Classification of service- The present appeal has been filed by the appellant against the Advance Ruling order.
Appellant is a proprietorship concern engaged in providing products and services in energy conservation, renewable energy sources, water infrastructure and water treatment project management. The appellant is engaged in supply of solar energy-based products under various contracts and on the basis of purchase orders from customers with or without installation service.
The Appellant has claimed that they are engaged in supply of solar energy based products under various contracts and on the basis of purchase orders from customers they supply these products with or without installation service.
The appellant has sought advance ruling as to the classification of the goods proposed to be supplied by them and the rate of GST applicable on different types of sale (supply) of such solar energy based products such as Solar Water Pumping System as a whole or sale of one of the specified products on standalone basis or sale of the products under different combinations to be undertaken by them and also supply of parts of the system along with supply of installation service relating to such system.
The Advance Ruling Authority in the instant case had held that the instant supply comprising supply of goods in the form of solar energy based bore well water pumping system alongwith installation and commissioning of such water pumping system is a composite supply of Works contract attracting GST 18% in terms of entry SI. No. 3 of Notification No. 11/2017-Central Tax (Rate), dated 28.06.2017.
However, the ruling that the composite supply of goods and services in the instant case deserves to be classified as works contract service is not supported by legal position which has been correctly interpreted by the Authority for Advance Ruling for the State of Uttarakhand in the case of M/s Premier Solar Systems Pvt. Limited by holding that the supply of solar irrigation water pumping system along with design, erection, commissioning and installation would constitute a composite supply attracting GST @ 5% on goods portion and GST @ 18% on services portion as prescribed in the relevant entry of the notification.
Held that- This authority observed that the effective rate of GST on supply of Goods and Services in relation to the Solar Power Based Devices upto 30.09.2021 is as follows:-
(a) 5% on value of goods where the value of goods is to be taken as 70% of the gross consideration arid
(b) 18% on the value of services where the value of services is to be taken as 30% of the gross consideration.
Hence, the effective rate of GST for the composite supply will work out to 8.9% [(5% x 70%) plus (18% x 30%)]. However, with the amendments effected vide Notification No. 06/2021-Central Tax (rate) dated 30.09.2021 and Notification No. 08/2021-Central Tax (rate) dated. 30.09.2021, the rate of tax on goods portion stands increased from 5% to 12% and accordingly, the effective rate of GST for the-period post 30.09.20121 will stand increased to that extent.