TMI Blog2019 (3) TMI 920X X X X Extracts X X X X X X X X Extracts X X X X ..... generating system which is immoveable property. Therefore, merely because a schedule entry is provided for the same does not mean that the product would be classified in the same. If the transaction is treated as a composite supply , whether the Principal Supply in such case can be said to be solar power generating system which is taxable at 5% GST? - Held that:- With reference to the question of GST rate of 5% on Principal supply of Solar Power Generating System , we have already treated the transaction as a Composite supply and a Works contract falling u/s. 2(119) of the CGST Act, 2017. Para 6 of SCHEDULE II [ACTIVITIES TO BE TREATED AS SUPPLY OF GOODS OR SUPPLY OF SERVICES] treats Works contracts u/s 2(119) as supply of services . In view thereof, there arises no occasion to go into the issue of Principal supply . - RAJ/AAAR/04/2018-19 - - - Dated:- 29-11-2018 - MS. ARCHANA P. TIWARI, AND MR. ALOK GUPTA, MEMBER Present for the applicant: CA Yash Dhadda, Counsel (Authorised Representative). CA Rajeev Tiwari Proceedings (under Section 101 of the Central Goods and Services Tax Act, 2017 and the Rajasthan Goods and Services Tax Act, 2017) 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred as SPGS ) under GST, the Appellant sought clarification in respect of the following : (I) Whether contract for Erection, Procurement and Commissioning of Solar Power Plant shall be classifiable as Supply of Goods or Supply of Services under the provisions of the Central Goods and Services Tax Act, 2017 and Rajasthan State Goods and Service Tax Act,2017. (II) If it is supply of Goods, then what will be its HSN classification and rate of tax in terms of the Notification No. 1/2017-Central Tax (Rate) Dt. 28.6.2017. (III) If it is supply of Services, then what will be its HSN classification and rate of tax in terms of the Notification No.11/2017-Central Tax (Rate) Dt. 28.6.2017. 3.6. The Authority for Advance Ruling, Rajasthan (hereinafter also referred to as the AAR ) vide Advance Ruling No. RAJ/AAR/2018-19/08 Dt. 1.8.2018 = 2018 (9) TMI 693 - AUTHORITY FOR ADVANCE RULING, RAJASTHAN passed the following order : 3.6.1. As per the statement of facts submitted by the applicant, the scope of work in respect of Turnkey EPC Contract includes civil works, procurement of goods and erection and commissioning. Accordingly, Turnkey EPC Contract are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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. As per Section 2(30) Composite Supply is defined as (30) composite supply means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply; Further Principal Supply is defined under Section 2(90) as (90) principal supply means the supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary; The term Mixed Supply is defined under Section 2(74) as (74) mixed supply means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Immovable property. Thus, in the given facts and circumstances, the supply can not be classified as Works Contract and be classified as Supply of Goods. 4.2 SOLAR POWER PLANT WHETHER MOVABLE /IMMOVABLE PROPERTY Under the General Clauses Act 1897 the term immovable property has been defined under Section 3(26) as immovable property shall include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth. As per the definition the term permanently fastened or attached to earth can be treated as immovable property. Any attachment with earth which is temporary in nature or can be shifted from part of earth to another without causing substantial damage to it, cannot be treated as immovable property. Further, on the given issue, CBEC has also clarified vide its Order number 58/1/2002CX dated 15/1/2002 where in Para 4 (v) it was clarified that v) 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rms and the terms of this contract, in addition to the detail drawings finalised during engineering. 6.4. As per the Appellant, since the Scope of work includes the provision of goods and services, the entire contract is one turnkey EPC contract and hence would qualify as a composite supply within the definition of the term as given under Section 2(30) of the CGST Act. It is also his contention that the principal supply in such case is the provision of goods and hence the entire contract should be taxable @ 5%. 6.5. For better appreciation of the facts and legal position, it is preferred to refer to the clause (30) of section 2 of the CGST Act, 2017 defining the term Composite supply as under : composite supply means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply; Illustration.- Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e treated as naturally bundled in the ordinary course of business. Majority of service provider in a particular area of business provide similar bundled of services. The nature of the various services in a bundle of services will also help in determining whether the services are bundled in the ordinary course of business. If the nature of services is such that one of the services is the main service and the other services combined with such service are in the nature of incidental or ancillary services which help in better enjoyment of a main service. The other instructive indicators can be the following - a) There is a single price or the customers pay the same amount. b) No matter how much of the package the actually received. c) The elements are normally advertised as a package. d) The different elements are not available separately. 