Ruling: Composite Supply of TCAS Equipment taxed at 9% under CGST & SGST

The Authority ruled that the supply of Train Collision Avoidance System (TCAS) equipment by the applicant to South Central Railway constituted a composite supply under the CGST Act. The applicable GST rate for the supply was determined to be 9% for both CGST and SGST, based on the principal supply of electrical signaling equipment with HSN code '8530'.

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Issues:
1. Classification of HSN/SAC
2. Applicability of GST rate

Classification of HSN/SAC:
The applicant, a manufacturer of electronics equipment for railways, sought clarification on whether their supplies for a specific purchase order constitute a composite supply and the applicable tax rate. The contract with South Central Railway involved design, supply, installation, testing, and commissioning of Train Collision Avoidance System (TCAS) equipment. The applicant inquired whether the scope of work falls under the composite supply of works contract service as defined under Section 2(119) of the CGST Act, with a query on the applicable tax rate of 12%.

Applicability of GST rate:
The Authority analyzed the contract terms, the LOA issued by South Central Railway, and a handbook on TCAS published by the Ministry of Railways, which detailed the system's composition and working. The system was found to be a naturally bundled supply of various goods working together for railway safety through signaling. The supply was deemed a composite supply as per Section 2(30) of the CGST Act, where goods or services are naturally bundled and supplied together in the ordinary course of business. The rate of tax applicable was determined based on the principal supply, which was identified as electrical signaling equipment with HSN code '8530'. This commodity was taxed at 9% under CGST and SGST, as per Notification No. 41/2017. Therefore, the supply of TCAS equipment was held taxable at 9% under both CGST and SGST.

In conclusion, the Authority issued an Advance Ruling clarifying that the HSN classification for the TCAS equipment was '8530' and the applicable GST rate was 9% for both CGST and SGST.

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