GST
TRT-2025-
AAR Gujarat
Date:-05-01-24
In:-
Issue Favourable to Tax Payer ?:-
Order Date – 05 January 2024
Facts –
- The Applicant, Tecnimont Private Limited, has entered into a turnkey contract with Indian Oil Corporation Ltd (IOCL), to execute the work of "EPCC - I Pctckage for Acrylic Acid & Butyl Acrylate Unit of Acrylic/ Oxo-Alcohol Project ".
- All imported materials required to be supplied under the contract will be sold by the applicant to IOCL on High Seas Sale [HSS] basis by endorsing bill of lading in favour of IOCL who will be filing the bill of entry for warehousing and subsequently for home consumption by paying the applicable customs duty and IGST.
- The Applicant identifies two separate set of supplies for the turnkey project (i) works contract for EPC work pertaining to EPCC-1 project and [ii] supply of imported materials for the same project.
Issue –
- Whether the transaction of sale of goods shall be excluded from the value of work contract service for charging GST?
Order –
- The AAR observed that the applicant, in terms of the contract, is liable to provide the goods [supplied on HSS basis] and hence the submission that this value is not to be included in the transaction value in respect of works contract service is legally not tenable more so since the applicant is contractually bound/liable to supply both the goods and the seruices. Therefore, in terrns of section 15, ibid, the value of such imported goods would form a pan of the transaction value lor payment of GST.
- On going through section 15 of the CGST Act, 2017, and judgement of the Hon'ble High Court of Chhattisgarh, the AAR does not find any merit in the submission of the applicant. Thus held that the value of the imported goods would form a part of the Transaction value under section 15, ibid, for computing the value of work contract service for charging GST and that it cannot be excluded under thc guise offree supply, as is being canvassed by the applicant.
- The transaction of sale of goods on high seas sale [HSS] basis by the applicant to IOCL in terms of Contract No. 44AC91 00-EPCC- I, is covered under entry 8(b) ofSchedule III ofthe CGST Act,2017 and is therefore the HSS supply is neither a supply ofgoods nor a supply of services.
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