Page 104 - GSTL_23rd April 2020_Vol 35_Part 4

430 GST LAW TIMES [ Vol. 35
(d) Operation & maintenance of the said LED street lights during the
tenure of the contract.
4. The street light poles and the old street lights will continue to remain
under the ownership of TMC. The applicant does not have any control over the
electrical poles & can’t object to or damage any other installations on the poles
during the supply. Further the applicant is required to maintain minimum
standard of operation, which requires for maintenance of minimum LUX level on
road. The applicant, remains to be owner of the newly installed LED lights; is
responsible for functioning of the said lights; has to replace, if required, at free of
cost; shall surrender all the LED lights & system installed at no cost to TMC, at
the end of the contract.
5. In view of the above, the applicant has sought advance ruling in re-
spect of the following questions :
(i) Whether the street lighting activity under the Energy Performance
Contract dated 5-12-2016 is to be considered as Supply of goods or a
Supply of Services under the CGST/KGST Act, 2017? Accordingly,
whether the transaction can be sub-classified as a ‘Pure Supply of
Service’ or ‘Pure Supply of goods’ or ‘Composite Supply of goods
and services being a works contract’?
(ii) What is the rate of tax applicable on this transaction? Whether the
applicant is entitled to the benefit of exemption under Entry 3 or 3A
of Notification No. 12/2017-Central Tax (Rate), dated 28-6-2017, as
amended? If not, what is the applicable rate of tax?
(iii) If the transaction is treated as supply of services, what is the time of
supply of such services? Whether KEONICS is liable to tax only
once the energy saved is certified by the energy auditor? Whether
amount credited in joint ESCROW account can be termed as ‘re-
ceipt’ especially because the said amount is not under control of
KEONICS until the conditions are met?
(iv) Without prejudice to above submissions, if the transaction is treated
as a supply of goods, what is the time of supply of such supply?
Whether KEONICS would be liable to tax only at the time when the
possession and ownership in goods are vested to TMC at the end of
tenure? What would be the value of the aforesaid taxable supply
given the fact that it is based on energy savings which can be com-
puted only when the energy auditor certifies the workings submit-
ted by KEONICS?
6. Applicant’s understanding of the law :
6.1 The applicant contends that their activity amounts to supply of
pure service, in terms of GST Act, on the basis of the following reasons.
(a) Dominant object of contract is street lighting and energy saving, but
not supply of LED lights.
(b) The only supply involved is supply of ‘LIGHT’ and LIGHT is not
goods.
(c) Installation of LED lights is a self-activity & no separate considera-
tion is received. The applicant has the control and access of lighting
systems during the entire contract period.
(d) The transaction is not a composite supply at all.
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