9911796707
Advanced Search 
TMI Blog2019 (3) TMI 539X X X X Extracts X X X X X X X X Extracts X X X X ..... d the MGST 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 - AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus- Statement of relevant facts having a bearing on the question(s) on which advance ruling is required. 1. The Government of Maharashtra (for short "GOM") has envisaged to setup a comprehensive CCTV based City Surveillance System for the city of Pune and Pimpri-Chinchwad (hereinafter referred to as the "Surveillance Project"). 2. The GOM published the Request for proposal (for sort' RFP') to seek services of a reputed IT firm as a System Integrator for Design, Development, Implementation & Maintenance of CCTV based Surveillance System For Pune and Pimpri-Chinchwad areas. Accordingly the Applicant, has submitted its proposal for the same. 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egrator the total fees in following manner : (a) 20% of the total fees against Project Go Live (i.e. successful FAT) and (b) Remaining 80% of total fees in 20 equal installments (Rs. 8,97,26,004.22 /per quarter). The fees shall be inclusive of Value Added Tax or Sales Tax, Service Tax, Income Tax, duties, fees, levies, charges, and commissions as applicable under the relevant Laws of India. Should there be a change in applicable taxes, the actual taxes on the date of billing would prevail. The payment shall be made at the end of every three months starting from the date of Successful Go Live and shall be subject to strict adherence of the respective SLAS. If the Systems Integrator is liable for any penalty/liquidated damages as per the SLAs (refer to the clause no. 7 of this agreement), the same shall be adjusted from quarterly payments due to the System Integrator. GOM will release the payment within 30 days of submission of valid invoice subject to the condition that invoice and ail supporting documents produced are in order and work is performed to the satisfaction of GOM. GOM shall be entitled to delay or withhold the payment of any invoice or part of it delivered by SI. w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20 FAT for phase II Cameras, Viewing Center Setup, Police Station T + 37 weeks 21 Go Live for the 2nd, 3rd & 4th Zones T + 40 weeks 22 System Documents, User Documents as per ITIL (Information Technology Infrastructure Library) standards T +41 weeks 23 formal Go Live for the Entire Project T + 42 weeks 24 Operations and Maintenance post Go-live 5 years Time is the essence of the agreement 7) Service Level Agreement (SLA) GoM is looking at a very professional approach in the project implementation and its operations. System Integrator is expected to match these expectations of the service levels given in Annexure III of this agreement. Any non-adherence to the SLAS would lead to the penalty, to be calculated as per the details given in Annexure III to this agreement. 8) Use & Acquisition of Assets during the term System Integrator shall:- a) Take all reasonable & proper care of the entire hardware & software, network or any other information technology infrastructure components used for the project & other facilities leased/owned by the system integrator exclusively in terms of the delivery of the services as per this Agreement (hereinafter the "Assets") in propor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on architecture to provide efficient services to GOM of this project in an efficient and speedy manner. q) Obtain a sign off from GOM or its nominated agencies at each stage as is essential to close each of the above considerations. r) Ensure that the Mobile Vans mentioned in RFP shall be registered under the provisions contained u/s 39 of Motor Vehicle Act, 1988 in the name of GoM. s) Follow/observe the conditions laid down under the provisions contained u/sub Section 2 of Section 149 of Motor Vehicle Act, 1988. 19) Date Ownership All the data created as the part of the project shall be owned by GOM. The SI shall take utmost care maintaining security, confidentiality and backup of this data. Access to the data / systems shall be given by the SI only to the personnel working on the projects and their names & contact details shall be shared with GOM in advance. GOM / its authorized representative(s) shall conduct periodic / surprise security reviews and audits, to ensure the compliance by the SI Vendor to data / system security. 20) Intellectual Property Rights (A) For the customized solution developed for the project, IPR of the solution would belong exclusively to the GOM. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r requirements, GoM shall have the right to ask System Integrator to change the team. m) Entire Agreement This MSA, the SLAs & all schedules appended thereto & the contents & specifications of the volumes 1, II, III & IV of the RFP subsequent corrigenda issued thereon & clarification (undertakings) accepted by the GOM constitute the entire agreement between the parties with respect to their subject matter." 7. From the schedule forming part of the contract it is clear that the entire project cost, as per the contract is at Rs. 224,31,50, 106/-- The goods used in the project that is capital cost of the project is at Rs.,90,35,70,545/-; and the balance operation cost for 5 years of the entire project which is a 133,95,79,561/ 8. As per the contract the project went "Go Live" on 27th October 2015. This shows that the project was operational in all respect on or before 1st July 2017 i.e. before the GST regime. 