Authority for Advance Rulings, West Bengal Vrinda Engineers (P.) Ltd., In re – [2020] 122 taxmann.com 115 (AAR-WEST BENGAL)

The applicant was engaged in the reconstruction of the Majherhat Railway Overbridge (ROB). The principal contracted with the applicant for fabrication, painting and transportation at the site of the ‘Viaduct and Cable Stay’ part of the ROB. The applicant submitted that the activities in terms of the above contract should be treated as job work. The applicant filed an application to determine the nature and rate of tax of the transaction with the principal.

The authority for advance ruling observed that as per agreement, the applicant would be required to do fabrication work on the goods provided and return the Principal the excess material. As regards the fabrication job, the applicant’s liability would end after delivery of the fabricated structures at the site. But the applicant would need to apply a coat of paint after the structures erected. The contract would be mainly of the job work of fabrication of steel structures and delivery at the site with incidental supply of paint, and works contract of applying a coat of paint to the steel structures after erection.

Although both supplies would be in conjunction with each other at a single price, they can’t be said to be naturally bundled. The job work of fabrication would end with the delivery of the fabricated structures at the site. The works contract of applying paint to the erected structures would be a separate supply made in conjunction with the job work. It would, therefore, be treated as a mixed supply and would be taxable at the rate of 12%.