2018 (12) TMI 1277 – AUTHORITY FOR ADVANCE RULINGS WEST BENGAL – TMI – Classification of supply – rate of tax – Composite Contract or Works Contract? – tender received from the Indian Railways for retro-fitment of Twin Pipe Air Brake Systems on wagons – principal supply – Twin Pipe Air Brake Systems or the supply of services of fitting these goods to the wagons?
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Held that:- The contract referred to by the Applicant is that of a composite supply within the meaning of Section 2(30), where the Twin Pipe Air Brake Systems are the Principal Supply as defined under Section 2(90) ibid. The entire contract value is, therefore, taxable at the rate applicable for supply of Twin Pipe Air Brake Systems – Twin Pipe Air Brake System is classifiable under Tariff Head 8607 21 00 [Parts of Railway.. ..Air Brakes and part thereof] which is taxable @ 5% under Serial No. 241 of Schedule I of Notification No. 01/2017 – CT (Rate) dated 28/06/2017 with no benefit of refund of the unutilized input tax
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ons, seeks a Ruling as to whether such activity under contract is to be treated as Composite Contract or Works Contract, and If it is determined to be a Composite Contact, whether the Principal Supply will be the supply of the Twin Pipe Air Brake Systems or the supply of services of fitting these goods to the wagons, and what should be the appropriate classification of the supply and rate of tax. Advance Ruling is admissible on these questions under Section 97(2) (a), (e) & (g) of the CGST / WBGST Act, 2017 (hereinafter referred to as the GST Act ). The Applicant further submits that the question raised in the Application is neither decided by nor pending for decision before any authority under any provisions of the GST Act. The officer concerned raises no objection. The Application is, therefore, admitted. 2. The Applicant submits that the scope of work conforms to the requirements of the Railway Technical Bulletin. The materials will be supplied by the Applicant as per the RDSO s
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contract value, and, hence, should be treated as the predominant element of the supply. The service of fitting the brake to the wagon, the Applicant submits, is ancillary to the supply of these goods. 4. The contract is for retro-fitment of twin pipe air brake system on wagons. Retro-fitment of twin pipe air brake system involves supply of goods, the air brake system, and supply of service for fabrication and assembling of the air brake system on the wagons. The term retro-fitment indicates the wagons that have otherwise been in operation are being upgraded by fitment of the twin pipe air brake system. Section 2(119) of the GST Act defines works contract as a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such co
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course of business. 6. In the context of the contract, the supply of the service of fitting the Twin Pipe Air Brake Systems to the wagon cannot be made unless the goods have already been supplied. The supply of services of the fitting is, therefore, dependent upon and ancillary to supply of the Twin Pipe Air Brake Systems. Predominant supply is, therefore, of the Twin Pipe Air Brake Systems, which constitutes essence of the contract. 7. Section 2(30) of the GST Act defines composite supply as a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply . Again, Section 2(90) of the GST Act defines principal supply as the supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part of t
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