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Turnkey EPC contract is falls under ‘composite supply’

Shanti Prime Publication Pvt. Ltd.

Section 101 of the Central Goods and Services Tax Act, 2017—Rate of tax—the Appellant sought clarification in respect of the following:
a. Whether contract for supply of/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 Central Goods and Services Tax 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% of solar power generation system and parts thereof would also be available to sub-contractors
Held that :- Q.1 Whether supply of turnkey Engineering, Procurement and 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 Central Goods and Services Tax Act, 2017?
A. 1. The Appellant poses before us to decide if the Engineering, Procurement and Construction contract falls within the definition of ‘composite supply’ as found in the GST Act. The question is answered in the positive as supply of the said turnkey EPC contract is a ‘composite supply’ u/s.2(30) of the CGST Act, 2017. The said composite supply falls within the definition of works contract u/s.2(119) of the CGST Act, 2017.
Q.2. If yes, whether the Principal Supply in such case can be said to be ‘solar power generating system’ which is taxable at 5% GST?
Ans. We have treated the transaction as a ‘Composite supply’ and a works contract falling u/s. 2(119) of the CGST Act, 2017 and Para 6 of SCHEDULE II [ACTIVITIES TO BE TREATED AS SUPPLY OF GOODS OR SUPPLY OF SERVICES] treats “works contracts” u/s 2(119) as supply of ‘services’. In view thereof, there arises no occasion to go into the issue of ‘principle supply’. We proceed to the third question.
Q.3. Whether benefit of concessional rate of 5% of solar power generation system and parts thereof would also be available to sub-contractors?
A.3 In the absence of any documents before us, we would not be able to deal with this question in the present proceedings.
[2018] 4 TAXLOK.COM 80 (AAR-Maharashtra)