M/s. BEML Limited (hereinafter referred to as “Respondent Company”) have entered into a contract with M/s BMRCL for the manufacture and supply of Standard Gauge Intermediate Cars. The activity of manufacture and supply of Standard Gauge Intermediate Cars involves the supply of both goods and services which is undertaken by Cost Centres A to H.

The value/cost of the supplies specific to each Cost Centres are separately stipulated in the Contract and milestones have been identified for raising of invoices for individual supplies. The Respondent Company is raising separate invoices based on the nature of transactions mentioned in different Cost Centres and accordingly charging GST on separate supplies. The Respondent Company is at present levying tax @ 12% on the supply of Standard Gauge Intermediate Cars and 18% on other supply of services as supplied by the respective Cost Centre

While, BMRCL has paid GST charged relatable to the supplies made by cost centre A and C, they have disputed the payment of GST at the rates charged by the Respondent Company for supplies made vide Cost Centre D, E and G. It is the understanding of BMRCL that the supply for the disputed cost centres are essentially composite supplies taxable at the rate of 5%/ 12% i.e., the rate applicable to principal supply of Rolling stock and that other supplies in the cost centre D to G are incidental and naturally bundled to the principal supply of rolling stock and supplied in conjunction with each other.On account of the disagreement on the nature of supply and applicable tax to be charged, total differential GST of Rs. 19,90,84,844/- stands withheld by BMRCL relatable to cost centres D, E and G.

In view of the above, the Respondent company filed an application for Advance Ruling under Section 97 of the CGST Act, 2017 in respect of the following questions:

I Whether the supplies made by cost centres C, D, E and G to BMRCL are to be considered as independent supplies of goods and services depending upon the scope of the work and applicable GST at the rate of 18% for supply of services and at the rate of 5%/ 12% for supply of goods shall be levied and charged? Consequently, what will be the time of supply for each supplies made by the cost centres?

1. Whether the supplies made by cost centres C, D, E and G to BMRCL are to be considered as `composite supply` as defined under Section 2(30) of the CGST Act, 2017 read with Section 9(1) of the CGST Act, 2017, with the supply of intermediate cars undertaken by. Cost Centre C as the principal supply on which GST at 12% shall be levied and charged? Consequently, what will be the classification and time of supply for the entire Contract considering supplies made by Cost Centre C as principal supply?

The Authority for. Advance ruling examined the case of the Respondent arrived at the conclusion that the supplies made by the Respondent Company under Cost Centers C, D, E and G form a composite supply and since the supply of goods i.e intermediate cars is the principal supply, the rate of tax as applicable to the supply of intermediate cars will be applicable to the composite supply in terms of Section 8 of the CGST Act, 2077. The Authority also held that Section 12 of the CGST Act, 2017 is applicable to the issues related to the time of supply

The jurisdictional CGST officer reviewed the impugned order passed by the Authority and being aggrieved by the ruling passed, filed an appeal

The Respondent Company has admitted that each Cost Centre will deliver the indented item on its own; that it was also agreed upon as per the terms of the Contract that agreed amounts would be paid on supply/delivery of intended items/services and against reaching of milestones; that it is clear from the agreement that even the costings in respect of each item of work was worked out by the Respondent Company and the same was accepted by M/s. BMRCL. They submitted that it was a clear and a legally accepted contract between two major businesses who are not new to complex nature of contract/agreement for turnkey projects; that at the time of entering into contract, both the vendor and the customer had mutually agreed to the terms of the contracts fully understanding that billing will be done in accordance with the delivery of goods/services by the respective Cost Centres; that it is evident from the submissions made by M/s. BEML that they have gone by the terms of agreement and billed M/s. BMRCL precisely as per the terms of the agreement. It is only in June,2019, M/s. BMRCL contested that supply as a whole was a Composite supply and lesser rate of GST are applicable.