2018 (6) TMI 466 – AUTHORITY FOR ADVANCE RULINGS, ANDHRA PRADESH – 2018 (13) G. S. T. L. 474 (A. A. R. – GST) – Classification of Supply – supply of solar power generating system – Turnkey EPC Contract – split contract for supply of goods and supply of services – Entry 234 of Schedule I of the Notification No. 1/2017- Integrated Tax (Rate), Entry 234 of Schedule I of the Notification No. 1/2017- Central Tax (Rate) both dated 28 June 2017 and Entry 234 of Schedule I of the Notification No. 1/2017-State Tax (Rate) dated 29 June 2017?
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Turnkey EPC Contract – Other EPC Contract – supply of solar power plant under ‘Turnkey EPC Contract’ – Held that:- The scope of work in respect of “Turn key EPC Contract” and “Other EPC Contract” includes civil works, procurement of goods and erection and commissioning. Accordingly, “Turnkey EPC Contracts” and “Other EPC Contracts” are not getting covered under supply of ‘solar power generating system’ under Entry 234 of Schedule I of the N/N. 1/2017-
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tral tax (Rate), dated 28th June, 2017. And the supply of service attracts at the rate specified thereon in Notification No. 11/2017 -Central tax (Rate).
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Supply Contract – the assembly, erection, and ‘commissioning of the solar power plant is undertaken by a third party contractor – Held that:- In this scenario, the goods are supplied by one contractor, and the services were supplied by the other contractor. Therefore the rate of tax applicable for supply of goods as long as it satisfies the condition of being “ device and parts” of the solar power generating system attracts 5% rate of tax as per Entry 234 of Schedule I of Notification No 1/2017 -Central tax (Rate), dated 28th June, 2017.
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Balance of Plant Supply Contract – supply of ‘solar power generating system – What would be nature of supply i.e. composite supply or mixed supply? – Held that:- The nature of transaction falls under composite transaction as both the goods and services are naturally bundled. Even though th
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under Section 31 (4) of the CGST Act/SGST Act read with Section 12(2) thereof? – Held that:- Yes, the time of supply of power plant shall be determined under Section 31 (4) of the CGST Act/SGST Act read with Section 12(2) thereof. – Ruling No. AAR/AP/3O(GST)/2018 In Application No. AAR/05(GST)/2018 Dated:- 8-5-2018 – MR. J. V. M. SARMA, JOINT COMMISSIONER (STATE TAXES), AUTHORITY ADVANCE RULING, ANDHRA PRADESH AND MR AMARESH KUMAR, JOINT COMMISSIONER (CENTRAL TAXES), AUTHORITY FOR ADVANCE RULING, ANDHRA PRADESH For The Present Applicant : Applicant himself attended RULING Mr. Dinesh Kumar Agrawal, R/o #501, ACME Regency, 5m floor, SV Road, Vile Parle (West), Mumbai, Maharashtra (hereinafter also referred as an applicant), is an unregistered taxpayer, is engaged in erection and supply of solar power generating system by making an agreement with his customers, has filed an application on 09,h February 2018. Vide acknowledgement number VPG736416, for seeking advance ruling for the tax ra
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ns by this authority. 1. The Issues raised by the applicant is as follows., Issue No. 1 Whether supply of solar power plant under Turnkey EPC Contract is supply of solar power generating system under Entry 234 of Schedule I of the Notification No. 1/2017- Integrated Tax (Rate), Entry 234 of Schedule I of the Notification No. 1/2017- Central Tax (Rate) both dated 28 June 2017 and Entry 234 of Schedule I of the Notification No. 1/2017-State Tax (Rate) dated 29 June 2017? Issue No. 2 Whether supply of solar power plant under Other EPC Contract is supply of solar power generating system under Entry 234 of Schedule I of the Notification No. 1/2017- Integrated Tax (Rate), Entry 234 of Schedule I of the Notification No. 1/2017- Central Tax (Rate) both dated 28 June 2017 and Entry 234 of Schedule I of the Notification No. 1/2017- State Tax (Rate) dated 29 June 2017? Issue No.3 Whether supply of solar power plant under Supply Contract is supply of solar power generating system under Entry 234 o
