Composite supply of LED street lights treated as goods, so concessional works-contract GST was denied

A contract for supply, installation, operation and maintenance of LED street lights and SCADA system was held not to be a works contract because the LED lights and fixtures were detachable and did not constitute immovable property. As the bundle was treated as a composite supply with the principal supply being goods, the concessional GST entry for works-contract services did not apply. The applicable tax was the tariff rate for the goods supplied, with LED lights and fixtures taxable at 12% GST.

---

---

Issues: (i) Whether the contract for supply, installation, operation and maintenance of LED street lights and SCADA system was a composite supply of works contract eligible for concessional GST under Entry 3(vi)(a) of Notification No. 11/2017-Central Tax (Rate); (ii) What rate of GST applied if the contract was not covered by that entry.

Issue (i): Whether the contract for supply, installation, operation and maintenance of LED street lights and SCADA system was a composite supply of works contract eligible for concessional GST under Entry 3(vi)(a) of Notification No. 11/2017-Central Tax (Rate).

Analysis: The contract involved supply of goods and services bundled together, but the predominant element was supply of LED lights and fixtures. The LEDs and fixtures were found to be detachable without damage to the poles and therefore not immovable property. Since works contract under section 2(119) requires a contract for work on immovable property, the supply did not satisfy that definition. The entry relied upon covered composite supply of works contract by way of services and not a composite supply where principal supply was goods.

Conclusion: The contract was not covered under Entry 3(vi)(a) of Notification No. 11/2017-Central Tax (Rate). The answer was in the negative.

Issue (ii): What rate of GST applied if the contract was not covered by that entry.

Analysis: Since the principal supply was held to be goods, GST was to be charged at the tariff rate applicable to the goods supplied. LED lights or fixtures were classified under the GST tariff heading for lighting fittings and were taxable at 12%.

Conclusion: The applicable GST rate was 12%, comprising 6% CGST and 6% SGST.

Final Conclusion: The ruling denied the claimed works-contract classification and held that the transaction was a composite supply with principal supply of goods, attracting the tariff rate applicable to the goods.

Ratio Decidendi: A contract is not a works contract unless the supply relates to immovable property; where the principal supply in a composite bundle is goods and the goods are removable without damage to the underlying structure, concessional treatment reserved for works-contract services does not apply.

---