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TMI Blog2018 (10) TMI 683X X X X Extracts X X X X X X X X Extracts X X X X ..... e CGST Act and the SGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / MGST Act would be mentioned as being under the "GST Act". 02. FACTS AND CONTENTION - PER THE APPLICANT The submission (Brief facts of the case), as reproduced verbatim, could be seen thus - Brief relevant facts: 1. IL&FS Education and Technology Services Ltd. ("Applicant") is a public limited Company incorporated in India and registered under the Companies Act, 1956. The Applicant having GSTIN 27AABCI2106H1Z0 is registered in Mumbai, Maharashtra and falls within the jurisdiction of Mumbai Nodal Division-5, Maharashtra. The Applicant is the social infrastructure arm of IL&FS group and is engaged in the key areas of education, Skill development, healthcare and cluster development for long term and sustainable impact. 2. Inter alia, the Applicant is working with various State or Union Territory Gove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may consider entry of private partners in various aspects of the ICT Project by adopting the Build, Own, Operate and Transfer (BOOT) model to avoid out of date/ obsolete equipment in schools. Thus, the new policy lays emphasis on the Public-Private Partnership (PPP) in the implementation of ICT Projects. 7. It is to be noted that ICT in Schools scheme is a collaborative venture between the Central and the State or Union Territory Governments which actively solicits the partnership between the Governments for the effective implementation of ICT Projects. Under this scheme, the State Government or Union Territory Government shall be responsible for defining norms, standards, guidelines and framework to facilitate and monitor the implementation of the scheme in an effective manner. Thus, primary responsibility of implementing ICT Projects is on the State or Union Territory Governments. 8. However, while framing the policy, standards, norms, etc. for implementation of ICT Projects, the State or Union Territory Governments would be guided by the national level policy framed by the Ministry of Human Resource and Development, Government of India. This is to ensure uniform and high stand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Annexure-I and Annexure-IA to the agreement and the decision of the technical committee, the Applicant would procure the requisite number of IT equipment i.e. Computers, Printers, Scanners, etc. The equipment so procured would be installed and commissioned by the Applicant in the ICT lab prepared in schools. All these activities i.e. site preparation, installation and commission are to be completed by the Applicant in the time prescribed in the agreement i.e. Within 120 days from the date of handing over of the sites by DE(S&HS). 16. Once the labs are ready, the Applicant Shall operate the same for imparting computer training. For this, the Applicant is required to provide one teacher, having specified qualifications and experience, to each school. The teachers so appointed would utilize the available ICT infrastructure (i.e. the ICT lab so created by the Applicant) for imparting computer training to the students in accordance with the curriculum developed in this regard by the Director, Pune as per Annexure-Ill to the agreement. 17. Annually, the appointed teacher shall also impart necessary training to at least 5 school teachers including the headmaster/headmistress of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices or both; f. Whether applicant is required to be registered; g. Whether any particular thing done by the applicant with respect to any goods or Services or both amounts to or results in a supply of goods or services or both, within the meaning of that term. 22. The Applicant submits that the issue on which advance ruling is sought in the instant matter relates to the applicability of Sl. No. 72 of Notification No. 12/ 2017-Central Tax (Rate) dated 28.06.2017 under CGST Act to the services provided by the Applicant. The questions relating to applicability of a notification issued under the CGST Act, 2017 are eligible to be posed for advance ruling before the Advance Ruling Authority in terms of Section 97(2)(b) of the CGST Act, 2017. Hence, present advance ruling application is maintainable before the Hon'ble Authority of Advance Ruling, ISSUE(S) REQUIRING ADVANCE RULING: 23. The Applicant submits the following question for Advance Ruling and their interpretation on the question is as under: a. Whether the services provided by the Applicant to the Government secondary and higher secondary schools under the ICT Project, are covered under the scope of Entry No. 72 of Not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tallation, commissioning, Site maintenance, operation, etc. to implement ICT Projects in the government secondary and higher secondary schools in the state of Maharashtra. A detailed explanation of the activities carried out by the Applicant is already provided in the facts above (Annexure I to the present application). 31. At this juncture, it is essential to analyse whether all the above referred activities carried out by the Applicant would qualify as 'supply of services under the training program' or not? 32. In order to answer this question, it is pertinent to understand true nature, scope and extent of the activities undertaken by the Applicant in the implementation of ICE Projects under the ICT in Schools scheme. All the activities undertaken under ICT Projects are naturally bundled 33. It has been explained in the facts of the instant matter (Para 6-9 of Annexure I to the application) that the national level policy framed by the Central Government for implementation of ICT Projects provides that the State Government(s) should preferably follow BOOT model. 