9. As per the contract the ownership of the assets that is hardware/software/funiture/data/documentation/manuals/catalogue/broachers / or any other material procured, created or utilised by the applicant will be transferred to the GOM on the date of "Go Live". The Project we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en Government of Maharashtra to set up comprehensive CCTV based surveillance system on dt.28.10.2013 for desing, development, implementation and Maintenance of CCTV based surveillance system for Pune and Pimpri -Chinchwad area. The total fees paid to the applicants as per the agreement for the execution of this contract are at Rs. 2,243,150,105.50/- which includes all the cost components as per ""scheduled A to S , for a period of 5 years and 10 months of the execution. The Government of Maharashtra released 20% amount of entire project cost. As per agreement after project "GO LIVE" on or about 27 October 2015. The balance amount i.e. 80% of the total contract value is being, released in 20 quarterly equal installments for the further period of five years from 27 October, 2015 onwards. The Government of Maharashtra has issued letter to the Applicant for Final; Acceptance Certificate for Design, Development, Implementation & Maintenance of CCTV based Surveillance System for Pune & Pimpri-Chinchwad and declared the project GO LIVE from The issuance date of letter on 27 October 2015. The Applicant has submitted invoices dt. 25 July 2017, dt. 26 October 2017, dt.25 January 2017 of Pun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the jurisdictional officer and the relevant provisions of the GST law In this regard. The Government of Maharashtra has awarded contract to the applicant to render services of system integrating design, development, implementation and maintenance of CCTV based surveillance system for the use by the Police in the jurisdiction of cities of Pune and Pimpri-Chinchwad. The agreement was entered between the Home Department of GOM and the Applicant on the 28th day of October, 2013, which falls in the period prior to implementation of GST. We refer this contract as "Surveillance Project". The issues before us are: Question 1: whether there is liability to pay tax under the GST law on the amount received post GST for supply of services as per the contract executed prior to the implementation of GST and Question 2: if the said amount is held to be taxable, then at what rate tax should be paid. Both the questions are inter-connected. Answers to both the questions depend on the determination of the nature of the activity being carried out by the applicant and once the nature of the activity is determined the question both the questions as to whether the activity is covered under the GST l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'Works Contract' as defined in clause (119) of section 2 of the SGST/CGST Act. Section 2(119) reads: "works contract means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract;" Works contract is essentially a contract of service which may involve supply of goods in the execution of the said contract. However, under the GST Act 'Works Contract' has been restricted to any work undertaken for an immovable property which is a complete departure from the erstwhile VAT and Service tax regimes where the provisions were applicable to both movable and immovable property. In the present contract, we find that the liability of the contractor-applicant does not end with the supply of goods but it extends till the successful testing, commissioning and also to maintenance of the system. The present contract in our view is a works contract as it involves provision of services and goods, but it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mns which are similar to huge pillars. This fabrication activity takes place in the cast house floor at 25 feet above ground level. After welding the columns, the base plate has to be secured to the concrete platform. This is achieved by getting up a trolley way with high beams in an inclined posture so that base plate could be moved to the concrete platform and secured. The same trolley helps in the movement of various components to their determined position. The various components of the mudgun and drilling machine are mounted piece by piece on a metal frame, which is welded to the base plate. The components are stored in a storehouse away from the blast furnace and are brought to site and physically lifted by a crane and landed on the cast house floor 25-feet high near the concrete platform where drilling machine and mudgun have to be erected. The weight of the mudgun is approximately 19 tons and the weight of the drilling machine approximately 11 tons. The volume of the mudgun is 1.5 * 4.5 * 1 metre and that of the drilling machine 1 * 6.5 * 1 metre. Having regard to the volume and weight of these machines, there is nothing like assembling them at ground level and then lifting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. v. CCE [(1997) 1 SCC 203 : (1996) 88 ELT 622] =1996 (11) TMI 66 - SUPREME COURT OF INDIA this Court was concerned with the exigibility to duty of mono vertical crystallisers which are used in sugar factories to exhaust molasses of sugar. The material on record described the functions and manufacturing process. A mono vertical crystalliser is fixed on a solid RCC slab having a load-bearing capacity of about 30 tons per square metre. It is assembled at site in different sections and consists of bottom plates, tanks, coils, drive frames, supports, plates, etc. The aforesaid parts were cleared from the premises of the appellants and the mono vertical crystalliser was assembled and erected at site. The process involved welding and gas-cutting. After considering the material placed on the record it was held that the mono vertical crystalliser has to be assembled, erected and attached to the earth by a foundation at the site of the sugar factory, it is not capable of being sold as it