GST is applicable to bus air-conditioning systems that include the rooftop unit, compressor, and installation kit
Facts and Issue of the Case
The applicant is a Private Limited Company registered and Companies Act and has GST registrations in Bengaluru, Mumbai, Bhubaneshwar, Delhi and Kolkata. They are into manufacture of Bus Rooftop air conditioning systems which include Rooftop Unit, Compressor and installation kit. In addition the applicant undertakes installation and servicing of air conditioning systems as per the requirement of customers through dealer network. They specially cater to the needs of passenger buses and is not into the business of air conditioning systems for passenger car, commercial vehicles, house or office. Rooftop air conditioning systems are fitted on mobile vehicles to control the inside temperature and provide adequate ventilation. The said systems mainly consists of three components (units) namely Rooftop unit, compressor and tallation kit.
Roof top Unit : This item is seen on the roof of the bus i.e. certain portion is seen inside the roof of the bus and certain portion is seen on the top of the roof facing sky; It is designed depending on the size of the bus and the chassis size; It contains one evaporator and one condenser, which can either be integrated as a single unit or a split unit based on the unit design of the rooftop and expectation /requirement of the customer.
The evaporator cools the air inside the bus with the help of temperature sensor and condenser absorbs the heat from inside the bus and exchanges it to the atmosphere. Rooftop consists of heat exchangers, blowers, fans, copper tubing’s, relay panel, rubber hoses and electrical wiring harness. Though there is requirement of compressor and installation kits for running of rooftop unit, customer can choose to buy the compressor and installation kit separately from another vendor.
Installation Kit: It consists of controller, hoses, wiring harness, drain hoses, hardware accessories. The main purpose of the items in kit is to facilitate Rooftop unit installation on to the bus. Customers can buy only installation kit without rooftop unit.
Compressor: This is the heart of the complete AC system where the refrigerant is pumped to the rooftop in cycles for the heat exchange process. Cold air is not possible without a working air conditioner compressor. Some customers buy only compressor with or without modifications. Compressor is a bought out item for the company.
Observation by the Court
At the outset the court would like to make it clear that the provisions of CGST Act, 2017 and the KGST Act, 2017 are in pari-rnateria and have the same provisions in like matters and differ from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the COST Act would also mean reference to the corresponding similar provisions in the KGST Act. We have considered the submissions made by the applicant in their application for advance ruling. The court also considered the issues involved on which advance ruling is sought by the applicant and relevant facts along with the arguments made by the applicant & the submissions made by their learned representative during the time of hearing.
The applicant manufactures 86 supplies Bus Rooftop air conditioning systems which include Rooftop Unit, Compressor and installation kit; undertakes installation and servicing of air conditioning systems as per the requirement of customers through dealer network. The applicant specially caters exclusively to the needs of passenger buses. In view of this the applicant sought advance ruling in respect of the questions mentioned at Para 3 supra with regard to classification of their product/s. The proceed to consider one question at a time. In this regard the court invite reference to explanation (iii) and (iv) given in Notification, relevant to the classification of goods under GST.
The court consider the first question with regard to Classification of Bus air-conditioning system which comprises of Rooftop unit, compressor and installation kit for one consolidated price to a single customer. We examined and observed from the Customs Tariff Act 1975 that covers machinery and mechanical appliances and parts thereof and covers Air conditioning machines, comprising a motor driven fan and elements for changing the temperature and humidity, including those machines in which the humidity can’t be separately regulated.
In the instant case, it is an admitted fact that the applicant supplies the air conditioning system, comprising of Rooftop unit, Compressor and Installation kit, as a single product for a consolidated price to a single customer, exclusively for buses. Thus the said air conditioning system for buses merits classification under the same is specifically classified under the said heading.
The second question is about the classification of Rooftop unit, compressor and installation kit sold to single customer for a single fitting at customer end, but price negotiated and agreed separately for each unit. It could be inferred from the question that the applicant is undoubtedly supplying bus air condition system only comprising all the three major components as in the case of first question, but the prices of individual components have been negotiated and agreed separately for each of the units. Further it is an admitted fact and pertinent to mention here that these parts are meant for a single fitting at customer end. In other words the entire air condition system is fitted into a particular bus and for a particular customer except that the components are negotiated and agreed separately.
In this regard the court observed that Rooftop unit and Installation kits are not classified individually under the Customs Tariff Act 1985, but are identified/recognised as parts of the composite machine i.e. “air condition system for a bus” itself. Thus the above items either individually or in combinations, are to be classified as parts of said composite machine, as they are suitable for solely or principally with a particular composite machine i.e. air conditioning system for bus, Thus they merit classification parts of air conditioning machines and attracts GST accordingly.
The Bus air-conditioning system inclusive of Rooftop unit, compressor and installation kit for one consolidated price to a single customer merits classification under heading 8415 20 10.
b. The Rooftop unit, compressor and installation kit sold to single customer for a single fitting at customer end, but price negotiated and agreed separately for each unit also merits classification under heading 8415 20 10,
c. The Rooftop unit or installation kit sold individually or in combinations thereof, as mentioned below, merit classification under heading 8415.90.00.In-re-Eberspaecher-Suetrak-Bus-Climate-Control-Systems-India-Private-Limited-GST-AAR-Karnataka