Combined service of setting up of Wet Limestone FGD plant & its operation & maintenance not a composite supply

It was submitted by the applicant that his activity shall be considered as composite supply of setting up of plant and operation and maintenance with setting up of plant as principal supply.

Authority of Advance Ruling noticed that supply of operation & maintenance service started only on completion & handing over of the operating FGD plant integrated with the existing power plant and subject to the fulfillment of performance guarantees. This clearly indicates that the setting up of the FGD plant and the O&M of the same are two separate distinguished supplies and the supply of O&M service starts after completion of the setting up of the FGD plant. Thus these two supplies are not naturally bundled.

Further, it was observed that the Contract provides for a price break up and not only from the price break up but also from the terms and conditions of the agreement show that the activities of operation & maintenance are separately identified.

The Authority concluded that setting up of FGD plant attracts GST at the rate of 12%. Further the Operation & Maintenance of the FGD plant merit classification under SAC 9985, as “Business Support” service and attracts CST at the rate of 18%.