GST Rate of 18% applicable on supply of precast manhole to Larsen & Toubro: AAR

The applicant M/s Natani Precast LLP, has recently received request for quotation (hereinafter known as the RFQ) for supply of precast Manholes for a specific project site by M/s Larsen & Toubro Ltd. The said request for quotation contained the detailed scope of BOQ (Balance of Quantity) with specific numbers / quantity requirements along with standard terms and conditions.

The applicant M/s Natani Precast LLP further submitted that two basic ingredients used for manufacturing of precast manholes were kept outside the scope of applicant and same have been specified to be included in the scope of M/s Larsen & Toubro Ltd. In fact the scope matrix appended with the said RFQ also clearly lies down that out of 298 line items forming part of scope matrix, two were excluded from the scope of the applicant. The proposed recipient i.e. M/s Larsen & Toubro Ltd has raised RFQ with clear mandate that same shall be within the scope of Larsen & Toubro Ltd and for supply of precast manholes, the applicant is not responsible to procure the same.

The applicant M/s Natani Precast LLP intimated that he has to quote the rates for finalization of the contract with M/s Larsen & Toubro Ltd in context of supply of precast manholes. The said rates have to be quoted keeping in consideration the RFQ received by it. The applicable GST shall be extra. Those items whose cost is not required to be borne by the applicant (free of cost material) shall not form of price which shall be charged from the recipient.

The applicant M/s Natani Precast LLP, stated with illustration that applicable GST Rate and HSN Code for supply of precast manhole is 68109990 and 18% respectively. However the applicable GST on manufacturing activity done for other is classified as service under HSN Code 9988 and is taxable at 18%. Further in accordance with the provisions of Section 9 read with Section 15 of the CGST / RGST Act 2017, the tax is charged on the transaction value as given under Section 15(1) of the Act, subject to certain inclusions and exclusions as given under Section 15(2)/ (3) of the Act.

Advance Ruling

Q.1 The applicant is incorporated with an intention to manufacture and supply Precast Manholes and Rises to various government and non government entities. The applicant raised the question that 1 whether the supply of precast manhole using the steel and cement within the scope of recipient is a supply of service of supply of goods? What should be appropriate classification of the same?

Ans-1. Supply of precast manhole using the steel and cement within the scope of recipient is a supply of goods. HSN Code for supply of precast manhole is 68109990 and 18% respectively.

Q.2 Whether the price to be charged from the recipient i.e. M/s Larsen & Toubro Ltd by the applicant for supply of precast manhole shall be transaction value in terms of Section 15(1) of the CGST / RGST Act 2017?

Ans-2. No

Q.3 Whether the material which are to be made available free of cost by the recipient and are not within the scope of applicant for supply of precast manhole shall form part of the transaction value for the purpose of levy of tax

Ans-3. Yes

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