Section 101 of the CGST Act, 2017— Rate of Tax—The appellant filed an application on 24.11.2017 before the Karnataka Authority for Advance Ruling under Section 97 of CGST/KGST read with Rule 104 of CGST/ KGST Rules, 2017 in form GST ARA-01, seeking a ruling on the following questions:
a. Whether supply of turnkey Engineering, Procurement & Construction (EPC) Contract for construction of a solar power plant wherein both goods and services are supplied can be construed to be a composite supply in terms of Section 2(30) of the CGST Act, 2017
b. If yes, whether the principal supply in such case can be said to be of “Solar Power Generating System”, which is taxable at 5% GST,
c. Whether, benefit or concessional rate of 5% on Solar Power Generation System and parts thereof would also be available to sub-contractors.
Held that :- In view of our findings and discussions as above, the Ruling dated 21.03.2018 of the Karnataka Authority for Advance Ruling is modified as under:
a) The supply of the PV module which is the major component of the Solar Power Plant is not naturally bundled with the supply of the remaining components & parts of the Solar Power Plant and the supply of the services of Erection, Installation and Commissioning of the Solar Power Plant.
b) The supply of PV module is a distinct transaction from the supplies in contract in question as it is the owner whose responsibility it is to procure and supply the PV module. This PV module is to be supplied as free issue material over and above the plant being supplied by the contractor. The owner is responsible for transportation of the PV module from the point of origin till plant site and he bears the other risks and rewards of ownership. The PV module which is procured by the Project owner on High Sea Sale basis and imported by availing Customs duty exemptions and later supplied to the Appellant as a free issue for use in the setting up of the Solar Power Plant.
c) The supply of the remaining portion of the contract in question by the Appellant Which involves the supply of the balance components and parts of the Solar Power Plant and the supply of services of Erection, Installation and Commissioning of the Solar Power Plant is viewed as a ‘composite supply’ as the supply of goods and services are naturally bundled.
d) The tax liability on this portion of the contract in question (other than PV module) which is termed as a ‘composite supply’ will be determined in terms of Section 8 of the CGST Act, 2017 wherein the rate applicable to the dominant nature of the supply will prevail.
The Appeal is disposed off in the above manner. [2018] 4 TAXLOK.COM 100 (AAAR-Karnataka)