12% GST applicable on supply of goods or services for setting up of network to BSNL: AAAR

The Maharashtra Appellate Authority for Advance Ruling(AAAR Maharashtra) in the matter of Sterlite Technologies Limited has ruled out that 12% GST applicable on supply of goods or services for setting up of network to BSNL.

The Appellant is registered under the GST Acts bearing GSTIN 27AACES8719B1ZC. The activities of Applicant involve manufacture of telecom products such as optic fiber, optic fiber cable etc. and services in relation to laying of these optic fiber cables (either underground or hung overhead) to create a network, setting up of control centres, installation of equipment, commissioning of network and other ancillary activities that may be necessary for creation of network infrastructure for its customers in the telecom industry.

The Question and Ruling are as follows:

The appellant had filed an application for Advance Ruling before the Maharashtra Authority for Advance Ruling vide Application reference number AD080120002058T dated 14.01.2020 to determine following questions:

i. Whether the supply of goods or services for ‘setting up of network’ would qualify as ‘works contract’ as defined in Section 2(119) of the CGST Act?

ii. If supplies contemplated as per the contract with BSNL are not treated as works contract can these continue to qualify as composite supply? if yes what is the principle supply?

iii. What is the rate of tax applicable to the supplies made under the contract?

RULING

In View of the above discussion and findings, we find that the appeal filed by the appellant is allowed and second order of ARA (Maharashtra Advance Ruling No GST-ARA-80/2019 20/B-25 dated 18.02.2022) is modified accordingly. The supply under the contract from 1.4.2019 to 31.12.2021 are held as falling under entry at serial number 3(vi)(a) of Notification No.11/2017-Central Tax (Rate) dated 28.06.2017 and accordingly taxable at 6% under CGST and 6 % under SGST or 12% under IGST Act.

For Official Ruling Download PDF Given Below: