PV module is not naturally bundled with the solar power plant : AAAR

PV module is not naturally bundled with the solar power plant : AAAR The Karnataka Appellant Authority of Advance Ruling has modified the ruling rendered by the Karnataka Authority of Advance Ruling in matter of M/s Giriraj Renewables Private Ltd. as under: 1. The supply of the PV module which is the major component of the solar power plant is not naturally bundled with supply of the remaining components & parts of the solar power plant and the supply of Services of Erection, Installation and Commissioning of the solar Power Plant. 2. The supply of the remaining portion of the contract in question which involves the supply of balance components and parts of the solar power plant and supply of services of erection, installation and commissioning of solar power plant is viewed as a composite supply as the supply of goods and services are naturally bundled. The tax liability on this portion of the contract in question (other than PV Module)which is termed as "composite supply" will be determined in terms of section 8 of the CGST Act 2017, where in the rate applicable to the dominant nature of the supply will prevail. The Extract of Order is given below : a) The supply of the PY module which is the major component of the Solar Power Plant is not naturally bundled with the supply of the remaining components & parts of the Solar Power Plant and the supply of the services of Erection, Installation and Commissioning of the Solar Power Plant b) The supply of PY module is a distinct transaction from the supplies in contract in question as it is the owner whose responsibility it is to procure and supply the PY module. This PY module is to be supplied as free issue material over and above the plant being supplied by the contractor. The owner is responsible for transportation of the PV module from the point of origin till plant site and he bears the other risks and rewards of ownership. The PY module which is procured by the Project owner on High Sea Sale basis and imported by availing Customs duty exemptions and later supplied to the Appellant as a free issue for use in the setting up of the Solar Power Plant c) The supply of the remaining portion of the contract in question by the Appellant which involves the supply of the balance components and parts of the Solar Power Plant and the supply of services of Erection, installation and Commissioning of the Solar Power Plant is viewed as a 'composite supply' as the supply of goods and services are naturally bundled. d) The tax liability on this portion of the contract in question (other than PV module) which is termed as a 'composite supply' will be determined in terms of Section 8 of the CGST Act, 2017 wherein the rate applicable to the dominant nature of the supply will prevail. Click here to download the Order of Karnataka Authority of Advance Ruling Click here to download the Order of Karnataka Appellant Authority of Advance Ruling