TMI Blog2019 (3) TMI 925X X X X Extracts X X X X X X X X Extracts X X X X ..... of property of all the goods involved in executing it. Therefore, this constitutes a supply of composite supply of works contract by the Applicant which is a supply of service as per Schedule II of CGST Act 2017. The agreement for wet leasing of Robotic spot welding machine and Laser cutting and welding machine as per Schedule V(a) and Schedule V(b) for a period of 10 years is a supply of right to use the equipment along with manpower service maintenance service etc. As multiple taxable supplies of services are involved, this is a composite service of service. However, this is not a works contract as there is no immovable property nor transfer of title of goods is involved. As per explanatory notes to classification of services for SAC 9973. The agreement of wet leasing of machinery falls under this classification of SAC 997319 for leasing of machinery with or without operator etc. - The agreement for Comprehensive Annual Maintenance Contract (CAMC) of Mechanical Electrical under Schedule VI (a) and VI (b) will involve supply of goods, spares etc. and services and hence is a composite supply. This maintenance is in relation to the factory being erected, commissioned involv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue and should include the amounts, if any, as specified in Section 15(2) and exclude the discounts, if any, as specified in Section 15(3) of CGST ACT 2017. - Order No. 8/AAR/2019 - - - Dated:- 22-1-2019 - MS. MANASA GANGOTRI KATA, IRS AND THIRU S. VIJAYAKUMAR, MEMBER Note: Any Appeal against the Advance Ruling order shall be filed before the Tamil Nadu State Appellate Authority for Advance Ruling, Chennai under Sub-section (1) of Section 100 of CGST ACT/TNGST Act 2017 within 30 days from the date on which the ruling sought to be appealed against is communicated. At the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Service Tax Act would also mean a reference to the same provisions under the Tamil Nadu Goods and Service Tax Act. M/s. HYT SAM INDIA (JV), (hereinafter called the Applicant or the Company) having an establishment at No. S9, SAM Towers, 6th Avenue, Anna Nagar West, Chennai, Tamilnadu - 600 04 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were entered and few are yet to be entered as per the terms of the LOA and the main contract dated 19.08.2017. 2.2 The Applicant has stated that the contract awarded to them is works contract as it involves Construction, Installation, and Fabrication etc. of factory which is immovable property and also involves transfer of property of goods. Whereby in terms of Section 7 of CGST Act, 2017 read with Schedule Il to the said Act, it has to be construed as supply of services. Accordingly, the rate of tax is to be determined in terms of Notification No, 11/2017-CT(R) as amended. The Applicant has submitted that since their work is pertaining to railways and also for benefit of public, the construction and setting up of a modernized factory is not for commerce, industry or any other business or profession. The main objective is to construct the factory for manufacture of stainless steel coaches. This has been given on turn-key basis though different parts of the contract are given for purpose of administrative and execution. This is a composite supply. As per the definition of original works in Notification 12/2017-Central Tax (Rate) dt 28.06.2017, this contract is an original work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailways and are eligible for exemption. 4.1 The submissions of the Applicant were examined. The Applicant is awarded the Letter of Acceptance No. M/CPM/ICF/CSP-II/T-1 dated 29.06.2017(hereinafter called the LOA) by Integral Coach Factory, Chennai 600 038(hereinafter referred as ICF) in respect of Tender No: ICF/Comp1ete Switch-over project Phase-II/T-1 dated 27.03.2017 opened on 09.05.2017 for the work of Modernization of ICF for Complete Switch-over to Stainless steel coach manufacturing-Phase Il, consisting of construction of shed, provision of M Ps in ICF Shell/ Furnishing Division, retro-fitment / re-conditioning / re-sitting / disposal of obsolete M Ps of shell division including wet leasing of M Ps and associated Electrical works on turnkey basis . It is seen from the tender document that the scope of work is covering all the works specified from Schedule I to Schedule VI as per LOA with an approximate estimated cost of works as ₹ 243.28 Cr. On perusal of the LOA, it is seen that the works covered under each Schedule has separate consideration specified: Schedule I,II,III are Mechanical, Civil and Electrical works consisting of supply, construction, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e agreements for Wet leasing of Robotic spot welding machine; Laser cutting and welding machine as per Schedule V (a) and V (b) have been entered into vide agreement No. ICF/CPM/CSP-II/T-1/ WET-LEASING/RSW dt. 09.08.2017 and ICF/CPM/CSP-II/T-1/WET-LEASING/LCW dt. 09.08.2017 -and payment schedule is as per those agreements. A separate agreement in respect of CAMC for 5 years is to be entered into after completion of warranty period. They involve intermediate stage payments for the works and they are