In Re: M\/s. Membrane Filters (I) Pvt. Ltd.
GST
2018 (10) TMI 684 – AUTHORITY FOR ADVANCE RULING, MAHARASHTRA – 2018 (18) G. S. T. L. 156 (A. A. R. – GST)
AUTHORITY FOR ADVANCE RULING, MAHARASHTRA – AAR
Dated:- 9-7-2018
GST-ARA-06\/2018-19\/B-62
GST
SHRI B.V. BORHADE, AND SHRI PANKAJ KUMAR, MEMBER
\nPROCEEDINGS
\n(under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017)
\nThe present application has been filed under section 97 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 MGST ACT”] by M\/S\/ Membrane Filters(l) Pvt Ltd., the applicant, seeking an advance ruling in respect of the following question.
\n“What is the rate & HSN code of GST applicable (after it's introduction from 1st July 2017) when Extracting water from tube well, passing it through treatment plant of removing unwanted contaminants like Iron fr<\/p>\n
= = = = = = = =<\/p>\n
Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n nine districts in the State of Bihar. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n s) are given for setting up of the drinking water treatment plants meant for human and animal consumptions and in the interest of the Citizen of the country. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n is the rate & HSN code of GST is applicable (after its introduction from 15 July 2017) when Extracting water from tube well, passing it through treatment plant of removing unwanted contaminants like Iron from ground water and eventually lifting it to overhead tank (in short the scheme) that is not only simply assembled at site Where it is a composite sully and assemblies done at Site including their interconnections and the drinking water scheme works purely on SOLAR POWER. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n operating on battery that is charged through solar energy = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n a day or two at site and the finally 5000 Litre PVC tank is kept of the top of the structure. Foundation bolts get tightened provided on the Civil structure. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n work is based on innovative design, engineering and each of the item is engineered and pre-fabricated in the factory and taken to the site and in a particular sequence it is assembled and the entire work is simplified to make it screwdriver technology and simply assembled at site. Since it is having interconnections with individual sub-assemblies and all such subassemblies are finally connected, it is treated as composite supply and the water supply gets started house to house for drinking water. Such system work only on the solar power. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n the licensee of technology of Ultra Filtration membrane based on which we have been producing safe drinking filtration equipment which are very unique and cost effective in nature. The Finance Minister of Govt. of India in the year 2008 gave a special consideration by waiving of Excise duty for the filtration systems made out of such technology. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ot find appropriate GST tax. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n enefit of Notification of service tax if an availed. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n al authority, State or central government in relation to the above-mentioned activity by a consultant or contractor is exempt from the GST. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n curement of domestic equipment and plant for setting up a water project is subject to tax at a rate of 18 percent. This Will lead to overall increase in the capital expenditure cost for the client. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n o becomes cost at the time of procurement of goods – cement, steel, etc -from traders instead of manufacturers by the contractors for the purpose of construction works. Due to the change in tax regime there is marginal increase in the cost saving available to the contractor and client. GST is a new born baby which replaces a 60-year-old tax regime in India. Once the Act becomes more mature with clearer understanding, the entire industry is going to benefit from the new tax regime. The Indian Government is currently refining the GST Act and, on the basis of industry representation, lots of amendments have been made in the last six months. On a positive note, we can expect that over time the overall cost for the infrastructure projects will decline. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n sions made by the applicant and the department. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ies are carried out with the help of nuts. Prefabrication is done in the factory using standard steel structures and as per engineering carried out in each of the component and only final assembly is carried out at site and the finally a 5000 Litre PVC tank is kept on the top of the structure. Foundation bolts get tightened provided on the civil structure. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ntract. Here it would not be out of place to mention that the applicant is claiming that the work performed by them are 'water treatment schemes' and not 'water purification schemes'. In their submissions they have mentioned that “…..when Extracting waterfront tube well, passing it through treatment plant of removing unwanted contaminants like Iron from ground water and eventually lifting it to overhead tank (in short the scheme)…..”. These works would be covered under Sr. No. 3, Column 3 (iii) of Notification No. 11\/2017-Centra1 Tax (Rate) dated 28.06.2017. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ……………….; = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n","protected":false},"excerpt":{"rendered":" In Re: M\/s. Membrane Filters (I) Pvt. Ltd.GST2018 (10) TMI 684 – AUTHORITY FOR ADVANCE RULING, MAHARASHTRA – 2018 (18) G. S. T. L. 156 (A. A. R. – GST)AUTHORITY FOR ADVANCE RULING, MAHARASHTRA – AARDated:- 9-7-2018GST-ARA-06\/2018-19\/B-62 GSTSHRI B.V. BORHADE, AND SHRI PANKAJ KUMAR, MEMBER PROCEEDINGS (under section 98 of the Central Goods and Services … Continue reading “In Re: M\/s. Membrane Filters (I) Pvt. Ltd.”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-14438","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/14438","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=14438"}],"version-history":[{"count":0,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/14438\/revisions"}],"wp:attachment":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=14438"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=14438"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=14438"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
For full text:-Visit the Source <\/a><\/p>\n
\nScheme is comprising of:
\n1) Drilling of tube well.