34. This suggestion of the Central Government is in fact being followed by the State Governments. Multiple state g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation. 40. The Applicant humbly submits that the entire infrastructure is being developed for imparting computer training and that the Applicant is engaged in single supply of computer training services to the state of Maharashtra. The ICT in Schools scheme has been introduced with an aim to promote computer literacy among the students and teachers 41. The above argument that the entire infrastructure is developed to provide computer training is also supported by the policies framed by the Central as well as State Government in this regard. 42. The vision and mission statement in the new policy provides that the scheme has been introduced in schools with an aim to promote computer literacy and technologically-aided education among the students as well as teachers. 43. The preamble to the agreement clearly provides that the supply of computer hardware, software, faculty and provision of education services under BOOT model are in pursuit to improve the quality of education in secondary and higher secondary schools of Maharashtra. 44. On a careful perusal of the new policy issued by the Central Government and the preamble of the agreement, it is abundantly clear that the prime ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government has stressed upon the fact that the 'Outright Purchase Basis' or 'Direct Procurement of Hardware' by the State Governments would be the last resort. Moreover, the State Government(s) opting to implement the ICT Project under Outright purchase method would be required to give a detailed justification as to why BOOT model is not opted. 49. It has been experienced in the past that the 'Outright Purchase of Assets' helped in creation of assets or infrastructure, but in absence of the qualified teachers or trainers, such infrastructure was never utilized for imparting education and resultantly, the assets would eventually have become obsolete. Not only this, even the Government was not technically equipped to operate and maintain the computer systems (both hardware and software) to ensure smooth implementation of ICT Projects. Thus, it failed to achieve the object of imparting computer training to the students and teachers. 50. Therefore, keeping in mind the past experience, BOOT model is preferred and outright purchase of assets is kept as the last resort. The Applicant submits that the above discussion is to bring to the notice of the Hon'ble Advance Ruling Authority tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e co. Pvt. Ltd. = 2017 (11) TMI 442 - SUPREME COURT. 55. Thus, in view of the above discussion it is clear that the entire infrastructure is owned by the Applicant and the repair and maintenance activities undertaken by the Applicant are in regard to the self-owned equipment. Therefore, there is no supply of maintenance or operation services by the Applicant. 56. In fact, the repair and maintenance of the equipment and infrastructure is performed by the Applicant so that it may continue to provide computer training during the contract period in a smooth manner without any obstruction. There is no supply of goods during the period of contract 57. The activities undertaken by the Applicant are under BOOT model basis and therefore, the ownership in the infrastructure developed by it would be transferred after the expiry of the contract period (i.e. 5 years). This is also clearly provided in the tender notice that the ownership of the entire hardware, software, other equipment, etc. will be transferred by the Applicant to DE(S&HS) at a nominal value of Re. 1/- at the end of the contract period. 58. In view of the above, it can be concluded that during the entire period of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. a course of diet and exercise for developing physical strength, endurance or dexterity; (v) Oxford Dictionary of English, third edition Training means the action of teaching a person or animal a particular skill or type of behaviour 62. On a careful perusal of the above referred dictionary meaning. it can be understood that in common parlance, training is generally used to refer to practical instruction or learning process. It also means practical guidance given for developing skills or the action of teaching or giving instruction in a particular subject to enhance skills. 63. It is to be noted that under the erstwhile service tax regime, the services in the nature of commercial training and coaching provided by commercial training and coaching institutes were taxable and the term 'commercial training and coaching' was also not defined under the Finance Act (both under the positive and negative regime). Further, the courts had, at various occasions, interpreted the term 'training' used therein and distinguished it from education. 64. In this regard, reference is made to the decision of Hon'ble Tribunal (Larger Bench) in the decision of Great Lake Institute of Managemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any conditions viz. content, syllabus, periodicity, etc. Thus, once it is established that the services are in the nature of imparting skills or knowledge, the same would amount to training services for the purpose of entry No. 72 of Notification No. 12/2017. 70. It is already discussed in detail that the Applicant is engaged in providing computer related skills to the students as well as teachers. Thus, it is abundantly clear that the services provided by the Applicant viz. computer related training to the students as well as teachers under ICT Project would squarely fall within the ambit of term 'training' used in Entry No. 72 of Notification No. 12/2017 irrespective of the tenure, syllabus, content, etc. of the Project. 