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solar power generating system under Entry 234 of Schedule I of the Notification No. 1/2017- Integrated Tax (Rate), Entry 234 of Schedule I of the Notification No. 1/2017- Central Tax (Rate) both dated 28 June 2017 and Entry 234 of Schedule I of the Notification No. 1/2017- State Tax (Rate) dated 29 June 2017? Issue No.6 If the Clarification to Issue No. 5 is negative, what would be nature of supply i.e. composite supply or mixed supply? Issue No.7 Whether contract for assembly, erection, and commissioning of the plant undertaken by the Applicant under a separate contract would be a service contract liable to be taxed under Service heading 9954? Issue No.8 Whether the time of supply of power plant shall be determined under Section 31 (4) of the CGST Act/SGST Act read with Section 12(2) thereof? The Issues raised by the applicant is fit to pronounce advance ruling as they falls ambit of the Section 97(2) (a), (b) and (c), they are as given under (a) Classification of any goods or servic
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t and supply of all equipment/components for the power plant (iii) Assembly, erection, and commissioning (iv) Operations and Maintenance of the plant between 2 to 15 years In Other EPC Contract, the Applicant is required undertake all activities of turnkey projects except civil work. The scope of work typically involves: (i) Designing, procurement and supply of all equipment/components for the || power plant (ii) Assembly, erection, and commissioning In Supply Contract, the Applicant is required to supply the power plant on complete knocked down condition in piecemeal at project site. Customer engages a third party contractor or the Applicant for assembly, erection, and commissioning of the plant under a separate contract. In Balance of Plant Supply Contract, the Applicant is required to supply goods and services stated above, except solar panels. Solar panels procured by the customer are made available by the customer to the Applicant for assembly and erection. Statement of facts as s
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mp; Commissioning B. Equipment and components are delivered at project site and stored at the risk of the Applicant C. Ownership is transferred on successful commissioning of the plant D. Payment is as per milestone or monthly depending on the % of goods delivered at site E. Full payment is released on successful commissioning of the plant with stipulated power generation. F. Cost: a. In the case of Ground Base Solar Project: 20% Civil & Erection & 80% Supply. Roof Top Base Solar Project: 10% Civil & Erection & 90% Supply. For Issue number 2, the statement of facts are as follows… The scope of supply includes: a. Detailed designing of power project b. Procurement and supply at project site i. Solar photovoltaic modules/panels/array ii. Panel mounting structure iii. Solar tracker iv. Meteorological equipment v. Cables vi. Combiner box vii. Solar power conditioning unit viii. Inverter ix. Isolator x. Transformer xi. Switchbox xii. Conductor xiii. Battery xiv. Transmissi
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ii. Battery xiv. Transmission tower xv. Steel/plastic tubes & pipes xvi. SCADA Software b. Equipment and components are delivered at project site and risk is transferred to the customer c. Payment is as per milestone or monthly depending on the % of goods delivered at site d. Full payment is released on successful commissioning of the plant with stipulated power generation. A. Scope of Erection Contract includes: a. Assembly & erection i. Assembly & erection ii. Supply of nut, bolts, fasteners and other miscellaneous materials b. Test & Commissioning B. Risk of Equipment and components are acquired by the Applicant during erection till successful handover of the plant to the customer C. Payment is as per milestone or monthly depending on the % of goods delivered at site D. Full payment is released on successful commissioning of the plant with stipulated power generation. E. Supply contract and Erection contract are two independent contract. However, a. Breach of one con
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ssue number 5, the statement of facts is as follows…. A. The scope of supply includes: a. Civil works i. leveling of ground ii. Wall boundary iii. internal roads iv. concrete foundations for mounting of panel mounting structures v. digging ditch for underground cabling vi. Concrete flooring for inverter/transformer/battery pack, vii. Control room etc. b. Detailed designing of power project c. Procurement and supply at project site i. Panel mounting structure ii. Solar tracker iii. Meteorological equipment iv. Cables v. Combiner box vi. Solar power conditioning unit vii. Isolator viii. Transformer ix. Switchbox ix. Conductor xi. Battery xii. Transmission tower xiii. Steel/plastic tubes & pipes xiv. Pre-fabricated shelter xv. SCADA Software d. Assembly & erection i. Assembly & erection ii. Supply of nut, bolts, fasteners and other miscellaneous materials e. Test & Commissioning B. Equipment and components are delivered at project site and stored at the risk of the Appli
