Facts Involved: The United Engineering Works (“The Applicant”) is manufacturing and supplying pump sets and also engaged in installing the same as service.The applicant has submitted that their supply is a composite supply of works contract which is in the nature of construction or installation of irrigation works taxable at 12% GST.


Issue Involved: The applicant has sought an advance ruling to determine applicable GST rate on supply of such pump sets along with their installation, electrification & energization to government entities


Legal position: Composite supply under GST means two or more taxable supplies of goods or services or both which are naturally bundled and supplied in conjunction with each other where one of the taxable supply is a Principal supply.


Held:The Authority for Advance Rulings, Karnataka observed that the applicant is engaged in two taxable supplies, firstly of goods and secondly of installation service. Installation service is possible only when the pump sets are supplied and hence, the principal supply is of pump sets.

As per the agreement entered into by the applicant with the government entities, it is not involved in drilling bore wells. The obligation of the applicant is to ensure effective installation and functioning of pump-sets supplied by it and does not relate to building, construction, etc., of any immovable property as defined under ‘works contract’.

The Authority for Advance Rulings, Karnataka held that supply of pump sets along with installation, electrification & energization is a ‘composite supply’ would not qualify as ‘works contract’.


The Applicant’s supply does not qualify as Works Contract”. It is a composite supply wherein the principal supply is that of the supply of goods i.e. submersible pumps. The applicable GST rate to the applicant’s supply would be the rate applicable on the Principal supply i.e. submersible pump sets.