71. In view of the above discussion, it can be inferred that the first pre-requisite of the Entry No. 72 of the Notification No. 12/2017 is fulfilled. The services are provided to Government of State of Maharashtra 72. The second pre-requisite of Entry No. 72 of Notification No. 12/2017 is that the services are to be provided to the Central or State or Union Territory administration. In the instant case, the agreement pertaining to implementation of ICT Proj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ministration. As per Para 3.1.3 of the revised guidelines, the total expenditure on this programme is borne by the Central and State/UT Government in the ratio of 75:25 except for the NER states including Sikkim where it is 90:10. This information is also available at the website of MHRD. A screenshot of the relevant page of the MHRD website is enclosed as Annexure-F. 78. Therefore, the third pre-requisite of the Entry No. 72 of Notification No. 12/2017 is also fulfilled. ISSUES REQUIRING ADVANCE RULING AND APPLICANT'S UNDERSTANDING: In the light of aforementioned, the Applicant seeks to enter the following question for Advance Ruling and its interpretation of the question will be as under: Question: Whether the training services provided by the Applicant are covered under the scope of Entry No. 72 of Notification No. 12/2017? Applicant's Understanding: The Applicant is providing computer training services to the Government of Maharashtra and the whole expenditure in regard to such training programme, is borne by the Central Government as well as the Government of Maharashtra, Thus, the services provided by the Applicant would fall within the scope of Entry No. 72 of Notif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the Central Government, State Government, Union territory administration under any training programme for which total expenditure is borne by the Central Government, State Government, Union territory administration attract nil rate of taxes under the GST law. 5.5 From a reading of the description mentioned in column 3 of the above mentioned table we find that there are three elements involved as under which have to be satisfied by the applicant to be eligible to avail the benefit of Entry No. 72 of Notification No. 12/2017:- 1. Services should be provided to the Central Government, State Government, Union territory administration. 2. under any training programme. 3. for which total expenditure is borne by the Central Government, State Government, Union territory administration. 5.6 We now take up each of the factors involved in the said Entry No. 72 of the Notification No. 12/2017-CT (Rate) as follows:- A. SERVICES SHOULD BE PROVIDED TO CENTRAL GOVERNMENT STATE GOVERNMENT UNION TERRITORY ADMINISTRATION. The applicant has submitted that they are working with various State or Union Territory Governments to promote computer training among the students and teachers of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... project in Government and Government aided higher secondary schools across the State of Maharashtra. In the preamble of the contract it is mentioned that "In its pursuit to improve the quality of education in Secondary and Higher Secondary schools of Maharashtra, the supply of computer hardware, software and connected accessories, Faculty and provision of IT Education Services in Government Secondary and Higher Secondary schools in the State of Maharashtra on Build, Own, Operate and Transfer (BOOT) Model is envisaged under the ICT @school scheme under Public Private partnership'. As seen in the contracts the Applicant, has to procure, supply and install requisite number of IT equipment i.e. computer hardware, software, etc and to maintain and keep the same in proper working conditions for the entire contract period of five years along with deployment of manpower (in the form of Faculty member/ Instructors, etc) in the said 1590 Schools to impart computer knowledge to the students and teachers for a total contract value of Rs. 284.61 Crores. Thus it is seen that the applicant, under the contract, is obliged to make taxable supply of goods and services to the during the contract pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... skills to the students as well as teachers Also we see that the contract is for the supply of computer hardware, software and connected accessories along with the site preparation (i.e. vinyl flooring, furniture and fixtures, electrical fittings, power backup facilities, LAN, etc.), maintenance of equipment and provision of computer training services for 5 years in 1590 Govt, and Govt. aided high schools of Maharashtra under ICT @ school project for a certain contract value. Thus, the contract is clearly for supply of goods and services including training. It is a composite supply having distinctly identifiable components with distinct value attributable to each of the components. There is no doubt that the applicant has provided computer training service as part of the contract, but the said service is not the pre-dominant/ principal supply. In fact as seen above the contracted supply has many distinct supply components out of which training is a small component. It is also seen from their submissions that during the contract period, the infrastructure built by the Applicant remains property of the Applicant. Even after the expiry of contract period, the ownership of the entire ..... X X X X Extracts X X X X X X X X Extracts X X X X
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