TMI Blog2019 (2) TMI 1603X X X X Extracts X X X X X X X X Extracts X X X X ..... vice as operation or maintenance of self-owned equipment does not amount to supply of services to third party. But on the other hand, they claim that the ownership in the infrastructure developed by it would be transferred after the expiry of the contract period (i e 5 years). The said transfer of ownership is also unconditional. Moreover, under Schedule-II (1)(c) of the CGST Act, 2017/SGST it is clearly defined that any transfer of title in goods under an agreement which stipulates that property in goods shall pass at a future date upon payment of full consideration as agreed, is a supply of goods. It is also observed that the Appellant at para-13.3 of their Appeal, have clearly admitted that the funds for implementation of project are being provided by OMSM to OKCL, for further release to the Appellant. The Appellant has cited the agreement copy of OMSM and OKCL, where it is provided that if OKCL fails to discharge the obligation under the agreement, OMSM would discharge all the responsibilities. The agreement cited between OMSM and OKCL is not relevant to the present issue. The Appellant themselves have admitted that OKCL will release the money for the supplies made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge Corporation Limited (hereinafter referred to as OKCL ) to implement ICT project in 4000 government and government aided higher secondary schools across the State of Odisha. Accordingly, OKCL floated a tender (Tender Code No.3) on e-tendering portal of Secured e-Tendering System (SeTs). 1 4 The said tender was for Supply, Installation, Maintenance and Commissioning of Projection system, Interactive White Board, Computer Hardware, Connected Accessories, Installation of Software and other allied accessories, site prepafation (i.e. vinyl flooring, furniture and fixtures, electrical fittings, power backup facilities, LAN, etc ), maintenance of equipment and provisions of computer training services for 5 years, in 4000 schools, divided in 6 zones on the BOOT Model basis. 1.5 The Appellant was successful bidder and was awarded the tender vide letter of award No.OKCL/SME/47/04, dated 12th July, 2013to execute the contract in 5 zones. Accordingly, the Appellant entered into agreement with OKCL on 12th Septemebr, 2013. 1.6 This contract period was for five years and as per the agreement the entire infrastructure (supplied installed) will be transferred to school and mass educa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01/ODISHA-AAR/18-19, dated 20.06.2018 = . 2018 (7) TMI 755 - AUTHORITY FOR ADVANCE RULING - ODISHA , held that the applicant is not entitled to the benefit of exemption under Entry No.72 of Notification No.12/2017-Central Tax(Rate), dated 28.06.2017, and has given Ruling as under RULING (a) Recipient of the service OKCL is a body corporate which cannot be regarded as Government. (b) The supply undertaken by the applicant is in the nature of composite supply. It includes supply of goods and services which are not naturally bundled. Each of the components of the composite supply are distinctly identifiable both in terms of quantity and value. The service provided or to be provided is not exclusively in the nature of training programme. (c) Though the source of funding for the service is the State Government and Central Government, yet, as per the contract, the payment responsibility is vested on OKCL. Therefore, the activities of the applicant by way of supply of goods and services under the ICT project are not covered under Entry 72 of the notification no. 12/2017 dated 28.06.2017, to be entitled to the benefit of exemption from GST. 1.9 While renderi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an aim to promote computer literacy among the students and teachers; (iv) BOOT Model achieves the object of imparting computer training and therefore, is preferred over outright purchase of assets; (v) The Appellant is not providing operation or maintenance services; (vi) There is no supply of goods during the period of contract. The Appellant has stressed upon the facts mentioned under point Nos. (v) (vi) above which are detailed below: Point No.(v) The Appellant is not providing operation or maintenance services; The Appellant has contended that in terms of the agreement, during the period of contract (i.e. 5 years), the operation and maintenance of the entire IT infrastructure equipment is to be carried out by the Appellant on its own cost. It is to be noted that during this period, the ownership of the equipment and infrastructure remains with the Appellant. This can be interred from the following terms of the contract: (a) during the period of contract, the equipment, infrastructure, etc. are to be repaired by the Appellant at its own cost. (b) it is the responsibility of the Appellant to obtain necessary insurance for the equipment, infras ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the IT equipment in its books of accounts and as per the accounting policy, the normal life span of IT equipment is 5 years. Thus, after 5 years, the net realizable value of IT equipment in the books of account of the Appellant reduces to zero. As the IT equipment does not have any realizable value in the books of accounts of the Appellant, the same are being transferred to SMED at zero value. Without prejudice to the above discussion regarding supply of goods, it is humbly submitted that even if some value is to be attributed towards supply of goods (equipment / infrastructure), the supply of goods here is ancillary