9911796707
TMI Blog2019 (2) TMI 1603X X X X Extracts X X X X X X X X Extracts X X X X ..... ing on the applicability of Entry No. 72 of Notification No. 12/2017-Central Tax(Rate), dated 28.06.2017, read with Entry No. 72 of Notification bearing SRO No. 306/2017-Finance Department. Government of Odisha to the services provided by them under the category of Information and Communication Technology (ICT) @ School Project. 1.2 The Appellant is a public limited company incorporated in India and registered under the Companies Act, 1956. The Appellant having GSTIN 21AABC12106HIZC is registered in Khordha, Odisha and falls within the jurisdiction of State of Odisha. The Appellant 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 a long term and sustainable impact. 1.3. The present appeal concerns, one such ICT project being implemented by the Appellant in the State of Odisha. The Odisha Madhyamik Shiksha Mission (hereinafter referred to as "OMSM"), Government of Odisha, has mandated the Odisha Knowledge 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. Acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ha, after examining the grounds filed in the Application filed by the Applicant, has observed that three pre-perquisites are to be satisfied for the supply of services to qualify for the notified exemption (a) The supply has to be a supply of Service provided to the Central Government, State Government or Union Territory administration; (b) Such Service must be 'under any training program'; (c) The total expenditure of such Service is borne by the Central Government, State Government or Union territory administration. 1.8 After thoroughly examining the contract details, the service details as said to be rendered, mode of payment details etc., the AAR, Odisha, vide its Ruling passed vide Order No- 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 supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out various activities viz. installation, commissioning, site maintenance, operation, etc. to implement the ICT Project in the government schools and government aided schools in the State of Odisha. The Appellant relies on the following points with a view to establish that the provided by them are under training programme. (i) All the activities undertaken under the ICT Project are naturally bundled, principal supply being that of provision of computer training; (ii) The basic infrastructure is being developed to provide computer training to the students and teachers; (iii) The ICT in Schools scheme has been introduced with 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cture developed by it would be transferred after the expiry of the contract period (i.e. 5 years). This is also clearly provided in the agreement that the ownership of the entire hardware, software, other equipment, etc. will be transferred at zero value at the end of the contract period. In view of the above, it can be concluded that during the entire period of contract, the Appellant is not engaged in the supply of goods inasmuch as supply of goods is taking place only after the expiry of contract period of 5 years. It is to be noted that the Appellant is claiming depreciation of 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 h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t as regards the said transfer involving supply of goods. Conversely, in the application as well as in the additional submissions submitted by the Appellant before the Ld. AAR, the Appellant has emphasized on the fact that supply under the JCT Project involves supply of goods as well as supply of services, and whilst supply of services is the principal supply, supply of goods is merely an ancillary supply taking place at the end of the contract period, at zero value. The Appellant would like to highlight here that as per the contract entered into between 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 releas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ays delay in filing the Appeal by the Appellant. 4.2 The Appellant in support of condonation of delay has submitted that the Advance Ruling passed by AAR, Odisha was communicated to the Appellant on 17.07.2018. The Appellant has also submitted the proof of the receipt of the date of Speed Post. Accordingly, the time limit of 30 days for filing the appeal expired on 16.08.2018. Considering that the appeal was filed on 21 08.2018, the delay in filing of appeal is reckoned to be five days. 4.3 The Appellant has also submitted that 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 Bhu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y has to be a supply of Service provided to the Central Government, State Government or Union territory Administration; (b) Such service must be under any training programme; (c) The total expenditure of such service is borne by the Central Government, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the finding arrived at the Advance Ruling given by the Advance Ruling (AAR), Odisha, on this point and hold so Even if some percentage of shares are owned by Government of Odisha in the OKCL. the company cannot be construed as Government. 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 12.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