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als iii. Test & Commissioning A. Risk of Equipment and components are acquired by the Applicant during erection successful handover of the plant to the customer. B. Payment is as per milestone or monthly depending on the % of goods delivered at site Full payment is released on successful commissioning of the plant with stipulated power generation. And for Issue number 8, the statement of facts is as follows… The contract stipulated successive payment against successive statements depending on the milestone stipulated in the contract. On analyzing the Issues, with respect to the CGST/SGST Act, rules, and notifications released from time to time, it is to note Entry number 234 of Schedule I ( which are taxable @ 2.5% ) of notification 01/2017 -Central Tax ( Rate), dated :28 h June 2017, is relevant to the Issues raised by apolicant. Entry 234 reads as… S. No. Chapter/Heading/ Sub-heading/Tariff item Description of Goods 234 84 or 85 Following renewable energy devices & parts
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) section 12(2, reads The time of supply of goods shall be the earlier of the following dates, namely:- (a) the date of issue of invoice by the supplier or the last date on which he is required, under sub-section (1) of section 31, to issue the invoice with respect to the supply; or (b) the date on which the supplier receives the payment with respect to the supply: Provided that where the supplier of taxable goods receives an amount up to one thousand rupees in excess of the amount indicated in the tax invoice, the time of supply to the extent of such excess amount shall, at the option of the said supplier, be the date of issue of invoice in respect of such excess amount. On plain reading of the above facts along with provisions of law, for the clarifications sought by the applicant along with rulings are as follows… RULING Issue No:1 Whether supply of solar power plant under Turnkey EPC Contract is supply of solar power generating system under Entry 234 of Schedule I of the Notifica
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ystem under Entry 234 of Schedule I of the Notification No. 1/2017- Integrated Tax (Rate), Entry 234 of Schedule I of the Notification No. 1/2017- Central Tax (Rate) both dated 28 June 2017 and Entry 234 of Schedule I of the Notification No. 1/2017- State Tax (Rate) dated 29 June 2017. Issue No.3: Whether supply of solar power plant under Supply Contract is supply of solar power generating system under Entry 234 of Schedule I of the Notification No. 1/2017- Integrated Tax (Rate), Entry 234 of Schedule I of the Notification No. 1/2017-intergrated Tax (Rate), Entry 234 of Schedule I of the Notification 1/2017-Central Tax (Rate) both dated 28 June 2017 and Entry 234 of Schedule I of the Notification No. 1/2017- State Tax (Rate) dated 29 June 2017 where the assembly, erraction, and commissioning of the solar power plant is undertaken by the Applicant under a separate contract? Ruling : The applicant sought a clarification on the liability of division of contract into two, one is supply of
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ification No. 1/2017- Integrated Tax (Rate), Entry 234 of Schedule I of the Notification No. 1/2017- Central Tax (Rate) both dated 28 June 2017 and Entry 234 of Schedule I of the Notification No. 1/2017- State Tax (Rate) dated 29 June 2017 where the assembly, erection, and commissioning of the solar power plant is undertaken by a third party contractor? Ruling : In this scenario, the goods are supplied by one contractor, and the services were supplied by the other contractor. Therefore the rate of tax applicable for supply of goods as long as it satisfies the condition of being device and parts of the solar power generating system attracts 5% rate of tax as per Entry 234 of Schedule I of Notification No 1/2017 -Central tax (Rate), dated 28th June, 2017. Issue No.5: Whether supply of solar power plant under Balance of Plant Supply Contract is supply of solar power generating system under Entry 234 of Schedule I of the Notification No. 1/2017- Integrated Tax (Rate), Entry 234 of Schedule
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