https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=768501 https://www.taxtmi.com/caselaws?id=768501 Classification of supply - composite supply with principal supply of goods under the Third Contract or not - supply of services made by the Applicant under Fifth Contract - supply of service of transportation, freight and insurance under the Fifth Contract provided for the goods supplied by the Applicant is in the nature of Business Support Services or not - HELD THAT:- As per the Fifth Contract, the applicant had been entrusted with the responsibility of delivery of goods at the site of installation. In connection with the same, the applicant had engaged transporters for undertaking transportation. The said transporters had issued consignment notes, on which the applicant discharged the GST under Reverse Charge. The applicant had also obtained necessary insurance for the said goods. Thereafter, in terms of the said contract, the applicant raised invoices on Power Grid Corporation of India Limited for freight and insurance along with applicable taxes under SAC code 996793 Other goods transport services . However, the GST component of the said invoices was reportedly not reimbursed by Power Grid Corporation of India Limited, as they are of the view that the same is exempt in terms of Sl.No. 18 of Notification No. 12/2017-CT (Rate). The services of transportation with the additional services of taking in-transit insurance are not being provided in isolation by the applicant in the instant case and that they are inextricably linked to the overall execution of the project that comprises of four other Contracts. Apart from the ex-works supply of goods under the First and Third Contract, it involves erection and commissioning including civil work of the various equipment and materials to be supplied for setting up the facility/system under the First, Second, and Third Contracts, and training in India and any other services specified in the contract - in the instant case, the scope of work especially under the Fifth Contract involving the applicant, does not get restricted to procurement of goods, transportation of goods and taking delivery of the same, but it extends to erection, testing and commissioning, i.e., installation of the facility/system including the training to be imparted in relation to the same. Though the contract is divided into five segments so as to assign the roles and responsibilities to the different parties involved in the contract, the overall assignment is to install terminals at the respective places to provide Bipole link between the Western region and the Southern region. It is opined that the commissioning of terminals and other such installations tantamount to commissioning of immovable property, wherein the property in goods stand transferred to the principal on completion of the respective segment of the project. From a conjoined and harmonious reading of the various clauses of Third Contract and Fifth Contract awarded to the applicant, and their inter-dependency under the overall contract comprising of five contracts, we are of the considered opinion that the agreement for setting up the aforesaid project is nothing but a composite works contract as defined under Section 2 (119) of the CGST/TNGST Acts, 2017, and that the same is classifiable under Construction Services , falling under SAC 9954, attracting GST @ 18% as provided under entry Sl.No.3 (xii) of N/N. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended vide N/N. 1/2018-Central Tax (Rate) dated 25.01.2018. Once it is held that the said activity qualifies as Works Contract Service, the question of examining the applicability of exemption as provided under Sl.No.18 of the N/N. 12/2017-Central Tax (Rate) dated 28.06.2017, as claimed by the applicant under para 3 of Annexure-A (Statement of relevant facts) enclosed to the application, does not arise. Conclusion - i) The supply of services made by the Applicant under Fifth Contract is composite supply of service under Works Contract . ii) The supply of service of transportation, freight and insurance under the Fifth Contract provided for the goods supplied by the Applicant is in the nature of Works Contract Service and shall be chargeable to taxes under GST at 18%. Case-Laws GST Tue, 18 Mar 2025 00:00:00 +0530