is, without anything more. This Court, therefore, concluded that mono vertical crystallisers are immovable property and hence not "goods" within the meaning of the Act and, therefore, not exigible to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ismantling the same. 43. It is noteworthy that in none of the cases relied upon by the assessee referred to above was there any element of installation of the machine for a given period of time as is the position in the instant case. The machines in question were by their very nature intended to be fixed permanently to the structures which were embedded in the earth. The structures were also custom-made for the fixing of such machines without which the same could not become functional. The machines thus becoming a part and parcel of the structures in which they were fitted were no longer movable goods. It was in those peculiar circumstances that the installation and erection of machines at the sites were held to be by this Court to be immovable property that ceased to remain movable or marketable as they were at the time of their purchase. Once such a machine is fixed, embedded or assimilated in a permanent structure, the movable character of the machine becomes extinct. As can be understood from the above judgements, the Honourable Courts have evolved the term 'immovable property' when faced with the question of what constitutes movable and lmmovable property. Though not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce Rate (per cent.) Condition 1 2 3 4 5 Chapter 99 All Services Section 5 Construction Services Heading 9954 (Construction services) (i) ....................................) 9 - (ii) composite supply of works contract as defined in clause 119 of section 2 of Central Goods and Services Tax Act, 2017.' 9 - (iii) construction services other the (i) and (ii) above. 6 - Hence as per the said Notification it is very clear that the composite supply of works contract as in the subject case under (ii) attracting 18% GST. The said Notification was amended 22.08.2017 vide Notification No. 20/2017 - Central Tax (Rate) and is reproduced as under:- SI. No. Chapter, Section or Heading. Description of Service Rate (per cent.) Condition 1 2 3 4 5 Chapter 99 All Services Section 5 Construction Services Heading 9954 (Construction services) (i) ....................................) 9 - (ii) composite supply of works contract as defined in clause 119 of section 2 of Central Goods and Services Tax Act, 2017.' 9 - &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause 119 of section 2 of Central Goods and Services Tax Act, 2017.' 9 - (iii) Composite supply of works contract ...................... 6 - (iv) Composite supply of works contract ................... 6 - (v) Composite supply of works contract as 6 defined in clause. (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied by way of construction, erection, commissioning, or installation of ORIGINAL WORKS pertaining to, (a) railways, excluding monorail and metro.............. 6 - (vi)Services provided to the Central 6 Government, State Government, Union Territory, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of - (a) a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession; (b) a structure meant predominantly for use as (i) an educational, (ii) a clinical, or(iii) an art or cultural establishment; or (c) a residential complex predominantly meant for self-use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are supplied to a Government Entity, they should have been procured by the said entity in relation to a work entrusted to it by the Central Government, State Government, Union territory or local authority as the case may be Notification 31/2017 Dt.13.10.2017 "(vii) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, involving predominantly earth work (that is, constituting more than 75per cent, of the value of the works contract) provided to the Central Government, State Government, Union territory, local authority, a Governmental Authority or a Government Entity. 2.5 Provided that where the services are supplied to a Government Entity, they should have been procured by the said entity in relation to a work entrusted to it by the Central Government, State Government, Union territory or local authority as the case may be Notification 31/2017 Dt.13.10.2017 (viii) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017 and associated services, in respect of offshore works contract relating to oil and gas exploration and prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no. (iv)]. (xii) Construction services other than (i), (ii), (iii), (iv), (v), (vi), (vii), (viii),(ix), (x)and (xi) above. 9 -"; Even with the amendment aforesaid the applicant's position has remained unchanged. The Surveillance project remains works contract as in the subject case falls under (ii) attracting GST @18%. However in the subject it is seen that applicant is providing composite supply of works contract in respect of surveillance project to Government of Maharashtra but the reduced rate of tax is available only if the work is of the type of original work. The expression 'Original work' has not been defined under any of the Notifications applicable to the present case. The expression 'original work' has assigned meaning under the CPWD Works Manual 2014 which reproduced as below: 1.3.1 Original Works These shall mean:- (i) all new constructions, (ii) all types of additions, alterations and/or special repairs to newly acquired assets, abandoned or damaged assets that are required to make them workable. (iii) major replacements or remodeling of a portion of an existing structure or installation or other works, which results in a genuine increase ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
