Bangalore Metro Rail Corporation Ltd. Vs Karnataka Appellate Authority For Advance Ruling (Karnataka High Court)
Material Facts
The petitioner, Bangalore Metro Rail Corporation Limited (BMRCL), a joint venture of the Government of India and the Government of Karnataka, implemented the Bangalore Metro Rail Project. Initially, train sets were procured from a consortium comprising BEML, Hyundai Rotem, Melco and Mitsubishi Corporation. During expansion, bids were invited for supplying 150 Standard Gauge Intermediate Cars, and Bharat Earth Movers Limited (BEML) emerged as the successful bidder.
The contract provided that BMRCL would reimburse the applicable GST to BEML. BEML subsequently filed an application under Section 98 of the Central Goods and Services Tax Act, 2017 seeking an advance ruling on the classification of the supply. The Authority for Advance Ruling (AAR), by ruling dated 06.04.2021, held that the transaction constituted a composite supply taxable as supply of intermediate cars under Sections 8 and 12 of the CGST Act.
The Revenue appealed before the Karnataka Appellate Authority for Advance Ruling (AAAR). By order dated 03.09.2021, the AAAR reclassified the supplies, treating certain activities as supply of goods taxable at 5–12%, certain activities as services taxable at 18%, and certain goods taxable at 18–28%. BMRCL challenged this AAAR order under Article 226 of the Constitution, contending that its contractual obligation to reimburse GST resulted in civil and financial consequences.