6.10. From the application of the above indicators we hold that the contract for providing the design, procurement, supply, development, testing and commissioning of the Plant which includes the supply of both goods and services is a composite supply as per the definition in the Act. There are two taxable supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment, 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. However, these activities should be in terms of immovable property. In order to decide whether the transaction is a works contract it is for us to decide whether it is in terms of immovable property. The term Immovable property has not been defined under the GST Act. The appellant has submitted certain judgements in his favour and after going through them, we find that the following principles emerge - If a machine is attached for operational efficiency, it does not become immoveable property. If the fixing of the plants to a foundation is meant only to give stability to the plant and keep its operation vibration free then it cannot be called as Immoveable property . . If the setting up of the plant itself is not intended to be permanent at a given place and if the plant can be moved and is indeed moved after the road construction or repair project for which it is set up is completed, then also it cannot be termed as Immoveable prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earthing lines etc. 6.21. There are generally two types of Solar Power Systems 1) Roof mounted 2) Ground mounted. The Solar Polar Generating System in the present case is a ground mounted or ground based Solar Power system. A simple ground mounted system ( for a home ), requires a customized positioning at the perfect angles for absorbing sunlight. In a ground mounted system, good planning is a big part of placing solar panel ground mounts as the installer has to choose a location that receives the ideal amount of daily sunlight and uses space effectively. Installing ground-mounted solar panels always starts with building a stable base. Traditional ground-mounted systems , essentially all work the same-systems anchor to the ground and hold a large number of stacked panels, often two but sometimes three or four panels high. Two rails usually support each panel, whether oriented in landscape or portrait. The anchoring to the ground is the tough part of these installations, as there are many different types of foundations. If the soil is clear of debris, steel beams are driven into the ground and the racking system is attached to the beams. If ground conditio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The works relating to Module Mounting Structure includes soil testing, contour survey, levelling of land, laying of foundation, drilling of holes for foundation and erection of the MMS i.e. Module Mounting Structure. It also includes erection and installation of solar side module and solar inverter which forms the core of the SPGS. As far as works relating to solar inverter is concerned, it is not only restricted to include the procurement of inverter but also entails construction of inverter room, selection of underground cables, laying of cables etc. The Scope of work includes fine detail regarding the electrical work involved. The electrical work is not only limited to the procurement of the equipment but also includes laying of cables, digging of trenches for laying of cables and earthing system. Further the Scope of work extends to laying down of the OHT line which includes line survey, procurement of materials and erection of poles. Contract shows that lot of approval and permissions are required not only for transportation of materials but also for payment of land related taxes, approval from local bodies, environmental clearance, NOC from utilities, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red for blast furnace and the issue was whether the same is immoveable property. The Apex Court observed: Keeping in view the principles laid down in the judgments noticed above, and having regard to the facts of this case, we have no doubt in our mind that the mudguns and the drilling machines erected at site by the appellant on a specially made concrete platform at a level of 25 feet above the ground on a base plate secured to the concrete platform, brought into existence not excisable goods but immovable property which could not be shifted without first dismantling it and then re-erecting it at another site. We have earlier noticed the processes involved and the manner in which the equipments were assembled and erected. We have also noticed the volume of the machines concerned and their weight. Taking all these facts into consideration and having regard to the nature of structure erected for basing these machines, we are satisfied that the judicial member of the CEGAT was right in reaching the conclusion that what ultimately emerged as a result of processes undertaken and erections done cannot be described as goods within the meaning of the Excise Act and exigible to exci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y doubt that they were set up permanently in the land in question with a view to operate a fertilizer plant and the same was not embedded to dismantle and remove the same for the purpose of sale as machinery at any point of time. The facts as could be found also show that the purpose for which these machines were embedded was to use the plant as a factory for the manufacture of fertiliser at various stages of its production. Hence, the contention that these machines should be treated as movables cannot be accepted. 6.26. Thus what can be seen from the above is that when machines are embedded with no visible intention to dismantle them and they are intended to be used for a fairly long period of time, they are Immoveable property . 6.27. The Appellant has claimed that the Solar Power Plant is made of equipment which are largely moveable in nature, if required, the equipment can be moved without any substantial damage to them, from one land parcel to another. This may happen in cases where there is a requirement to shift the whole Solar Power Plant from one area to another area or is being sold to a party who intends to install/set it up in another area, the equipment in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of goods 234. 84, 85 or 94 Following renewable energy devices parts for the manufacture (a) Bio-gas plant (b) Solar power based devices (c) Solar power generating system (d) Wind mills, Wind Operated Electricity Generator (WOEG) (e) Waste to energy plants / devices (f) Solar lantern /solar lamp (g) Ocean waves/tidal waves energy devices/plants (h) Photo voltaic cells, whether or not assembled modules or made up into panels 6.31. The above description in the Notification shows the description of goods as Following renewable energy devices and parts for their manufacture . The term devices is very important here. A device means an object. The Oxford dictionary defines device as an object or a piece of equipment that has been designed to do a particular job . The Solar power generating system described in the entry is used in the sense of a device. Also, we have decided the instant case on its facts and circumstances. After going through the entire contract, we have come to the conclusion that the contract leads to an erection of a Solar po ..... X X X X Extracts X X X X X X X X Extracts X X X X
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