Authority for Advance Ruling — GST on contract for composite supply – The applicant is engaged in the business of design, construction and operation and maintenance of water distribution networks for municipal bodies across India. The applicant sought an advance ruling as to whether the agreement entered between the applicant and KMC, Establishment of District Meter Areas, Construction Works and Operation & Maintenance be considered as divisible supplies under the GST Laws; if the answer to (1) is not affirmative, whether the agreement entered between the applicant and KMC be treated as single contract for composite supply and what would be its taxability under GST regime; if the answer to (1) is affirmative, would O&M be regarded as pure services contract falling under clause (b) of para 5 of Schedule II to the Act, accordingly, ITC would become the cost in the hands of the applicant.

Held that:- The Hon’ble Authority for Advance Ruling held that the contract for water loss management made by the applicant with KMC which includes construction of water distribution networks and operation & maintenance shall be treated as an indivisible single contract and qualifies for works contract as defined under clause (119) of section 2 of the Act. This is covered under entry serial number 3(iii) of the Notification No. 20/2017- CT (Rate) dated 22.08.2017 and shall attract tax @ 12% w.e.f. 22.08.2017. For the period from 01.07.2017 to 21.08.2017, the supply is taxable @ 18% vide entry serial number 3(ii) of the Notification No. 11/2017- CT (R) dated 28.06.2017.