Page 111 - GSTL_23rd April 2020_Vol 35_Part 4

2020 ] IN RE : KARNATAKA STATE ELECTRONICS DEVELOPMENT CORPORATION LTD. 437
supply of goods. Therefore the value of the goods in the impugned composite
supply can’t be determined till the completion of the contract period.
16. The consideration, in the instant case, is being received by the Ap-
plicant on monthly basis, in terms of energy savings fee, as agreed upon by both
the parties. The said consideration is for the composite contract comprising sup-
ply of LED street lights, installation & commissioning of the same and also
maintenance of the said installed LED Street Lights, the principal supply being
the supply of LED street lights i.e. goods.
17. Para 1(C) of Schedule II, in relation to Section 7 of the CGST Act,
2017, envisages that “any transfer of title in goods under an agreement which stipulates
that property in goods shall pass at a future date upon payment of full consideration as
agreed, is a supply of goods”. In the instant case the transfer of the title in goods i.e.
LED Street Lights, fixtures, feeder panels etc., will be passed to the TMC by the
applicant at the end of the contract period i.e. 7 years, as agreed upon by both the
parties to the contract.
18. The impugned contract, in the instant case, is a composite supply
where the principal supply is supply of goods. It is an accepted fact that the con-
sideration is received on monthly basis; invoice is raised on energy savings; val-
ue of such invoice is equal to 90% of the energy savings. It is pertinent to mention
here that the energy savings are directly related to the functioning and quality of
the LED street lights etc., i.e. the goods supplied by the applicant. Therefore, the
applicant receives the consideration, throught [out] the contract period i.e. 7
years, on a monthly basis, on the energy savings. Thus the monthly consideration
includes the value attributable to the supply of the goods also. The time of sup-
ply of goods in terms of Section 12(2)(a) of CGST Act, 2017 is the date of issue of
invoice by the supplier. Further, in terms of explanation 1 to the aforesaid Section
12(2), supply shall be deemed to have been made to the extent it is covered by
the invoice. Thus the time of supply in the instant case is the date of invoice.
19. In view of the foregoing, we pass the following :
RULING
(1) The street lighting activity under the Energy Performance Contract
dated 5-12-2016 amounts to composite supply where the principal
supply is that of supply of goods.
(2) The rate of tax applicable on this transaction is 12% (CGST-6% &
SGST-6%), in terms of Sl. No. 226 of Schedule II to the Notification
No. 1/2017-Central Tax (Rate), dated 28-6-2017, as amended. Fur-
ther, the applicant is not 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, as the impugned supply is not that of pure
services.
(3) The instant transaction amounts to a composite supply, with supply
of goods being principal supply and hence the impugned question
is redundant.
(4) The time of supply is the date of invoice and the consideration is
equal to the value of the invoice, the GST rate being 12%.

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GST LAW TIMES  23rd April 2020  231