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TMI Blog2019 (2) TMI 834X X X X Extracts X X X X X X X X Extracts X X X X ..... the applicant is neither pending for proceedings nor proceedings were passed by any authority. Based on the above observations, the applicant is admitted to pronounce advance ruling. 1. SUBMISSION AND INTERPRETATION OF THE APPLICANT: 1.1. The applicant is engaged in providing the comprehensive water services to the clients by way of water conservation, water distribution, water purification, water supply management, etc. That currently the applicant is in the process of bidding for tender floated by P.H.E.D., a unit of Rajasthan Government for designing, providing, installation, commissioning, operation and maintenance of solar energy based bore well water pumping systems, Reverse Osmosis Plant and operation and maintenance of Fluoride Control Project on ESCO and O & M contract. 1.2. That in relation to such tender the applicant is required to quote a rate for undertaking all the aforesaid activities which shall be inclusive of all the costs of site visits on the part of the applicant, packaging, forwarding, spare parts, insurance and taxes & duties as may be applicable. Hence, in view of the same the applicant is desirous of knowing its liability of GST in relation to the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t service. 1.4. On the given issue, CBEC has also clarified in its circular number 58/1/2002-CX dated 15/ 1/2002 where in para (e) it was clarified that e) If items assembled or erected at site and attached by foundation to earth cannot be dismantled without substantial damage to its components and thus cannot be reassembled, then the items would not be considered as moveable and will, therefore, not be excisable goods. 1.5. The supply of Reverse Osmosis plant along with its installation, commissioning and operation and maintenance is a single supply owing to the following factors * A single tender shall be floated for the supply, installation and operation and maintenance of the RO plant. * The contractor is required to provide an acceptable system to provide good hygienic conditions around the installed plant and to maintain this system during seven year comprehensive maintenance. * Special conditions of the contract generally specify that the contractor shall be bound to carry out the O&M maintenance of the installed plants for seven years. * The security deposit for the work shall be refunded after the expiry of O & M period of 7 years for all the installation made b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... minates into a plant for water supply or treatment and since work is undertaken for PWD which is Government Department, hence according to applicant the rate of tax applicable on given service (if it is a works contract service) shall fall under Entry 3(iii) with HSN Code 99544 and it should be 12%. That in case of above transaction, the entire work to be awarded shall be composite supply wherein the principal supply shall be supply of goods i.e. RO Plants and the same shall be classified under HSN code 8421 and taxable at the rate of 18%. Further, if it is considered as a works contract service then the aforesaid activity should be taxable under Entry No. 3(iii) of Notification No. 11/2017-CT (Rate) with HSN Code 99544 and should be taxable at the rate of 12%. 2. QUESTIONS ON WHICH THE ADVANCE RULING IS SOUGHT Whether the activity of supply, design, installation, commissioning and testing of reverse osmosis plant supply of goods or supply of services and what shall be e rate of GST on it? 3. PERSONAL HEARING In the matter personal hearing was given to the applicant on 11.01.2019 at Room no. 2.22 NCRB, Statue Circle, Jaipur. Mr. Mudit Jain (Authorised Representative) of appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able supplies is a principal supply. g. However, since composite supply of works contract has been explicitly classified as supply of service under Schedule II, the concept of works contract follows that:- 1. Works contract in itself is a composite supply in which construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning etc are involved along with transfer or property in goods. 2. In GST, as per definition of works contract service if construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning is for immovable property only, then it will classify as works contract. Hence it means that aforesaid activities if they are undertaken for a movable property then it will not be works contract service. 3. Now whether a supply is a works contract or not is dependent on whether the plant or device or property is a movable or immovable property. To decide whether a property is movable or immovable, the given terms have not been defined under the Act and hence the reliance needs to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plant and to maintain this system during seven year comprehensive maintenance. * Special conditions of the contract generally specify that the contractor shall be bound to carry out the O & M maintenance of the installed plants for seven years. * The security deposit for the work shall be refunded after the expiry of O & M period of 7 years for all the installation made by the firm as successfully completed and certificates to this effect are obtained from the field officers. * As per tender, payment schedule for supply, erection, commissioning and O & M of RO unit will be made for individual installation of RO plants collectively. I. According to definition of works contract under GST regime, the supply of goods and services are done by the supplier simultaneously which is for immovable property. Hence in works contract supply of goods and services together is compulsory. Thus, based on above facts and concept such contract shall be a single supply and cannot be treated as distinct supplies. Since all the conditions of composite supply are satisfied, it is a composite supply. J. We observe that the activity proposed to be undertaken is a composite supply of works contrac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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