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2019 (10) TMI 1013 - AUTHORITY FOR ADVANCE RULING, KARNATAKARate of GST - HSN Code - e-campus solutions supplied by the applicant - HELD THAT:- The transaction of the applicant is verified and found that the applicant has entered into contract with various organisations, especially with schools for the supply of e-campus solutions which involves various e-learning facilities. The contract also involves the annual maintenance of the entire product. The contract is for multiple years and the consideration for the contract is to be received in two instalments in each year. The sample contract is examined and found that the transfer of title in goods is happening only at the end of the contract period in all cases, except planetarium where no transfer of property in goods is happening and it is a clear case of lease (hence a service). Even where the contract is terminated within the contract period, a lump-sum amount is charged as severance amount which is related to the cost of infrastructure installed and the transfer of property happens at that time. Hence in all cases, the actual contract is for the lease of infrastructure in the project and usage and hence is a service - What is leased in this case is not individual goods but all the goods involved in the set-up of an e-classroom. The moment the e-classroom comes into existence,- the individual goods lose their existence and only additional users can be attached for additional amounts. Thus, the lease of the project is covered under item (iii) of entry 17 of Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017 and is liable to tax at 9% CGST as the project is taxable at 9% CGST.
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