\n2) Solar panels & its system to run the pump, and take the water through treatment plant and reach water to 5.95 overhead tank at 7 meter height
\n3) Iron Removal treatment plant
\n4) Mild Steel Staging (Steel Structure) for supporting overhead tank of 5000 Litre capacity & enthusing treatment plant
\n5) RCC plinth
\n6) Prefabricated GI Sheet enclosure
\n7) Distribution line of GI pipes for house to house connections of Size 80 mm 40 mm
\n8) Automatic multiport valves operating on battery that is charged through solar energy
\n9) House to house connections
\nNature & scope of work:
\nIt's an assembly work involving drilling of tube well, construction of civil plinth at site, supply of pre-fabricated structure, Iron removal treatment plant and the solar system comprising of solar panel, its mounted steel structure, Battery operation to run the night light for security and operate the treat<\/p>\n
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\nNow we seek your guidance on what is the rate & HSN code of GST is applicable (after it's introduction from 1st July 2017) when Extracting water from tube well, passing it through treatment plant of removing unwanted contaminants like Iron from ground water and eventually lifting it to overhead tank (in short the scheme) runs on solar power. Our technology has been not only vetted but recognized as one of the innovation by department of Rural Drinking Water through a wing of CSIR-GOI in the year 2015 and published through the Compendium of Innovative Technologies.
\nIssues Involved as on date:
\nThe contract is issued by Public Health Engineering Department (PHED) of Bihar Government and till now (30h June 2017) they have been deducting VAT against each of supply and the work carried out and we have been filing VAT returns in <\/p>\n
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\nFollowing explanation clearly spell out that the total supply has been in two parts with sub items where SOLAR POWER is the pivot point since the scheme works only when there is solar power. SO also each sub system is billed separately and each item is paid separately based on its completion and final bill is paid once the scheme is commissioned. We have attached detailed explanation with the kind of billing that is carried out at each item and each sub assembly work
\nNature of Work,
\nDesign, Construction, Supply<\/p>\n
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\n1.9425
\n9.
\nHouse to house connections… 100 nos
\n1.75
\nNature & scope of work:
\nIt's supply, erection and commissioning of a house to house drinking water supply schemes being installed in rural part of villages in the state of Bihar. These schemes operate of a specially developed technology and it exclusively work only on SOLAR POWER. Purchase of the items are done in the form of composite supply where each sub-assembly is supplied and the assembly work of various sub-assemblies and thereafter integration of such sub-assemblies together is done at site in a rural village allotted by the local Govt.
\nTube Well:
\nA tube well is dug in the ground and thereafter PVC pipes are inserted and assembled in the tube well by putting gravel around the pipes with strainer assembly at the bottom end of the tube well. Thereafter flushing of the tube well is done by an air compressor to ensure smooth supply of water flowing out. Once<\/p>\n
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\nIt's purely assembly work done at site by our own trained and employees
\n4. G I Sheet enclosure assembly en-housing treatment plant:
\nThis is assembly and fixing of GI Sheet around the bottom part of steel structure in which assembly of treatment plant is carried out. This is also a screwdriver technique used since there is no electricity available to carry out such work.
\nPayment of this item is also done once assembly work is carried out at site.
\n5. Solar Panel Assembly: Designing and engineering of Solar system is one of the specialties of this technology and such large size of panels are assembled and interconnected once the structure is ready. Once this is done on the top of the Structure, safety railing taken to site in prefabricated manner are assembled using appropriate Size of nuts and bolts as seen in above pictu<\/p>\n
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\nSubmissions on 06.07.2018
\nWe have conveyed you our plea & looking forward kind consideration on the following lines that will help to serve to the masses “safe drinking water” using INNOVATIVE solutions.
\n1. Reaching safe drinking water to the bottom of the pyramid of our society.
\n2. Motivate Innovators and help innovations to exhibit its performance in the field &
\n3. Proving masses (society of our country) that Government is fully aware of such i<\/p>\n
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\n2. Subsequent innovation that we did based on our exhaustive experience in the field working, Department of Drinking Water & Sanitation through CSIR body recognize in the year 2015 as another innovation created by our team in the Company.
\n3. Benefit Of such innovative technology has reached to the poorest of poor in the country and that too in rural part of India in recent past.
\n4. These Compact Drinking water schemes are NON RO base (NON REVERSE TECHNOLOGY BASE) solution which are absolutely cost effective and such schemes are being implemented through joint funding of State & Central Government of India.
\n5. Central Government till date h<\/p>\n
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\n10. Our humble request has been just not to find somehow a place and squeeze in such technology under one of the OLD prevailing laws and give somehow a treatment and close the chapter but to find unique justice to such innovative solutions.
\n11. Our submission is to bring such INNOVATIONS to the kind attention of apex bodies of GST regime like yours that will give justice and motivate the innovators in the country.
\nStatement containing the applicant's interpretation of law and\/or facts, as the case may be, in respect of the questions(s) on which advance ruling is required
\nIn our opinion do assembly of various parts of which one of them is manufactured by us. The main item which makes this product fit for marketing is Solar Panel which is the costlier item amongst all parts So this assembly is a composite supply and product is dependent on Solar Panel.
