TaxTMI 
TaxTMI 
2025 (4) TMI 415
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....d or suppression of material facts or misrepresentation of facts, shall render such ruling to be void ab initio in accordance with Section 104 of the Act. 5. The provisions of both the Central Goods and Services Tax Act and the Tamil Nadu Goods and Services Tax Act (herein referred to as the Act) are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Services Tax Act would also mean a reference to the same provisions under the Tamil Nadu Goods and Services Tax Act. M/s. Hitachi Energy India Limited, 3rd Floor, Old No. 7, New No. 41, Jayant Tech Park, Mount Poonamallee Road, Manapakkam, Chennai - 600 089 (hereinafter called as the "Applicant") is engaged in manufacture and supply of electrical equipment of various capacities depending on end use and application to specific industry. They are registered under GST with GSTIN 33AARCA9513E1ZO. 2. The Applicant has made a payment of application fees of Rs. 5,000/- each under sub rule (1) of Rule 104 of CGST Rules, 2017 and SGST Rules, 2017. The Applicant has filed this application seeking Advance Ruling on the following ques....
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....ng of that term. c. Based on the agreement entered into with PGCIL, the Applicant has inter alia provided the services of transportation, insurance and freight under the Fifth Contract for the supply of goods. d. Through the instant application, the Applicant seeks a ruling as to whether the services of transportation, insurance and freight are eligible for exemption under SI. No.18 of Notification No. 12/2017-CT (Rate) dated 28.06.2017 e. Alternatively, whether the services of transportation, insurance and freight are in the nature of composite supplies with principal supply being that of goods? 4.1. As per the terms of the Contract, M/s. Power Grid Corporation of India Ltd., ('PGCIL' in short), desirous of setting up 800KV, 6000MW HVDC Multi-Terminal System Package, had invited bids for complete project management, system design, engineering, type testing, manufacture, testing, supply, port handling and customs clearance for the imported goods, further handling, inland transportation and delivery at destination site, unloading, storage, handling at site, erection / installation including associated civil works, employer staff training, testing and co....
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....amended from M/s. ABB Power Products and Systems Limited to M/s. Hitachi Energy India Limited, as it stands today. A copy of the change order issued by PGCIL dated 21.12.2021 noting the change of name of the applicant from M/s. ABB Power Products and Systems Limited to M/s. Hitachi Entergy India Limited for the purpose of the contract has been enclosed as Annexure -2 to the application. 4.5. The entire scope of work was split into five Contracts covering specific and detailed nature of supply of various goods and services for supply of equipment and material offshore and onshore and for supply of services: (i) 'First Contract' - Off-shore Contract (with ABBAB) - for CIF supply of equipment and material including mandatory / availability spares, type testing & training to be conducted outside India. (ii) 'Second Contract' - On-shore Supply Contract (with BHEL) - ex-works supply of equipment and materials including mandatory / availability spares from within India, type testing under the scope of BHEL as per the division of work indicated in the JV agreement, required for the complete execution of the Project. (iii) 'Third Contract' - On-shore Supply Con....
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....ion, Insurance and other Incidental Services applicable for supply of Plant and Equipment from and within India only 1,749,715,832 (INR) 2. Local Transportation, Insurance and other Incidental Services applicable for supply of Plant and Equipment to be supplied from abroad under scope of ABB AB 438,121,107 (INR) 3. Installation Charges 9,231,059,834 (INR) The above contract price has undergone several changes since the formulation of the contracts but broadly remains the same. 4.7. The provisions of the contracts require the successful execution of all five contracts for the implementation of the Project, meaning that the contracts are interlinked. As per the provisions of each of the contracts, the Applicant was liable to furnish Contract Performance Security for 10% of the value of the First Contract', 'Second Contract', 'Third Contract', Fourth Contract' and 'Fifth Contract' and the Applicant was to furnish Contract Performance Security for 10% of the Contract Value of the Third Contract' and Fifth Contract' to ensure due performance of the Contract. 4.8. As mentioned above, the price payable by PGCIL in respect of the supplies specific to each of t....
