Setting up of a ‘Sulphate Removal Plant’ attracts 18% GST: AAR
The Rajasthan Authority of Advance Ruling (AAR) has ruled that the setting up of a ‘Sulphate Removal Plant’ attracts 18% GST.
Background
The applicant, M/S. ION Exchange India Limited is engaged in the business of water treatment, waste-water treatment and its recycling. The Applicant offers a wide range of customised treatment plants for water, waste liquids and wastewater which are installed in thermal and nuclear power plants, fertiliser factories, refineries, and the petrochemical and other industries. As a part of its business operations, the Applicant enters into Engineering, Procurement and Construction (EPC)contracts with its customers.
As a part of its business operations, the Applicant has entered into an EPC contract with M/s. Vedanta Limited (Vedanta) vide Contract No. 4600008952 dt. 14.08.2018. Vedanta is a globally diversified natural resources company which is engaged in the business of exploration and mining of various natural resources. The Applicant has been informed that Cairn (Vedanta’s upstream Oil & Gas vertical) is the operator of Onshore RN-ON-90/1 block which is located in Barmer basin and having 38 oil and gas discoveries, including Mangala, Bhagyam and Aishwarya fields. The relevant extract of the EPC contract outlining the Scope of Work entered between the Applicant and M/s. Vedanta is enclosed.
Issues Raised
The applicant has sought the advance ruling on the issue that with the introduction of Notification No. 20/2019-Central Tax (Rate) dated 30.09.2019, the applicant intends to ascertain whether the services with respect to EPC contract entered for execution of Sulphate Removal plant supplied to M/s. Vedanta Ltd vide Contract no 4600008952 dated 14.08.2018 is covered under Sr. No. 24(ii) (Support Services to Mining) or Sr. No. 21(ia) (Professional, Technical or Business Service to Mining) of the Rate Notification.
Further, if the subject services are not classifiable under any of the aforesaid entries, what would be the appropriate classification for the same and at what rate GST would be impossible.
Ruling
The coram of J.P.Meena and M. S. Kavia has ruled that services provided under EPC contract awarded to the applicant by M/S Vedanta for setting up of a ‘Sulphate Removal Plant’ broadly ranging from designing, engineering, Surveys, procurement, fabrication, manufacturing, erection & installation, facilities construction, Pre commissioning & Commissioning, training etc. and satisfactory hand over of complete ‘Sulphate Removal Plant’ as per contract, it is a “work contract” of composite supply. The composite supply is a mixed of goods & services and would be taxed accordingly under S. No. 3 Heading 9954 (ii) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 and GST @ 18 % (9% CGST and 9% SGST) is payable.
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