2021 (4) TMI 617 - AAR - GST

Court ruling emphasizes importance of comprehensive documentation for concessional tax rates

In Re: M/s. Apar Industries Limited

The ruling concluded that due to the applicant's failure to submit essential documents such as the contract/agreement/tender, it was not possible to ... Applicability or determination of liability to pay Tax - Solar HT XLPE & LT XLPE Cables - availability of benefit of concessional rate of GST @ 5% - Entry Sr.No.234 of the Schedule-I to Notification No.1/2017-Integrated Tax (Rate) - non-submission of various details - HELD THAT:- In the event of non-submission of the aforementioned documents by the applicant, it would not be possible for us to take a decision in the matter since the issue in hand covers supply of goods such as cables for the Solar Power Generating System and after going through the subject portion mentioned in the amendment of the original purchase order dated 25.12.2018, there appears to be a distinct possibility of supply of services being involved in the instant case, along with the supply of goods and in such an eventuality, the nature of the transaction as well as the aspect of GST liability thereon are likely to be completely different. There is also every likelihood of such supply of goods i.e. XLPE cables for Solar Power Generating System being accompanied by services such as assembly, installation of the cables with all fittings and accessories etc. In the instant case, we are not in a position to take any decision on the issue, since the applicant has failed to provide the documents such as contract/agreement/tender. It is thus concluded that in view of non-submission of the documents such as contract/agreement/tender as mentioned above by the applicant and without going through the conditions/provisions envisaged in the aforementioned documents, it will not be possible for us to take a decision in the matter. Issues Involved:1. Determination of the applicability of a 5% GST rate on HT XLPE and LT XLPE cables supplied to Solar Power Generating Projects.2. Verification of whether the cables are integral parts of the Solar Power Generating System.3. Requirement of documentation to substantiate the claim for a concessional GST rate.Issue-Wise Detailed Analysis:1. Determination of the applicability of a 5% GST rate on HT XLPE and LT XLPE cables supplied to Solar Power Generating Projects:The applicant sought an advance ruling on whether the supply of HT XLPE and LT XLPE cables to Solar Power Generating Projects would attract a concessional GST rate of 5% under Sr.No.234 of Schedule-I of Notification No.01/2017-Integrated Tax (Rate) dated 28.06.2017. The applicant contended that these cables are classified under Tariff Heading No.8544 and are essential parts of the Solar Power Generating System, thus qualifying for the concessional rate.2. Verification of whether the cables are integral parts of the Solar Power Generating System:The applicant argued that the cables are manufactured as per specific designs and standards provided by Solar Power Project Authorities and are used solely as parts in the manufacture of Solar Power Generating Systems. The technical specifications and international certifications (TuV as per EN-50618:2014) were provided to substantiate that these cables are exclusively for solar applications and have no other intended use.3. Requirement of documentation to substantiate the claim for a concessional GST rate:The ruling emphasized the necessity of verifying the actual use of the cables in Solar Power Generating Systems. According to Circular No.80/54/2018-GST dated 31.12.2018, suppliers must satisfy themselves with requisite documents such as supply contracts or orders from the buyer to claim the concessional rate. The applicant failed to submit the original purchase order and other critical documents like the contract/agreement/tender, which are essential to confirm the actual use of the cables in the Solar Power Generating System.Discussion & Findings:The ruling highlighted the need to confirm that the cables are indeed used as parts of the Solar Power Generating System. The applicant provided only an amendment to the original purchase order and some email correspondences but did not submit the original purchase order or the contract/agreement/tender documents. The ruling noted that without these documents, it is impossible to conclusively determine the nature of the transaction and the applicability of the concessional GST rate.The ruling also referenced an amendment to Entry No.234 of Schedule-I of Notification No.01/2017-Integrated Tax (Rate) dated 28.06.2017, which introduced an explanation effective from 01.01.2019. This amendment requires a bifurcation of the value of goods and services supplied together, with 70% deemed for goods (attracting 5% GST) and 30% for services (attracting 18% GST). The applicant's failure to provide the necessary documents prevented the ruling from applying this amendment to the case.Conclusion:The ruling concluded that due to the applicant's failure to submit essential documents such as the contract/agreement/tender, it was not possible to determine the applicability of the 5% GST rate for the supply of HT XLPE and LT XLPE cables to Solar Power Generating Projects. The decision emphasized the importance of providing comprehensive documentation to substantiate claims for concessional tax rates.Ruling:Question: Whether the applicability or determination of liability to pay Tax on our said goods at 5% GST rate is legally correct and in order in terms of Schedule-I of Notification No.1/2017-Integrated Tax(Rate) or notRs.Answer: In view of non-submission of copies of contract/agreement/tender as mentioned above, by the applicant M/s. Apar Industries ltd., Plot No.189/P1, GIDC Road, Tal. Umbergaon, Valsad, it would not be possible for us to give a decision in the matter for the reasons discussed hereinabove.