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of <h1>Supply Classification & Taxability in Plant Machinery Contracts: CGST & SGST Applicability, Invoice Requirements, Value Determination</h1> <h3>In Re: M/s. HYT SAM INDIA (JV)</h3> In Re: M/s. HYT SAM INDIA (JV) - 2019 (23) G.S.T.L. 277 (A. A. R. - GST) Issues Involved:1. Classification of the supply under the contract.2. Applicability of the benefit of Sl.No.3 (v) (a) and Sl.No. 3(vi) (a) of Notification No. 11/2017-C.T. (Rate) as amended.3. Requirement to raise invoices on completion of events/milestones and remit tax.4. Value on which invoices have to be raised in case of event/milestone invoicing.Detailed Analysis:1. Classification of the Supply:The contract involves the 'Modernization of ICF for Complete Switch-over to Stainless steel coach manufacturing-Phase II,' which includes various works such as construction of sheds, provision of machinery and plant (M&Ps), retro-fitment, reconditioning, re-sitting, disposal of obsolete M&Ps, wet leasing of M&Ps, and associated electrical works on a turnkey basis.The supply in the agreement for erection, commissioning, installation of plant and machinery for a factory to manufacture stainless steel coaches (covering Schedule I, II, III) is a composite supply of works contract. This is because it involves multiple taxable supplies bundled together for an immovable property, making it a composite supply of services as per Schedule II of the CGST Act 2017.The supply for wet leasing of Robotic spot welding machines and Laser cutting and welding machines (Schedule V(a) and V(b)) is a composite supply of services but not a works contract, as it does not involve immovable property or transfer of title of goods.The Comprehensive Annual Maintenance Contract (CAMC) of Mechanical & Electrical under Schedule VI (a) and VI (b) is also a composite supply of services related to works contract maintenance.2. Applicability of Notification No. 11/2017-C.T. (Rate):The supply in the agreement for erection, commissioning, installation of plant and machinery for a factory to manufacture stainless steel coaches (covering Schedule I, II, III) qualifies as a composite supply of works contract for original works of construction, erection, commissioning, or installation pertaining to railways. Therefore, it is taxable at 6% CGST and 6% SGST as per Sl.No. 3(v)(a) of Notification No. 11/2017 -C.T. (Rate) with effect from 22.08.2017. Prior to this date, it was taxable at 9% CGST and 9% SGST.The supply for wet leasing of Robotic spot welding machines and Laser cutting and welding machines (Schedule V(a) and V(b)) does not qualify for the benefit under Sl.No. 3(v)(a) of the notification as it is not a works contract.The CAMC of Mechanical & Electrical (Schedule VI (a) and VI (b)) also does not qualify for the benefit under Sl.No. 3(v)(a) as it pertains to maintenance, which is not covered under this provision.The contract for the erection, installation, commissioning of a factory for ICF, Chennai, which will manufacture stainless steel coaches, does not qualify for Sl.No. 3(vi)(a) of the notification as it is an activity of industry.3. Requirement to Raise Invoices on Completion of Events/Milestones:The question of whether the applicant is required to raise invoices on completion of events/milestones and remit the tax is not covered under the questions on which Advance Ruling can be sought as per Section 97(2) of the CGST Act. Therefore, this issue is not examined in the ruling.4. Value on Which Invoices Have to Be Raised:The value of supply for each invoice raised by the Applicant should be the transaction value as per the agreements. This includes amounts specified in Section 15(2) and excludes discounts specified in Section 15(3) of the CGST Act 2017.Rulings:1. The supply in the agreement for erection, commissioning, installation of plant and machinery for a factory to manufacture stainless steel coaches (covering Schedule I, II, III) is a composite supply of services. The supply in the agreement for wet leasing of Robotic spot welding machines and Laser cutting and welding machines (Schedule V(a) and V(b)) is a composite supply of services. The supply in the agreement for CAMC of Mechanical & Electrical (Schedule VI (a) and VI (b)) is a composite supply of services.2. The supply in the agreement for erection, commissioning, installation of plant and machinery for a factory to manufacture stainless steel coaches (covering Schedule I, II, III) is taxable at 6% CGST and 6% SGST as per Sl.No. 3(v)(a) of Notification No. 11/2017 -C.T.(Rate) with effect from 22.08.2017. Prior to this, it was taxable at 9% CGST and 9% SGST. The supply in the agreement for wet leasing of Robotic spot welding machines and Laser cutting and welding machines (Schedule V(a) and V(b)) and CAMC of Mechanical & Electrical (Schedule VI (a) and VI (b)) are not eligible for Sl.No. 3(v)(a) of this notification.3. The value of supply for each invoice raised by the Applicant will be the transaction value as per Section 15 of the CGST Act 2017.4. The Authority cannot give a Ruling on the supply for up-rooting and disposal of condemned M&Ps (Schedule IV) as the Applicant is a recipient.5. The Authority cannot give a Ruling on the question of when to raise invoices as per Section 97(2) of the CGST Act.
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