The Authority of Advance Ruling (AAR) stated in a ruling that all the goods supplied under the Turn-key Contractβ having some independent contract- out of which those contract that does not come under the nature of works contract, will not be categorized under the value of the contract- in the nature of works contract just because the goods were a part of Turn-key contracts.
However, these kinds of turn-key contracts will be considered under the value of the contract only if the contracts are a part of a works contract or have been made in the completion process of the works contract.
The ruling was made in the case of M/s Vihaan Enterprises where the applicant was engaged in the works contract under the turn-key contract under the World Bank Financing. The job was to construct a new 33 / 220 kV Pooling Substation at Badwar, REWA. Additionally, it was required to construct a 220 kV DCDS Transmission line and an associated feeder bay for the same.
The issue raised by the applicant, M/s Vihaan Enterprises, before the Authority of Advance Ruling (AAR)
The current rate of service for setting up a solar power generation system is hooked at 9% provided that the job is completed through engineering or other technical services. Entry at S. No. 38 of notification No. 11/2017 Central Tax (Rate) states that a taxable service under this notification like that in solar power system supply along with supplies of other goods and services
Joint Commissioners Virendra Kumar Jain and Manoj Kumar Choubey recognized that βIt is pertinent to note that the explanation which provides for splitting the value of the supply into goods and supplies is in Entry No. 234 and not in Entry No. 38. The contention that the supply of the goods in Entry No. 234 is essential is further supplanted by the inclusion of the explanation in Entry No. 234. 7.10 It, therefore, appears that in case of a Works Contract, the explanation to Entry No. 234 shall apply if and only if, the goods the title in which is/are being transferred during the execution of Works Contract find a place in Entry No. 234. Works Contract in relation to any of the goods listed in Entry No. 234, where such goods are not part of the Works Contract shall not merit taxation under Entry No. 234β.