to the principal supply of computer training service. As stated above, the basic idea of the ICT project implementation is provision of computer training to the students and teachers in the specific schools in the State of Odisha and not procurement of equipment/ mere creation of infrastructure. In view of the above, it is submitted that the Appellant is responsible for provision of computer training for five years using the newly built infrastructure. Entry No. 72 of Notification No. 12/2017 requires that the services must be provided under a training programm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellant and OKCL, title in the goods/infrastructure is transferred to SMED and not to OKCL. In such a case, even by applying Para l(c) of Schedule II, it cannot be said that the Appellant is supplying goods to OKCL. (e) With respect to services provided to Government of State of Odisha, the Appellant submitted that OKCL is a corporation established under Companies Act, 1956, which has been mandated by OMSM, Government of Odisha to act as an implementing agency to implement the ICT Project, on its behalf. Further, admittedly, the funds for implementation of this project are being provided by OMSM to OKCL, for further release to the Appellant, in accordance with the agreed terms. Moreover, in case, OKCL fails to discharge its obligations under the agreement entered into between OMSM and OKCL, OMSM would step into OKCL's shoes and would discharge all the responsibilities. All these terms of the agreement between OKCL and OMSM clearly provides that OKCL is merely acting as an implementing agency on behalf of OMSM. Moreover, at the end of the project after 5 years, the assets are being transferred to OMSM and not to OKCL. Thus, as OKCL is merely an implementing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the delay in filing the present appeal is not intentional and there were rational grounds preventing the Appellant from being able to file the appeal. It may be noted that due to the demise of former Late Prime Minister Atal Bihari Vajpayee, the State holiday was declared on 17.08.2018. Further, 18.08.2018 and 19.08.2018 were Saturday and Sunday. The Appellant also submitted that the Corporate Office of the Applicant is in Noida, U.P., and the appeal was drafted by the Applicant's Attorneys, whose office is situated in New Delhi. Hence, the entire appeal book was prepared in New Delhi and it was subsequently posted to another office of Applicant in Bhubaneswar, Odisha. The appeal book and filing documents were dispatched from Delhi on 17.08.2018 through Blue Dart Express courier. The courier was expected to reach within 2 days of dispatch, i.e., by 19.08.2018. However, due to delay in transit, the documents were received by Applicant's Odisha office on the evening of 20.08.2018. It is thus submitted that the delay in filing the appeal has been caused due to technical factors beyond the control of Applicant. 4.4 On records, it is found that the Appellant has received t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment, State Government or Union territory Administration. 4.7 To examine the issue as to whether the supplies by the Appellant are made to Central Government, State Government or Union Territory Administration, we notice that in terms of Section 2(53) of the CGST Act, 2017 and in terms of Section 2(53) of the SGST Act, 2017, Government means the Central Government or Government of Odisha respectively. 4.8 There is no denying of the fact that the Appellant is providing services to Odisha Knowledge Corporation Limited (here-in-after referred to as OKCL ), which is a body corporate. The Appellant has failed to produce any documentary evidence as to how the provision of service to OKCL qualifies to be a provision of sevice to the Central Government, state Government or Union Terittory Administration. The Argument put forth by the Appellant that they are the implementing agency on behalf of the Government is not tenable, as they are not providing services to Government. 4.9 On perusal of para 8 of the Agreement dated 12.09.2013 between OKCL and the Appellant it is noticed that the Appellant is required to supply and install the specified goods provide specified services in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent. Therefore, we hold that the Appellant does not meet the primary requirement of the conditions as laid down under Entry No. 72 of Notification No.12/2017-Central Tax(Rate), dated 28.06.2017, so as to be eligible for the said exemption, as the services provided by the Appellant to OKCL cannot be construed as services provided to the Central Government, State Government or Union Territory Administration. 4 12 The Appellant in para 12. 9.3 of their appeal have contended that as the entire infrastructure is owned by them and the activities of maintenance or operation of the infrastructure, hardware, software, etc. carried out by the Appellant are with regard to self-owned equipment. Thus, it cannot be said that the Appellant is engaged in the supply of operation or maintenance services in as much as operation or maintenance of self-owned equipment does not amount to supply of services to third party. 4.13 In this regard, we find that at para 12.10.1 of the said appeal , the Appellant themselves have contended that the activities undertaken by the Appellant are under BOOT model basis and therefore, the ownership in the infrastructure developed by them would be transferred afte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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