
The AAR, West Bengal in M/s KSB Limited [Ruling No. 02/WBAAR/2023-24 dated May 19, 2023] ruled that the supply of pumps along with their installation and commissioning work for a sewerage treatment plant qualifies as a Works Contract Services and taxable at the rate of 12% (6% CGST + 6% SGST) as the services are supplied to a local authority.
Facts:
M/s KSB Limited (“the Applicant”) is engaged in the business of manufacturing & selling pumps for various applications, and also provide services in relation to installation, commissioning, repair & maintenance of pumps.
The Applicant provide services to Kolkata Municipal Corporation (“KMC”) arising out of the tender dated December 09, 2019 and also submitted the copy of the tender notice and the tender documents accepted by KMC on December 26, 2019 pursuant to which the Work Order Number DR/PBPS/M/32/18-19 dated February 19, 2021 was issued.
The Applicant has submitted that this supply is a composite supply of works contract services to KMC and intended to be used in a sewerage treatment plant. Further the Applicant has stated that the contract executed with KMC is a turnkey contract for repairs of existing sewerage treatment plant that includes manufacturing of pumps and carrying out civil works in the form of construction of appropriate foundation for its erection and installation along with mechanical works in the form of earthing and bonding.
KMC is a Municipality constituted under Article 243P of the Constitution of the India.
Issues:
- Whether supply of pumps along with their installation for a sewerage treatment plant is a works contract service?
- Whether the said supplies will be covered under serial number 3 (iii) of the Notification No. 11/2017-Central Tax (Rate) dated June 28, 2017?
Held:
The AAR, West Bengal, in Ruling No. 02/WBAAR/2023-24 held as under:
- Observed that, tender is issued by the Sewerage and Drainage (“S&D”) department of the KMC and the documents of the tender states that the supply is in the nature of replacing the poor performing old pumps at the Palmer Bridge Drainage Pumping station and at the Ballygunge Drainage Pumping station.
- Held that, the supply of pumps along with installation for a sewerage treatment plant qualifies as services of composite supply of works contract services as defined under section 2 (119) of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) and since the supply is made to the local authority i.e KMC hence shall be taxable at the rate specified in serial number 3 (iii) of the Notification No. 11/2017-Central Tax (Rate) dated June 28, 2017 read with Notification No. 20/2017-Central Tax (Rate) dated August 22, 2017 which prescribes a rate of 12% (6% CGST and 6% SGST) for such supplies.
Relevant Provision:
“Section 2(119) of the CGST Act
“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.”
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