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M/s Hyundai Rotem Company, New Delhi Versus Commissioner of Customs, Central Excise & Service Tax, Hyderabad, Commissioner of Service Tax,

2016 (5) TMI 455 - AUTHORITY FOR ADVANCE RULINGS

Benefit of exemption notification no. 25/2012-ST is available or not - Activity of Testing & Commissioning, Integrated Testing & Commissioning and Trial runs of Trains under contract - Installation and commissioning of EMU and the platform - whether in the nature of erection, commissioning or installation of plant, machinery or equipment pertaining to metro - Whether in nature of original work - Held that:- the General Conditions of Contract/ Conditions of Contract mention that tests on completi .....

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ing stocks into operation. - Therefore, we agree with the applicant that the services provided i.e. in relation to testing & commissioning, integrated testing and commissioning, trial runs of trains, are by way of commissioning. - Works Contract - original work - Held that:- “original work” inter-alia means erection, commissioning or installation of plant, machinery or equipment or structures, whether fabricated or otherwise. - Rolling stock is at least plant and machinery and same woul .....

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R/ST/12-13/2016, Application No. AAR/44/ST/18/2013 & AAR/44/ST/32/2013 - Dated:- 22-4-2016 - V. S. Sirpurkar (Chairman) , Shri S. S. Rana (Member) And Shri R. S. Shukla (Member) For the Applicant : Shri Tarun Gulati, Advocate Shri Kishore Kunal, Advocate, For the Respondent : Shri Amresh Jain (AR) RULING Hyundai Rotem Company (hereinafter also referred to as the applicant) has filed following two applications for Advance Ruling:- (a) AAR/44/ST/18/2013 with respect to Contract with Delhi Metro Ra .....

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eral Conditions of the Contract ( GCC ), applicant is required to undertake integrated testing and system commissioning of the works. Integrated Testing has been defined in the Contract at Clause 1.1.4.2 of the GCC as tests performed by the applicant / Contractor at the direction of the Engineer for compatibility with the various sub-systems. Further, works as defined in the Contract at Clause 1.1.6.12 of the GCC includes services to be carried out for integrated testing and commissioning of the .....

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e E-3 of the Schedule of Prices. In terms of Clause 8.2.1.12, applicant is required to perform all the necessary testing and commissioning of the works including tests on completion. Further, integrated system testing is defined in Clause 1.1.75 to mean that the applicant has to undertake tests to L&T s satisfaction so that the system is compatible with the rest of the sub-systems of the metro rail system. 2. As the issues involved in both the applications are similar, as also the applicant .....

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rtaken under the Contract? 3. Applicant inter-alia submits that as per two Contracts, they are required to undertake testing to ensure integration of the Rolling Stock to the metro systems and said activity clearly amounts of commissioning of the rolling stock on to the metro rail system; that each metro rail system has its own requirements with respect to the various stations, signaling, gauge measurement etc. and therefore, the seamless integration by the applicant is required to undertaken by .....

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acement of doors and the distance between doors as well as with the signaling systems of the EMU and the platform; that when the metro train pulls into a platform, the EMU and the platform have to be completely aligned; that a metro project is not complete unless the EMUs are installed, commissioned and aligned with the metro systems; that the integrated testing carried out is part of commissioning of the metro project and involves a live testing of not just the EMU but also the other sub-system .....

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on the definition of the word machinery from the Privy Council decision of Corporation of Calcutta vs. Chairman, Cossipore and Chitpore Municipality (1922) ILR 49 Cal 190, wherein the term machinery is defined as ; The word machinery when used in ordinary language prima facie means some mechanical contrivances which, by themselves or in combination with one or more other mechanical contrivances, by the combined movement and inter-dependent operation of their respective parts generate power, or e .....

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ithin the definition of plant as provided under Section 10(5) of the Income Tax Act, 1961. In short, applicant relied upon the decisions of the Hon ble Supreme Court in CIT vs. Mir Mohammad Ali (1996)7SCR 846 and C.I.T. vs. Taj Mahal Hotel (1971) 3 SCC 550 to state that the Rolling Stocks, which are installed by the applicant will fall within the definition of plant , machinery as well as equipment and therefore, will be covered by said exemption Notification. 4. Revenue submits that the service .....

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(a) an airport, port or railways, including monorail or metro X X X X X 6. Para 2(y) of Notification No. 25/2012-ST dated 20.06.2012 is reproduced as under; 2. Definitions - For the purpose of this notification, unless the context otherwise requires,- (y) original works means as the meaning assigned to it in Rule 2A of the Service Tax (Determination of Value) Rules, 2006. 7. Rule 2A of the Service Tax (Determination of Value) Rules, 2006 defines original works as under:- Explanation 1- For the .....

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der; Bring (something newly produced) such as a factory or machine into working condition The New Shorter Oxford Dictionary (3rd edition) defines Commission as under; Bring (a machine, equipment etc.) into operation 9. Clause 1 of the Contract Agreement - Contract RS 10 dated 24.05.2013 between Delhi Metro Rail Corporation Ltd and the applicant (Contractor) inter-alia states that both the parties would implement the design, manufacture, supply, testing, commissioning and training of 486 EMU (Pas .....

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o include Integrated Testing where applicable as per the contract conditions. The Contractor shall, following satisfactory completion of tests on his works, equipment, sub-systems or system, perform, at the direction of the Engineer, programme of tests to verify and confirm the compatibility and complete performance of his works, equipment, sub-systems or system with the works, equipment, sub-systems or system provided by others. 1.1.4.2 Integrated Testing in the contracts where applicable means .....

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lled, completed, tested, commissioned,(including Integrated Testing and Commissioning) and remedying of any defects, and/ or supplied in accordance with the Contract and include Plant, Rolling Stock and Materials and their accessories. 10. Clause 4 of Contract Agreement dated 05.09.2012 between L&T Metro Rail (Hyderabad) Limited and the applicant (Contractor) mentions 3 documents, which shall be deemed to comprise the Contract. One such document is Conditions of Contract. Relevant portions o .....

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mpletion of the Contractor s tests on its equipment, subsystems or system, to verify and confirm the compatibility and compliance performance of such equipment/subsystem/system supplied by the Contractor with the equipment/subsystem/system, provided by the Other Contractors of the Rail System. 11. It is observed that the applicant would be eligible to avail benefit of exemption Notification No. 25/2012-ST dated 20.06.2012, in case, services provided by the applicant are; a) by way of constructio .....

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l Hotel (1971) 3 SCC 550 respectively. Further, these Rolling Stocks are to be brought into operation by the applicant, which would fall under the meaning of word commissioning . Further, the General Conditions of Contract/ Conditions of Contract mention that tests on completion shall include Integrated Testing, wherein the contractor (applicant) shall follow satisfactory completion of tests on his equipment, sub-systems or systems to verify and confirm the compatibility and compliant performanc .....

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