Author: Khushi J Prajapati
The Uttar Pradesh Authority for Advance Ruling (AAR) ruled that GST is applicable only on supervision charge fees when the value of materials and cost of execution was borne by the service recipient.
The AAR held that GST is applicable only on supervision fees when the recipient bears the cost of materials and installation. The work contract services provided by an independent contractor are classified under section 9954 distinct from services provided by Electricity Distribution Company.
AAR found that the fees charged for the supervision by UPPTCL are composite supplies under Section 2(30) of the CGST Act, 2017 which involve both goods and services. The authorities noted that since these supervision services were part and parcel of the installation process itself, GST assessment purposes needed to include in taxable value all the input materials and construction costs incurred by the recipient. It further stated that not considering these expenses while calculating taxable amounts would neither present a proper reflection on certain characteristics of composite supply nor comply with provisions of GST law.
In this connection, it emphasized that the full amount including values of materials and execution works should be taken into account for adequate GST evaluation under Section 15 of CGST Act, 2017.
Facts
M/s Uttar Pradesh Power Transmission Corporation Limited (UPPTCL) sought an advance ruling to determine whether the value of materials and the cost of execution work for installing electrical lines, borne by the recipient, should be included in the taxable value under GST when the applicant charges only supervision fees. The applicant, responsible for transmission infrastructure development, raised this query to clarify the tax liability.
Case Details
Case Name: In re Uttar Pradesh Power Transmission Corporation Limited (AAR Uttar Pradesh)
Appeal Number: Advance Ruling No. UP ADRG 04/2024
Date of Judgement/Order: 12/06/2024
Court: Authority for Advance Ruling (AAR) Uttar Pradesh
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