCUSSION
5.1 We have considered the submissions made by the applicant in their application for advance ruling as well as the submissions made by Shyama Sagar, Chartered Accountant and the duly authorised representative of the applicant during personal hearing. We also considered the issue involved, on which advance ruling is sought by the applicant, relevant facts 86 the applicant’s interpretation of law.
5.2 At the outset, we would like to state that the provisions of both the CGST Act and the KOST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the KGST Act.
5.3 The transaction of the applicant is verified and found that the applicant has entered into contract with various organisations, especially with schools for the supply of e-campus solutions which involves various e-learning facilities. The contract also involves the annual maintenance of the entire product. The contract is for multiple years and the consideration for the contract is to be received in two installments in each year.
5.4 The contract is examined and found that
a) the applicant shall provide various materials as contracted like Branded Interactive white board, ceiling mount Kit and projector, CPUs with speaker with legal version software. It shall also provide Digital content.
b) The applicant shall also provide Cabinets for safety of the c-class desktops.
c) The applicant will take care of the maintenance of the equipments provided for a period extending to multiple years after the warranty period. i.e. extended warranty.
d) Further, the applicant’s agreement states new e-classroom infrastructure would be delivered from second year onwards by replacing the earlier classroom infrastructure.
e) it is also seen that the contractee needs to support the applicant in all civil work and allow the implementation team to implement the project.
f) The applicant shall also provide digital content which will match with the syllabus of the Board for which the content is subscribed.
g) The applicant also trains the teachers to use the facility.
h) The project value as per the contract is charged on per Student basis.
5.5 The exit clauses of the contract shows that the project includes two types of investments
a) one time investment of hardware like Interactive Board, Projector, CPU, UPS etc,
b) periodic investment
i. for back office service and
ii. for maintenance of the hardware supplied.
The clauses read as under:
“1. Hardware High end Products: As we need to build up complete High end IT Infrastructure in the beginning of the contract we are investing huge investment on the Hardware and Hi-end infrastructure in the beginning stage of the contract at site. Hence in the contract 80% of the project cost is invested only for Hardware High end products (like IWB Board, Projector, CPU, UPS, etc.), the payment recovery is planned over the 5 years contract period in installments. If the institution opts for exiting the contract in between the contract period, the institution should pay to the company 80% of the entire contract value and retain the infrastructure of the hardware high end products, Digital contents, etc.
2. Manpower service (Training cost, digital content, back office support and annual maintenance cost for hardware):
Will be recurring investment as and when services are rendered to the institution, this service cost of the value included in the project is 20% of the project value. If the institution opts for exiting the contract in between the contract period, the institution should pay to the company only for the service received period only.’
5.6 The applicant states that they are providing various solutions and the details are as under:
