The Rajasthan Authority of Advance Ruling (RAAR) in the case of M/s Natani Precast vide Advance Ruling No. RAJ/AAR/2022-23/26 dated 22.03.2023, has ruled that the supply of precast manholes using steel and cement supplied by the recipient is a supply of goods, covered by HSN Code 68109990 attracting 18% GST.
In this case, the applicant has been incorporated with the intention of manufacturing and supplying precast manholes and rises to various government and non-government entities. The supply of precast manholes requires inputs, raw materials, and consumables for their manufacturing.
The applicant sought an advance ruling on the issue of whether the supply of precast manholes wherein main ingredients is supplied by the recipient is supply of goods or services. Also, whether the material which are to be made available free of cost by the recipient and are not within the scope of applicant for supply of precast manhole shall form part of the transaction value for levying tax.
The RAAR has observed the definition of “goods” and “services” as defined under Section 2(52) and 2(102) of the CGST Act, 2017 respectively. It was stated that the intention of the applicant to manufacture and supply precast manholes and rises which are movable property; hence, the supply of precast manholes and rises is a supply of goods and not a supply of services.
Further, the RAAR observed section 15 of the CGST Act, 2017, and noted that free of cost supply of main ingredient from the recipient is nothing but an mutual understanding between parties which do not debar them from the essence of supply of goods and consideration received under GST. The price to be charged from the recipient by the applicant for the supply of precast manhole shall not be transaction value in terms of section 15(1) and 15(2) of the Act. The material that is to be made available free of cost by the recipient and is not within the scope of the applicant for the supply of precast manhole shall form part of the transaction value for the purpose of levy of tax.
