TCAS being electrical signalling equipment is taxable at 18% GST: AAR

Case Details: Authority for Advance Rulings, Telangana Kernex TCAS JV, In re - [2022] 138 taxmann.com 173 (AAR-TELANGANA)

Judiciary and Counsel Details

• B. Raghu Kiran & S.V. Kasi Visweswara Rao, Member

Facts of the Case

The applicant was executing contract for South Central Railways for design, supply, installation, testing and commissioning of Train Collision Avoidance System (TCAS) onboard locomotive. It filed an application for advance ruling to determine taxability of design, supply and installation of TCAS system.

AAR Held

The Authority for Advance Ruling observed that the impugned contract was for installation of TCAS onboard locomotives which were movable property and therefore, would not qualify to be works contract under GST law. It was also observed that the entire system would be based on signalling equipment and RFID tags. The principal goods in the system would be electrical signalling equipment enumerated as HSN 8530 i.e., ‘Electrical signalling, safety or traffic control equipment for railways, tramways, roads, inland waterways, parking facilities, port installations or airfields’. Therefore, the supply of TCAS would be treated as naturally bundled supply of various goods working in unison to achieve a single purpose of railway safety through signalling etc. and would be treated as composite supply and taxable at the rate of 9% under CGST & SGST respectively.

List of Cases Reviewed

• Abott Health Care (P.) Ltd. v. CST [2020] 74 GSTR 37 (para 7) followed.

List of Cases Referred to

• Abott Health Care (P.) Ltd. v. CST [2020] 74 GSTR 37 (Ker.) (para 7)
• Dr Mahesh Chandra Sharma v. Smt. Raj Kumari Sharma AIR 1996 SC 869 (para 7).