Authority of Advance Ruling instructs on setting up of FGD plants

Authority of Advance Ruling instructs on setting up of FGD plants

Rules 12 percent GST on setting up of Flue Gas Desulphurisation plant and 18 percent on operation and maintenance

The Karnataka Authority of Advance Ruling (AAR) has ruled that 12 percent Goods and Services Tax (GST) would be levied on setting up a Flue Gas Desulphurisation (FGD) plant and 18 percent GST on its operation and maintenance.

The applicant, Shapoorji Pallonji and Company had submitted that they were engaged in the construction business and provided contractual services to the customers, including the government, the public sector undertakings, government entities and private sector units.

The applicant received an order from Raichur Power Corporation (RPC), on winning the tender for setting up of a Wet Limestone Flue Gas Desulphurisation plant and its operation and maintenance. The applicant stated that they initiated the work for setting up of the plant; received the mobilization advances from RPC and discharged GST at the rate of 12 percent on the advances.

The applicant sought ruling on the issue of whether the combined services of setting up of the plant and its operation and maintenance were considered as a composite supply. Yet another issue was in respect of the GST rate and Services Accounting Code (SAC) and Harmonized System of Nomenclature (HSN).

The Coram of Dr M P Ravi Prasad and T Kiran Reddy held that the combined services could not be considered as a composite supply.

"The setting up of FGD plant attracts GST at the rate of 12 percent in terms of the 2017 notification. And the operations and maintenance came under the "Business Support" service and attracted GST at the rate of 18 percent," the AAR ruled.