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2018 (12) TMI 1155 - AAR - GSTLevy of GST - Supply of goods or not - pure services - services provided by them by way of providing energy saving street lighting services including OM of the street lighting installations to Bhubaneswar Municipal Corporation (BMC) - Entry No. 3 of Notification No. 12/2017-CentraI Tax. Held that:- There is no clarity as to whether the service supplied is a case of pure service and whether the contract in pursuance to which the service is being supplied by the applicant to BMC is not a works contract. In fact, the present ruling entirely hinges on answer to the first question i.e., whether the supply is a case of supply of pure service. The term pure service has not been deemed in the said notification for which it has to be understood by applying the common parlance test and general understanding. As per dictionary, pure means unadulterated and unmixed. Accordingly, pure service should mean pure unadulterated service not mixed with any other element (in this case without any mixture of goods). The consideration payable to the applicant includes the cost of acquisition of the business assets i.e. ‘the energy efficient street light infrastructure’ set up by the applicant at the end of the contract period. Such transfer of business assets from the applicant to BMC is admittedly not covered in clause (c) of para 1 of Schedule II of the CGST/OGST Acts - Thus, it is not a case of supply of pure service but rather a case of supply with substantial use of goods. At the time of personal hearing, on a query raised by the authority it was explained by the applicant that during the period from 01.07.2017, till the date of hearing materials such as street Lights Control Panel and LED Bulbs etc. of value ₹ 3,89,72,117/- have been moved to Bhubaneshwar project from the manufacturing plant. This is a substantial amount and with material movement at this scale, the ultimate supply to BMC cannot be held as a case of supply of puce service. Thus, on this account, the condition is not fulfilled. The activities undertaken by the applicant do not constitute supply of ‘pure services’ as it involves significant use of goods/materials. It is also a case of supply of works contract service by the Applicant to BMC. The benefit of exemption from tax in terms of S 1.3 of the notification No. 12/2017- Central Tax (Rate), dated 28.06.2017 is not available to the applicant - When there is ambiguity In exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject / assessee and it must be interpreted in favour of the revenue.” Further, Entry at Sl. No. 3 of the notification No. 12/2017-central tax dated 28.06.2017 is unambiguous and it cannot be stretched or construed otherwise. It has no extension and putting any other extension is neither warranted nor intended to and would lead to absurd conclusion not called for and would render the notification entry redundant. Ruling:- The services provided by the applicant by way of providing energy efficient street lighting services including 0M of the street lighting infrastructure during the contracted period to Bhubaneswar Municipal Corporation (BMC) do not constitute supply of pure services as it involves significant use of goods/materials with stipulation to transfer the total business assets to BMC at the end of the contract period. The benefit of exemption from tax in terms of S 1.3 of the notification No. 12/2017- Central Tax (Rate), dated 28.06.2017 is not available to the applicant.
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