In re Vertiv Energy Pvt. Ltd. (GST AAAR Maharashtra)
The Appellate Authority for Advance Ruling, hereby, modify the AAR ruling to the extent that the supplies under question would not be considered as ‘Composite Supply’ in terms of section 2(30) read with section 2(90) of the CGST Act, 2017.
It is argued by the Appellant the supplies under the present case are not being made in the conjunction with each other, as the supply of services i.e. erection, commissioning, installation, testing etc. are undertaken only after the supply of the goods, i.e. UPS systems and other accessories, have been effected to the recipient of the goods, i.e. DMRC after carrying out all the inspection procedures by the persons, authorized by the Recipient in this regard. It is also argued by the Appellant that services of erection, commissioning and installation of the UPS Systems by the Delhi unit begins only after the ownership/title of the said goods has already been transferred from the Appellant to the Recipient. Hence, the above said services cannot be said to be supplied in conjunction of the supply of the said goods, thereby, precluding the said supplies from being in the nature of “Composite Supply” as envisaged under section 2(30) of the CGST Act, 2017. Here also, we find the Appellant’s argument cogent and compelling.
It is also opined here that out of the two supplies, i.e. supply of UPS Systems and supply of services like erection, commissioning, installation, testing, etc., it would not be proper to claim one of the supplies as the ‘Principal Supply” as envisaged under section 2(90) of the CGST Act, 2017, as both the supplies i.e. the supply of goods and the supply of services are equally important and indispensable, because in the absence of any of these two, the objective and purpose of the subject agreement cannot be achieved. Thus, even this key requirement of the ‘Composite Supply’ is not satisfied by the supplies under question. The AAR based its ruling on the sole premise that the supply of the said goods as well as the services have been agreed to be provided by the Appellant to the Recipient under the single contract, thereby concluding the supplies under question to be the composite supply without appreciating the fact that the said supply of goods and services are made by the two distinct taxable persons, i.e. Maharashtra (GSTIN) unit and the Delhi (GSTIN) unit of the Appellant. Here, it is stated that just because some supplies of goods or services or both have been included, or made part of, the one single agreement/contract, as per the convenience of the parties entering into the said agreement, does not make those supplies as composite supply. It is further opined that for any supplies to qualify as the composite supply, it has to satisfy the various essential conditions, which have been discussed herein above. In the present facts and circumstances of the case, it is observed that supplies under question do not satisfy those essential conditions stipulated for the Composite Supply under section 2(30) of the CGST Act, 2017.
Thus, in view of the above discussions, it is observed that the observation made by the Advance Ruling Authority, against which the Appellant has preferred the present appeal, is not proper and legal, and hence the same warrants to be set aside. Thus, we pass the following order:
We, hereby, modify the AAR ruling to the extent that the supplies under question would not be considered as “Composite Supply” in terms of section 2(30) read with section 2(90) of the CGST Act, 2017.
FULL TEXT OF ORDER OF APPELLATE AUTHORITY OF ADVANCE RULING,MAHARASHTRA
PROCEEDINGS
(under Section 101 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017)
At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST 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 MGST Act.
The present appeal has been filed under Section 100 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as “the CGST Act and MG5T Act”] by M/s. Vertiv Energy Private Limited (herein after referred to as the “Appellant”) against the Advance Ruling No. GST-ARA-17/2019-20/B-107 dated 04.10.2019.
Brief Facts of the Case
1.1 The Appellant having its corporate head office at Mumbai is, inter-olio, engaged in the manufacture of various types of UPS systems, which serve as an alternate source of power for a specific period of time in the event of power failure. The Appellant also supplies installation commissioning and maintenance and other services to its customers.
1.2 A UPS is typically used to protect hardware such as computers, data centers, telecommunication equipment or other electrical equipment where an unexpected power disruption could cause injuries, fatalities, serious business disruption or data loss. UPS units range in size from units, designed to protect a single computer without a video monitor, to large units, powering entire data centers or buildings.
1.3 The appellant is manufacturing UPS and its components at its manufacturing unit located at Ambernath and Pune in the state of Maharashtra. Some of the UPS components like battery and cables are either manufactured by the applicant or purchased by the applicant from third party vendors. The applicant has, inter alia, obtained GST registration in the state of Maharashtra (“Maharashtra GSTIN”) and New Delhi (“Delhi GSTIN”).
Contract with DMRC for supply of UPS
1.4 The Appellant entered into a contract with Delhi Metro Railway Corporation (“DMRC”) for supply, installation, testing, and commissioning of UPS systems (hereinafter referred to as “the said contract”) on 20.1.2014. The said contract, though entered in the pre-GST regime, is an on-going contract and the appellant has been making supplies to DMRC in the GST regime as well.
1.5 The scope of work agreed with DMRC provides the detailed description of various goods and services to be supplied by the applicant. The relevant portion of the contract with DMRC is extracted as under:
“3. SCOPE OF THE WORKS, SUPPLY AND SERVICES
3.1 General
3.1.1 The scope of the works includes but not limited to supply, manufacture, inspection, packing, shipping, transportation, storage, delivery, handling, insurance, installation, interfacing, integration, testing & commissioning, maintenance support, spares, special tools, test equipment, training, documentation and providing DLP for the UPS system.
3.2 Scope of supply
3.2.1 The Uninterruptible Power Supply (UPS) system shall include, but not be limited to the following: –
