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Capital Subsidy (90 per cent of Project Capital Expenditure) received by the Applicant is not a subsidy which generally means grant/grant-in-aid or a benefit given to an individual, business or institution, usually by the government, therefore it is liable to GST.

Levy of GST— In the instant case, applicant sought for an advance ruling in respect of the following questions. Q1. Whether Capital Subsidy (90 per cent of Project Capital Expenditure) received by the Applicant as per SIOM Agreement and Escrow Agreement from Odisha Government /ULBs for the Green Field Public Street Lighting System in the State of Odisha is not liable to GST and if liable to GST, then at what rate of GST? Q2. What shall be the GST rate for the balance 10% of the Project Capital Expenditure and O&M Fees received as Annuity Fee over the period of 7 years by the Applicant as per SIOM Agreement considering the Si. No. 3(vi) of the notification No. 11/2017 Central Tax (Rate), dt. 28-06-2017 as amended by Notification No. 31/2017 Central Tax (Rate), dt. 13-10-2017 and corresponding notifications of Odisha State Tax Rate as amended. Q3. What shall be the time for raising GST Invoices for Capital Subsidy and Annuity Fee (consisting of 10% of Project Capital Expenditure and O&M Fee) payable in 7 years? Q4. Whether the rate of tax on the supplies by the sub-contractor to the Applicant shall be 12 % GST (6% CGST and 6 % SGST) in terms of serial no. 3 (ix) of Notification No.11/2017-Central Tax(Rate) dated 28.6.2017 as amended by Notification No.1/2018-Central Tax (Rate) dated 25.01.2018/ Odisha State Tax (Rate) dated 28.06.2017 as amended. Held that— Capital Subsidy (90 per cent of Project Capital Expenditure) received by the Applicant is liable to GST. The GST will have to be paid on the goods at the appropriate rate after classification under the appropriate heading. The supply being undertaken or proposed to be undertaken by the applicant would qualify to be a supply of ‘composite supply’ in terms of definition under Section 2(119) of the Central Goods and Services Tax Act, 2017, where the principal supply is ‘ supply of goods’ not ‘supply of service’. Therefore, question of the applicability of concessional rate of tax in terms of Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017 and as amended does not arise. Since in the subject case there is a ‘composite supply’ where the predominant supply/principal supply is ‘supply of goods’, we are of the opinion that the applicant should raise invoice as per the provisions of Section 31 of the CGST Act, 2017. Notification No.11/2017-Central Tax(Rate) dated 28.6.2017 as amended is applicable for ‘supply of service’. In the instant case, the supply being undertaken or proposed to be undertaken by the applicant would qualify to be a supply of ‘composite supply’ in terms of definition under Section 2 (119) of the Central Goods and Services Tax Act, 2017, where the principal supply is supply of goods’ not supply of service’.