GST Ruling: Composite Supply of Submersible Pump Sets, Applicable Tax Rate

The ruling determined that the supply in question qualifies as a "Composite Supply" with the principal supply being the submersible pump sets. As such, the applicable GST rate is that of the principal supply, which is the rate applicable to the submersible pump sets. The ruling clarified that the provisions of the relevant notifications regarding GST rates for works contracts do not apply in this scenario as the supply does not pertain to immovable property.

---

---

Issues Involved:
1. Determination of the applicable GST rate for the manufacture and supply of submersible pump sets and accessories with installation, electrification, and energisation under the Ganga Kalyana scheme.
2. Classification of the supply as a "Works Contract" under Section 2(119) of the CGST Act 2017.
3. Determination of whether the supply qualifies as a "Composite Supply" under Section 2(30) of the CGST Act 2017.
4. Identification of the recipient entities as "Government Entities" under Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017.

Detailed Analysis:

1. Determination of the Applicable GST Rate:
The applicant, a proprietary concern registered under the GST Act, sought an advance ruling on the applicable GST rate for the manufacture and supply of submersible pump sets and accessories along with installation, electrification, and energisation under the Ganga Kalyana scheme. The applicant contended that their supply falls under "Works Contract" as per Section 2(119) of the CGST Act 2017, classifiable under SAC 9954, and attracts a GST rate of 12% (6% CGST + 6% SGST) as per Notification No. 11/2017-Central Tax (Rate) dated 28-06-2017. The applicant relied on a ruling by the Advance Ruling Authority, Jaipur, Rajasthan in the case of M/s. Kailash Chandra, which confirmed a 12% tax rate on a composite contract involving the supply, design, installation, commissioning, and testing of solar-based water pump systems to government entities.

2. Classification as a "Works Contract":
The term "Works Contract" under Section 2(119) of the CGST Act 2017 involves a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration, or commissioning of any immovable property wherein transfer of property in goods is involved. The applicant's contract involved the supply of submersible pump sets and accessories, along with installation, electrification, and energisation in already drilled bore wells, which are used for agricultural purposes by small and marginal landowners. The ruling examined whether the supply qualifies as a "Works Contract" and concluded that the contract does not relate to immovable property, as the bore wells are not constructed by the applicant, and the submersible pumps are movable property. Therefore, the supply does not qualify as a "Works Contract."

3. Qualification as a "Composite Supply":
"Composite Supply" is defined under Section 2(30) of the CGST Act 2017 as a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, with one being the principal supply. The applicant's supply involves goods (submersible pump sets) and services (installation, electrification, and energisation). The principal supply in this case is the supply of goods (submersible pump sets), making the supply a "Composite Supply." The tax liability on a composite supply is governed by Section 8 of the CGST Act 2017, where the applicable GST rate is that of the principal supply.

4. Identification as "Government Entities":
The entities receiving the supply, such as M/s. Dr. B.R. Ambedkar Development Corporation Limited and others, were established by the Government of Karnataka with 100% share capital and control to carry out public welfare functions. These entities are covered under the definition of "Government Entity" as per Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended by Notification No. 31/2017-Central Tax (Rate) dated 13-10-2017, which defines a "Government Entity" as an authority, board, or body set up by an Act of Parliament or State Legislature, or established by any Government with 90% or more participation by way of equity or control, to carry out functions entrusted by the Central Government, State Government, Union Territory, or local authority.

Conclusion:
The applicant's supply does not qualify as a "Works Contract" but as a "Composite Supply" with the principal supply being the submersible pump sets. The applicable GST rate is that of the principal supply, i.e., the submersible pump sets. The ruling emphasized that the provisions of Notification No. 11/2017-Central Tax (Rate) dated 28-06-2017, as amended, are not applicable as the supply is not related to immovable property.

Ruling:
The applicant's supply is a composite supply wherein the principal supply is the supply of goods (submersible pumps). The applicable GST rate is the rate applicable to the principal supply, i.e., submersible pump sets.

---