to be treated as advance against final payment Final bills are to be raised in respect of each of the Schedules. Payment shall be due within 30 days from date of receipt of invoice. The price schedule annexed to the contract agreement specifies the value for each of the Schedules. It is seen from invoice being raised that separate invoices are being raised for each Schedules and each invoice specifies the distinct works covered in the respective Schedule with distinct values to each such works. From the invoices submitted for Schedule I Mechanical Schedule II Civil and Schedule III Electrical, it is shown as Composite Supply of Works Contract and 6% CGST and 6% SGST is being charg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and commissioning of all civil structures in Schedule II, supply of electrical equipment including commissioning spares in Schedule III, with a total consideration of approximately ₹ 228.71 Cr by the Applicant to ICF, Chennai. It is seen that this agreement is for supply of more than one taxable supply involving supply of goods and services such as machinery (both mechanical and electrical), construction, erection, installation, commissioning service etc. These supplies are bundled together in the agreement which is on turnkey basis and are required to be supplied together. Further, these activities are for an immovable property which is the factory here and involves transfer of property of all the goods involved in executing it. Therefore, this constitutes a supply of composite supply of works contract by the Applicant which is a supply of service as per Schedule II of CGST Act 2017. The supply for up-rooting and disposal of condemned M Ps, under Schedule IV, is made by ICF to the Applicant for a consideration. Advance ruling as per Section 95(a) of the CGST is in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rate) dated 28.06.2017 is as under, Sl.No. 3 (v) was inserted vide No. 20/2017-C.T. (Rate) dated 22.08.2017 insert Sl .No 3(v). Sl.No. Chapter, Section or Heading Description of Service Rate (perc ent.) Condition 3 Heading 9954 (Construction services) (ii) composite supply of works contract as defined in clause 119 of section 2 of Central Goods and Services Tax Act, 2017. 9 (v) Composite supply of works, contract as 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, [including] 9 monorail and metro; 6 9. Substituted vide notification No. 1/2018-Central Tax (Rate) dt 25.01.2018. Prior to substitution it read excluding From the above, the rate of tax applicable for Composite supply of works Contract, supplied by way of Construction, erection, commissioning or installation of original ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... works of construction, erection, commissioning, or installation pertaining to railways, is taxable at 6% CGST and as per Sl.No. of Notification No. 11/2017 -C.T.(Rate) and 6% SGST as per Sl.No. 3(v)(a) of Notification No. II(2)/CTR/532(d-14)/2017 vide G.O. (Ms) No. 72 dated 29.06.2017 as amended with effect from 22.08.2017. Prior to that, it is taxable at 9% CGST and as per Sl.No. 3(ii) of Notification No. 11/2017 -C.T.(Rate) and 9% SGST as per Sl.No. 3(ii) of Notification No.ll(2)/CTR/532(d-14)/2017 vide G.O. (Ms) No. 72 dated 29.06.2017 as amended. The agreement for wet leasing of Robotic spot welding machine and Laser cutting and welding machine as per Schedule V(a) and Schedule V(b) is not a works contract though it is a composite supply and hence is not eligible for SI.no. 3(v)(a) of this notification. The agreement for Comprehensive Annual Maintenance Contract (CAMC) of Mechanical Electrical under Schedule VI (a) and VI (b) is composite supply of works contract maintenance pertaining to railways. However, Sl. No 3(v) (a) of the above notification does not cover maintenance hence is not eligible for Sl no 3(v)(a) of this notification. The Applicant in his written su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iated Electrical works on turn-key basis dt 29.06.2017 entered into by the Applicant with ICF, Chennai, the supply in the agreement for erection, commissioning, installation of plant and machinery for a factory to manufacture stainless steel coaches covering Schedule I, II, III, the portion pertaining to supply of machine, plant and equipment s including commissioning spares in Schedule I, erection and commissioning of all civil structures in Schedule II, supply of electrical equipment including commissioning spares in Schedule III is a composite supply of services; the supply in the agreement for wet leasing of Robotic spot welding machine and Laser cutting and welding machine as per Schedule V(a) and Schedule V(b) is a composite supply of services; the supply in the agreement for Comprehensive Annual Maintenance Contract (CAMC) of Mechanical Electrical under Schedule VI (a) and VI (b) is a composite supply of services. 2. The supply in the agreement for erection, commissioning, installation of plant and machinery for a factory to manufacture stainless steel coaches covering Schedule I, II and III is a composite supply of works contract for original works of construction, er ..... X X X X Extracts X X X X X X X X Extracts X X X X
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