\nSolar Panel should be applicable to the entire assembly
\n03. CONTENTION – AS PER THE CONCERNED OFF<\/p>\n
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\n25\/2012-service Tax dated 20.06.2012
\n5] (A) classification of service\/services as applicable.
\nCentrifuges, including centrifugal dryers, filtering or purifying machinering & apparent, for liquids for filtering, or purifying water, household filters etc.
\n(b) Rate of service tax as applicable to services provided.
\n12.36%
\nDetails of benefits of notification of central excise tax if availed.
\n
\n6] Copies of Advance ruling applications\/orders if any obtained you under the provisions of central excise or service to the sales tax & there presents status in your company related company or sister concern.
\nForm GST ARA-01, Advance Ruling
\n7] Copy of show cause Notice\/ Adjudication orders in respect of central Excises or service tax if any issued during the last five years, in case of your company related company or sister concern.
\nNo.
\n8] Cases of violation of central excises\/ services tax if any booked during last five years.
\nN<\/p>\n
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\n2) Services provided in relation to the above-mentioned activity by the local authority, state or central government to the society\/end-user shall also exempt from the GST.
\n3) Work contract services fall under the Composite supply and includes activity in relation to construction, erection, commissioning, installation, completion, fitting-out, repairs, maintenance, renovation, etc. Such activities Shall be subject to GST at a rate of 12 percent and shall become the cost of project to the local authority.
\n4) However rate of GST will become “nil” when the value of goods supplied under the Work contract services shall not exceed more than 25 percent of the total value of work contract services.
\n5) Any other construction services shall be chargeable at a rate of 18 percent.
\n6) Imported equipment and plant required for setting-up drinking water<\/p>\n
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\n2) Under the old tax system, counter vailing duty (CVD) and Special additional duty (SAD) were exempted on the imported equipment and machinery required for water projects. The water project falls under category of “project imports” and special privilege was given by way of exemption from tax by the government. Under GST regime, however, any import under Project import category shall be subject to tax at a rate of 18 percent. This will lead to overall increase in the capital expenditure cost for the client.
\n3) Services provided in relation to the construction, erection, commissioning, installation, completion, fitting-out, repairs, maintenance, renovation or alteration, etc., are now subject to GST at a rate of 12 percent in general. However, under the old tax regime construction services <\/p>\n
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\nHSN Code
\nDescription
\nRate (%)
\nEffective From
\nCess (%)
\nRelated Export\/Import HSN Code
\n2201
\nWater (other than aerated, mineral, purified, distilled, medicinal, ionic, battery, demineralized and water sold in sealed container]
\nNIL
\n28\/0<\/p>\n
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\nFrom the submissions made by the applicant we find that the issue pertains to a contract entered into by the applicant with the Public health Engineering Department, Government of Bihar. Vide letter dated 31.10.2014, the Executive Engineer of the Public health Engineering Department, Purnea, Bihar had informed the applicant that their bid in respect of their tender for the work of “Design, Construction, Supply and Commissioning of 200 Mini Piped Water Supply Schemes with solar powered pumps and suitable treatment plants (aeration and activated carbon based) for removal of excessive iron from the Iron affected habitations of 9 districts viz……. on TURNKEY basis with 3 months trial runs after commissioning and comprehensive of 60 months after successful completion of trial run period” had been approved.
\nThus from the same it is clearly seen that the applicant has been awarded a contract for supply of water after removal of excess iron <\/p>\n
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\nG I Sheet enclosure assembly en-housing treatment plant: This consists of assembly and fixing of GI sheet around the bottom part of steel structure in which assembly of treatment plant is carried out.
\nSolar Panel Assembly: Large size Solar panels are assembled and interconnected once the structure is ready. Once this is done on the top of the structure, safety railing taken to site in prefabricated manner are assembled using appropriate size of nuts and bolts.
\nTreatment plant: This is also pre-fabricated in their factory as per design and assembled at site as per the drawings. This is connected with interconnecting piping and CPVC<\/p>\n
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\nIn view of the above discussions and also in view of the submissions made by the applicant, we find that the work done by them is a composite supply which attracts the provisions of Notification No. 11\/2017-Central Tax (Rate) dated 28.06.2017. The said Notifications has specified the rate of central tax to be levied on Intra State supply of services of description specified in Column 3 of the Table in the said <\/p>\n
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\n (c) pipeline, conduit or plant for (i) water supply (ii) water treatment, or (iii) sewerage treatment or disposal.
\n6
\nProvided that where the services are supplied to a Government Entity, they should have been procured by the said entity in relation to a work entrusted to it by the Central Government, State Government, Union Territory, or a local authority, as the case may be.
\nA plain reading of Sr. No. 3, clause (iii) reveals that 'composite supply of WCS supplied by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of, pipeline, conduit or plant for (i) water supply (ii) water treatment, or (iii) sewerage treatment or disposal attracts a tax rate of 6% each of CGST and SGST. However, the benefit of 12% tax rate would be available to the applicant only if the Works Contract services provided by them are Composite supply of works contract as defined in clause (119) of section <\/p>\n
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