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SGST Advance Ruling Authority

GST – Gujarat AAR – Works Contract or Supply of goods – Separate contract for supply of plant and supply of installation services - Divisibility of turnkey contract for supply, installation, testing and commissioning of plant – Benefit of Notification No. 66/2017-CT dated 15.11.2017 to turnkey contract – HELD – the first contract relating to supply of plant cannot be executed independent of the second contract i.e. the contract relating to supply of installation services. There cannot be supply of goods without a place of supply. As the goods to be supplied under the contract agreement part-I involves movement and/or installation at the site, the place of supply shall be the location of the goods at the time when movement of the goods terminates for delivery to the recipient, or moved to the site for assembly or installation, in terms of section 10(1)(a) & (d) of the IGST Act, 2017. Thus, contract agreement part-I is not a complete contract, unless tied up with contract agreement part-II – Further, any default or breach under the contract agreement part-II, shall automatically be deemed as a default or breach of contract agreement part-I – the bifurcation of the turnkey contract into two further contracts as part-I and part-II, would not change the classification - The contract, being a turnkey contract, both of which are interlinked & interdependent, is a turnkey contract of Works Contract defined u/s 2(119) of the CGST Act, 2017 – Ordered accordingly - Whether GST is payable on advance received and whether the notification no. 66/2017-CT dated 15.11.2017 is applicable for turnkey contract – HELD – the notification no. 66/2017-CT provides the benefit only for supply of goods - the supply undertaken in respect of the turnkey contract, by the applicant is a works contract, and therefore, in terms of schedule II, is a supply of service. Hence, the question of availing the benefit of notification No. 66/2017-CT dated 15.11.2017 does not arise and therefore, the applicant is liable to pay GST on the advance received - As the turnkey contract entered into by the applicant has been held to be a works contract, Notification No. 66/2017-CT dated 15.11.2017 is not applicable in respect of the said turnkey contract.
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