M/S GIRIRAJ RENEWABLES PRIVATE LTD.

The Applicant an EPC contractor (work contractor) entered into contract with various developers for setting up solar photovoltaic plants for supply of power generation. The contractors supplied goods as well as services.

The applicant sought advance ruling on following three questions:

    a) Whether supply of turnkey Engineering, Procurement & Construction (EPCI  Contract) for construction of solar power plant wherein both goods and services are supplied can be construed to be a Composite Supply in terms of Section 2(30) of CGST Act, 2017.
   
    b) If yes, whether the Principal Supply in such case can be said to be 'Solar Power  Generating System' which is taxable at 5% GST.
   
    c) Whether benefit of concessional rate of 5% of solar power generation system and parts thereof would also be available to sub-contactors.

The major component (PV Module) constitute major value of the whole contract in the project which is procured by the owner and not supplied by the contractor, as such, it cannot be construed to be a principal supply of the project and thereby cannot be treated as composite supply defined under Section 2(30) of the CGST Act, 2017. In the absence of natural bundling concept the supply made in this case does not amount to a ‘Composite Supply’.

The answer to question under (b) above is automatically answered in the negative in view of the fact that the major component of PV Modules is procured by the owner himself and not by the contractor, therefore, it cannot be construed as a principal supply by the applicant.

The sub-contractor is an individual supplier in this case. Under GST law, no concessional rate of GST has been provided to sub-contractor. Hence, appropriate rate of GST has to be applied and not the concessional rate of 5%.

Crux - If major supply of goods is made by the owner and not he contractor, then concept of Composite Supply under Section 2(30) of CGST Act, 2017 is not attracted.

Concessional rate of tax is attracted in case of main contractor and not the sub-contractor.