TaxTMI 
TaxTMI 
2019 (11) TMI 1365
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....11^th Main Road, Anna Nagar, Chennai-600040 (hereinafter called the Applicant or TPL) are engaged in the process, design, detailed engineering, procurement, shop fabrication & inspection, supply, storage, site fabrication, erection, inspection & commissioning of Integrated Cryogenic Engine & Stage Test Facility. They are registered under GST vide GSTIN 33AAACT4119L1ZF. They have preferred an application seeking Advance Ruling on. 1. Whether supply of Engineering, Procurement & Construction (EPC) contract for establishment of Integrated Cryogenic Engine & Stage Test facility (ICET) where in both goods and services are supplied can be construed to be a Composite Supply in terms of Section 2(30) of CGST Act, 2017? 2. If Yes, Whether the Principal Supply in such case can be said to be "Establishment of Fluids Servicing System (FSS)" can be taxable at 5% GST vide notification No. 45/2017 -Central Tax (Rate) dt 14^th November, 2017? 3. If Principal Supply taxable at 5%, whether the entire transaction in the contract is taxed as per the rate applicable to Principal Supply? The Applicant has submitted the copy of application in Form GST ARA - 01 and also submi....
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.... price break up for the supplies under contract price given as annexure to the Contract. The break-up of contract price as a percentage in the Contract is as given below. S.No. Description Amt (Rs. in Crs) Payment in INR equivalent to the extent of USD Total in INR % of contract price In USD In INR (Base date considered for conversion as on 02.11.2018 1. Materials underCEAS 832278000 832278000 11.63 2. Services underCEAS 529656000 529656000 7.40 3. Materials underSMS 354946000 354946000 4.96 4. Services under SMS 110868000 110868000 1.55 5. Materials under FFS 1774429000 21500000 1565630000 3340059000 46.68 6. Services under FFS 496459000 150000 10923000 507382000 7.09 7. Materials under S&FS 123332000 123332000 1.72 8. Services under S&FS 71845000 71845000 1.00 9. Materials underICDAS 1199965000 1199965000 16.77 10. Services under ICDAS 85638000  ....
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....tion 2 of the Central Goods and Services Tax Ac, 2017. 2.6 The applicant has stated that ISRO being managed by Department of Space, Government of India is under the authority of Prime Minister's Office and Space commission. The funding will be allocated through Union Budget of Government of India. The prime objective of ISRO is to use space techn010U and its application to various national tasks. Its vision is to 'harness space technology for national development while pursuing space science research and planetary exploration'. For the purpose of Notification No.45/2017-Central Tax (Rate) dt. 14th November, 2017, "Public funded research Institution" means a research institution in the case Which not less 50% of the recurring expenditure in met by the Central government or the Government or the Government of any state or the administration of any Union Territory. In the present, total funding to ISRO will be allocated through Union budget of Government of India, therefore, it is covered under Public funded research Institution. 2.7 As per the definition of "Composite Supply" the essential conditions for a supply to qualify as composite supply can be - (a).....
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....vil electrical and Air conditioning system, structural and Mechanical system, Facility Fluid System, safety and Fire protection system, Instrumentation, control and data acquisition system in totality consisting of various goods and services which are incidental to provision of such goods. ISRO wants functional Cryogenic Engine & stage test Facility and services such as Installation, commissioning and testing etc are only a means to provide the main supply of good and are only incidental. The principal supply will be provision of Civil Electrical and Air conditioning system, Structural and Mechanicals system, Facility Fluid System, Safety and Fire protection system, Instrumentation, control and data acquisition system and not provision of works contract Service. And the principal supply or dominant intent is provision of goods which constitutes 82% in the contract; therefore entire contract shall be taxable @ 5% GST. In view of the both the above conditions are met by the Contract, Supplies undertaken in the contract covered under Sl.No. 1 of Notification No. 45/2017-C.T.(Rate) and the definition of Composite supply, Rate of GST applicable is @ 5% for the entire value of the contra....
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....) of CGST Act, 2017. 2. If Yes, Whether the Principal Supply in such case can be said to be "Establishment of Integrated Cryogenic Engine & Stage Test Facility" can be taxable at 5% GST vide notification No.45/2017- Central Tax(Rate) dated 14/11/2017. 3. If Principal Supply taxable at 5%, whether the entire transaction in the contract is taxed as per the rate applicable to Principal Supply? 6.1 From the contract documents furnished by the applicant, it is seen that • The applicant is responsible for the overall project management of the contract and the performance of ICET and directly accountable to IPRC for complete fulfillment of all the contractual obligations including those of the Co-Contractor, besides being responsible for execution of the systems under their own scope as per clause 1.2.3 of Volume 1 of the contract agreement. • The Scope of Contract as per clause 1.3 of the agreement are as follows: • Review of Front - End Engineering Design (FEED) work done by the Department • Risk analysis • Detail engineering, supply of materials, installation, testing and commissioning of following sy....
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....oning 6.2 From the above, it is evident that the contract between the applicant and ISRO Propulsion Complex Mahendragiri (IPRC))is for the establishment of an Integrated Cryogenic Engine & Stage Test Facility for the satellite launch vehicle program. The applicant is obligated to review the design; detailed engineering, supply of materials, installation, testing and commissioning of Civil, electrical and air conditioning system, structural and mechanical system, facility fluid system, safety and fire -protection system and instrumentation, control and data acquisition system; transportation and installation of imported materials required for establishing the ICET facility all to the satisfaction of IPRC. The contract Price is a single price for the entire work with a breakup price for Material and services under CEAS, SMS, FPS, S&FS, and ICDAS. AS per Para 1.5.1.2 of Volume 1 of the contract, the contract price is on "Lump-sum Turn-KEY) basis for the functional scope of the contract. It is on firm & Fixed price basis. The payment schedule indicates Payment pro-rata to the percentage of materials and service both together and the entire amount stands paid on commissioning the est....
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.... 6.4 Works Contract is a composite supply. Section 2(119) of CGST Act defines works contract as: (119) "works contract" means 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 (whether as goods or in some other form) is involved in the execution of such contract; In the case at hand, the applicant has a contractual obligation to supply the materials and also to erect the civil electrical and Air conditioning system, structural and Mechanical system, Facility Fluid System, safety and Fire protection system, Instrumentation, control and data acquisition system. Such erection and installation is to be done to the Integrated Cryogenic Engine & Stage Test Facility' by means of civil works. It involves the transfer of ownership of these equipment, instruments, consumables, civil and electrical goods involved in the erection, construction and installation of these systems. The Integrated Cryogenic Engine & Stage Test Facility itself is an immovable structure erected at....