Energy Performance Contract to operate and maintain Public Lighting Network in city is taxable at 18%: AAR

Case Details: Authority for Advance Rulings, Karnataka Bangalore Street Lighting (P.) Ltd., In re - [2021] 131 taxmann.com 313 (AAR - KARNATAKA)

Judiciary and Counsel Details

• • Dr. M.P. Ravi Prasad and Mashhood Ur Rehman Farooqui, JJ.
  • Karthik Dadhia, CA for the Applicant.

Facts of the Case

The applicant entered into an Energy Performance Contract with a Mahanagara Palika to install and implement energy conservation measures and also to operate and maintain project Public Lighting Network in city of Bengaluru for a period of ten years. It filed an application for advance ruling to determine taxability of the contract to operate and maintain Public Lighting Network.

AAR Held

The Authority for Advance Ruling observed on examination of the contract that the LED luminaries, feeder panels, switch gears etc., would not be handed over to the Mahanagara Palika and it would install, operate and maintain the same. Therefore, street lighting activity under the energy performance contract would be considered as a composite supply of goods & services with the supply of service being the predominant supply. Thus, it would be classified under heading 999112 and taxable at 18%.

List of Cases Referred to

• • Karnataka State Electronics Development Corpn. Ltd., In re [2020] 116 taxmann.com 265 (AAR – Kar.) (para 6.9)
  • Karnataka State Electronics Development Corpn. Ltd., In re [2020] 122 taxmann.com 188/[2021] 84 GST 309 (AAR – Kar.) (para 12).