GST on Cold Storage Refrigeration Machinery

[Guest]

Dear Sir

We are from Refrigeration industry and we supply machinery for cold storage.

Can you please let us know that according to new notification for works contracts, the new GST rate applicable on the refrigeration machinery and its installation will be 12% or not?

Thanks in Advance.

[Rajagopalan Ranganathan]

Sir,

According to Sl. No. 120 of Schedule IV of Notification No. 1/2017-Central Tax (Rate) dated 28.6.2017 "Refrigerators, freezers and other refrigerating or freezing equipment, electric or other; heat pumps other than air conditioning machines of heading 8415 are classifiable under heading 8418 attracting gst @14%.

[Guest]

Thanks but I think the machinery supply will come under Works Contract as metioned in below link:

https://www.taxtmi.com/article/detailed?id=7573

Thanks in Advance.

[Himansu Sekhar]

Works contract is for immovable goods.

[Guest]

Thanks.

But the supply of machinery with different parts along with their errection and commissioning, will it not be immovable property or come under works contract??

[KASTURI SETHI]

Definition of Works Contract under Section 2(119) talks of contract only for building, construction , fabrication --------------------of any immovable property --------------- such contract. Earlier installation of machinery was part of definition of works contract service. Now emphasis is laid on immovable property.. Regarding reduced rate from 18 to 12% is for those who provide works contract service to Govt. Departments.

Your chapter is NOT closed here. Now here dispute is 'what is immovable property?' Machinery embedded to earth is also immovable property as per various case laws pertaining pre-GST era.. You can raise the issue before GST Council and you may get benefit.

[Guest]

Thank you Sethi Ji,

Is it for govt. Jobs only??

There is no mentioning of govt works contract with the cold storage part of the notification, it is mentioned with the other parts only.

[KASTURI SETHI]

Cold storage services are separately classified and not under WCS. When GST rate was reduced from 18 % to 12 %, see the notification all pertain to Govt..

[Guest]

Yes sir, i am talking with reference to govt notification. Can you please give your comments on the notification in the below given link?

Reference: Point (v) part (e)

Notification No. 20/2017-Central Tax (Rate) New Delhi, the 22nd August, 2017

[KASTURI SETHI]

Yes, Sir. I shall visit the link and opine today.

[KASTURI SETHI]

In pre-GST era, as per Notification No.24/12-ST dated 6.6.12

(a) “original works” means-

(i) all new constructions;

(ii) all types of additions and alterations to abandoned or damaged structures on land that are required to make them workable;

(iii) erection, commissioning or installation of plant, machinery or equipment or structures, whether pre-fabricated or otherwise.

In pre-GST era your activity was covered under this notification.

Now definition of 'works contract ' has changed. More emphasis is laid on construction of original works. Even then in view of the language of the above Notification Serial No.V(e), you can get the benefit of word, "Infrastructure" for GST rate of 12 %. It is stretching. The issue is not litigation-free. Better option is to seek clarification from GST Council.

You must make efforts. Chances are bright.

 

[Guest]

Thanks a lot sir.

May i know how to get clarifications from GST council?

[KASTURI SETHI]

You are to address letter to the Chairperson, GST Council, New Delhi. Complete address along with email ID is available on internet/Google. Just type GST Council and all details will appear.

[Guest]

Ok. Thanks a lot.

[Manish Sulakshane]

Dear Sir

We are from Refrigeration industry and we supply machinery for cold storage.

Can you please let us know that according to new notification for works contracts, the new GST rate applicable on the refrigeration machinery and its installation will be 12% or not?

[Manish Sulakshane]

We are manufacturer of Air Cooling Units, Evaporative Condensers, Dry Fluid Coolers, registered with HSN 8418. As per the HSN Code our products attract GST at 28%.

Our competitors who are manufacturing similar products quoting our customers with 2 options

a) Supply of Units only @ GST 28% and

b) Turnkey for supply, errection & commissioning at GST @ 12% only after recent GST Notification. Can we also supply it a per option 2. Kindly advise.

AI Summary

Debate on GST Rate: Is Refrigeration Machinery in Cold Storage Taxed at 12% or 14%? Clarification Needed. A discussion on a forum addresses the applicable Goods and Services Tax (GST) rate for refrigeration machinery used in cold storage. A participant queries whether the GST rate is 12% under works contracts. Responses clarify that refrigeration equipment falls under heading 8418, attracting a 14% GST. The debate extends to whether machinery installation constitutes a works contract, which typically applies to immovable property, and whether the 12% rate applies only to government contracts. Participants suggest seeking clarification from the GST Council to resolve ambiguities regarding classification and applicable tax rates for such machinery.