AAR : Transportation under EPC contract for solar plant, taxable as composite 'works contract' supply

AAR holds that transportation charges received by applicant as part of Engineering, Procurement and Construction (EPC) contract for setting up of solar power plant, would be liable to GST as ‘works contract’ u/s 2(119) of CGST Act; Rejects applicant’s claim that since he is fully responsible for loading, transportation, delivery to the project site and unloading of equipment as well as required to bear transit insurance cost, there exists a standalone contract for transportation of equipment for which separate consideration is received; Observes that clauses of proposed draft agreement cannot be read in isolation or out of context, it is necessary to read the contract as a whole to ascertain the true / correct nature of transaction; Remarks, “As such this agreement for Engineering Procurement and Construction of Solar Power plant constitutes composite supply in the nature of Works Contract”; Resultantly, rejects applicant’s contention that since he is not GTA inasmuch as he is not issuing any consignment note, no tax is payable on transportation by road services by virtue of Notification No. 12/2017-Central Tax (Rate); Further states that intent of operationalizing Solar Power Plant, though as roof top mounted, is to set it up as an immovable property which involves civil work; In this regard, refers to SC decisions in T.T.G. Industries Ltd. and Solid and Correct Engineering Works and observes, “the intent of the person at the time of erecting and operationalizing a structure / plant is to be seen and if the intent is to establish it as an immovable property at the time of setting up, then it is to be treated as an immovable property even if later on due to some exigency it is required to be dismantled or removed” : Maharashtra AAR

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