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....along with GST. However, the GST component of the said invoice has not been reimbursed by PGCIL. A copy of the worksheet indicating the break-up of the GST paid by the Applicant on transportation, freight and insurance was enclosed as Annexure-5. Sample copies of the invoices raised by the Applicant on PGCIL was enclosed as Annexure-6. 4.14. The Applicant has borne the cost of the differential GST on their own account and duly deposited the same to the Government in a timely manner. The Applicant has also duly declared the details of the tax paid in their Form GSTR-3B as regularly filed during the relevant period. The invoice raised by the Applicant in terms of the Fifth Contract requesting PGCIL to make the payment of inter alia the Contract Value of transportation, freight and insurance along with GST and GST component has not been acknowledged and the payments have not been released, as reported by the applicant. 5.1. In the above factual matrix, the Applicant seeks advance ruling on the following questions: i. Whether the supply of services made by the Applicant under Fifth Contract is composite supply with principal supply of goods under the Third Contract? ....
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....icant. Smt. Sahana Rajkumar, Advocate, Authorised Representative (AR) of the applicant appeared for the hearing on 28.01.2025 and reiterated the submissions made in their application and written submission made during the hearing held earlier on 27.03.2024. 7.4. The Authorised Representative further stated that in response to the queries raised by the Authority for Advance Ruling, Tamil Nadu, through the reference RC No. 286/2023, dated 22:07.2024, they have the furnished relevant details/documents as called for vide their letter dated 03.12.2024 and requested the same to be taken on record. She insisted on the cross-fall breach clause which is in-built in the contract, whereby all the five contracts are inter-linked to each other and that the failure in one contract results in the failure of the entire contract. She cited a few ruling pronounced by various authorities on the same issue in support of their contention and stated that the copies of the same have been filed already along with the written submissions. DISCUSSION AND FINDINGS 8.1. We have carefully considered the submissions made by the applicant in the advance ruling application, the submissions made during th....
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.... Contract, irrespective of the Five Contracts entered, the Joint Venture is responsible for the overall completion of the Project. Any breach by the Joint Venture or the Applicant under the First, Second, Third or Fourth Contract will be considered as a breach of the Fifth Contract as well and will give Power Grid Corporation India Limited the right to terminate (Annexure-3 Page 52-54). Thus, it is understood that the Five contracts entered by the Joint Venture and the applicant with Power Grid Corporation of India Limited are indivisible and interlinked to each other, covered by 'cross-fall breach clause', whereby the breach of one of the contracts will result in breach of the entire contract. 8.6. The exact terms of the Fifth Contract', assumes significance under the facts and circumstances of the instant case, and the same is as in page 4 of the Contract dated 25.01.2017 is reproduced for reference and analysis, viz., "Fifth Contract' for all services to be performed in India covering, inter alia, local transportation, insurance and other incidental services, taking delivery of equipment / materials to be supplied under the 'First Contract' and 'Third Contract' under....
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....or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply; Illustration .- Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply." It becomes clear from the above, that a supply shall be treated as a 'composite supply' when two or more taxable supplies are provided, which are naturally bundled together in the ordinary course of business, one of which is a principal supply. Further, it is a normal industry practice that the goods to be supplied are delivered at site, and freight and insurance gets attached to the same and are paid as a natural consequence. Thus, the supplies are bundled together and the services so performed are ancillary and necessary for the supply of goods, being the principal supply. However, we note that 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 deliv....
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....ervice' as laid down under clause 6(a) of the Schedule II (Activities or transactions to be treated as supply of goods or supply of services) of the CGST Act, 2017, which reads as below :- "6. Composite supply The following composite supplies shall be treated as a supply of services, namely :- (a) works contract as defined in Sub-Section 119 of section 2; and (b) supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration." 8.11. 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 ....