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GST Authority for Advance Ruling (AAR)

GST Authority for Advance Ruling (AAR)

Maharashtra AAR: Composite contract with Govt. Dept. for water supply from tube-well after excess iron removal, taxable at 12%

  1. Maharashtra AAR holds that turnkey contract entered with Public Health Engineering Dept. Govt. of Bihar for the supply of water from tube-well after removal of excess iron and lifting it to overhead tank, shall be taxable under Tariff Sub-Heading 9954 (Construction services).
  2. It observed that, in order to perform the contract entered with Public Health Engineering Dept., Bihar, the applicant has to perform various other functions viz. digging of tube well, RCC plinth, mild steel structural staging for supporting an overhead tank of 5000-litre capacity, pipe laying and house to house connections, etc.
  3. It ruled out that, an entire contract is a composite contract consisting of supply of goods and services with main intention being provision of drinking water to the villages which is the main part of the contract, consequently said works shall be covered under Sr. No. 3, column 3 (iii) of Notification No. 11/ 2017- Central tax (Rate)
  4. It further remarked that plain reading of Sr. No. 3, clause (iii) indicates that ‘composite supply’ of WCS supplied by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of pipeline, conduit, or plant for (i) water supply, (ii) water treatment, or (iii) sewerage treatment or disposal attracts a tax rate of 6% each CGST and SGST.
  5. However, it clarified that benefit of concessional 12% tax rate would be available only if ‘works contract’ are a composite supply of ‘works contract’ as defined under clause (119) of Section 2 of CGST Act, 2017.

Maharashtra AAR: Classifies ‘reactors’ used in Hand Pump Water Disinfection under HSN 8421 21 90 attracting 18% GST; Distinguishes use from ‘hand pump’

  1. Maharashtra AAR holds that reactors used in Hand Pump Water Disinfection are classifiable under Tariff Heading 8421 21 90 chargeable to 18% GST (CGST plus SGST) while rejecting applicant’s contention that reactor forms part of Hand Pump and hence are classifiable under HSN No. 8413 91 as Hand Pumps and parts thereof.
  2. It observed that that reactor can be retrofitted into existing setups with minimum pipeline modification and with no plant stoppage, and the main function is ‘purifying the water’ supplied by hand pumps.
  3. It opined that “Reactors are an entirely different article which has a different use and purpose than that of a hand pump…even though claimed as meant to be solely used with and in Hand pumps, their existence would not be as a part of the hand pump, but still, this Reactor would have an independent existence as that of a water purifier which can be used in other applications for purification of water”.
  4. Further, it observed that reactors can also be used in various other places like motorized pipelines, in buildings along with the overhead tank, in swimming pool/ fountains, in sewage water treatment in townships, hotels, hospitals etc.
  5. It consequently held that “Reactors have used as water purifier at several places in various pipelines for purification of water and not only in hand pumps” while explaining that reactor is neither an Ion exchanger or apparatus, household type filter and therefore would fall under the “Others’ category i.e. 8491 21 90.

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