9911796707
TMI Blog2019 (3) TMI 925X X X X Extracts X X X X X X X X Extracts X X X X ..... st, Chennai, Tamilnadu - 600 040 are registered under GST vide number 33AABAH8574L1ZB. They are engaged in construction of Shed, Provision of M& P's in ICF Shell/ Furnishing Division/ retro-fitment/ re-conditioning/ re-sitting/ disposal of obsolete M&P's of Shell division including wet leasing of M&P's and associated Electrical Works on turn key basis at ICF Chennai. They have preferred an application seeking Advance Ruling on 1. Whether the works awarded by Integral coach Factory, Chennai for '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 turn-key basis' to the applicant is composite supply of services? 2. Whether the benefit of sl.No.3 (v) (a) as well as Sl.no. 3(vi) (a) of Notification No. 11/2017-C.T. (Rate) as amended is applicable to subject works? 3. Whether the Applicant is required to raise invoice on completion of events/milestones and remit the tax irrespective of the movement of goods for execution of project? 4. What is the value on which invoice has to be raised in case of event ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orks as it involves Erection, Commissioning, Installation of plant and machinery, equipment and structures. As per Section 2(31) of Railways Act, 1989, manufactories, fixed plant and machineries and any other works constructed for the purpose of or in connection with railway is also covered. The contract is pertaining to railway and not just the railway itself. The Integral Coach Factory is intended for purpose of building coaches which is not for commerce or industry or business, but for general public service. Therefore, both Sl no 3(v) and 3(vi)(a) notification 11/2017-central Tax(Rate) are satisfied in this case and the applicable rate of tax for the works in question is 12% . They has stated that this is a continuous supply of service and as per Section 31(5) (c) of CGST Act, the payment is linked to completion of an event/milestone and hence invoice is to be issued on completion of the milestone as per agreement. The invoice has to be raised to the extent of payment for each completion of events as per agreement irrespective of the quantum of costs or value of works executed. The value to be adopted should be equal to the amount prescribed in the agreement for completion of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lation, etc ; * Schedule IV - Up-Rooting and disposal of Condemned M & P's; * Schedule V(a) - Wet Leasing of Robotic Spot Welding Machine for 10 years * Schedule and V(b) - Wet Leasing of Laser Cutting and Welding Machine for 10 years * Schedule VI (a) - Comprehensive Annual Maintenance Contract (CAMC) Mechanical for Schedule I * Schedule VI(b) - Comprehensive Annual Maintenance Contract (CAMC) of Electrical for Schedule Ill As per the terms and condition and stipulations in LOA (Sl.No. 4) the following agreements are entered into: * The agreement containing Schedule I,II,III & IV * Two agreements for the wet leasing -Schedule V- before signing of the contract agreement containing Schedule I,II,III & IV * The agreement for the CAMC-ScheduIe VI(a) and (b) -shall be entered into after the completion of the warranty period The effective date of contract will be 29.06.2017 which is the date of issue of LOA. The works are to be completed in all are aspects within 20 months from this date i.e. 01.03.2019. It is evident that based on a single bid, the entire works of 'Modernization of ICF for Complete Switch-over to Stainless steel coach manufacturing-Phase Il' has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he tender and Letter of acceptance is for the 'Modernization of ICF for Complete Switch-over to Stainless steel coach manufacturing-Phase II, 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 turn-key basis'. However, separate agreements are executed for (1) indicated for 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, for up-rooting and disposal of condemned M&Ps in Schedule IV (2) Wet leasing of Robotic spot welding machine; Laser cutting and welding machine as per Schedule V(a) and V (b) and (3) Comprehensive Annual Maintenance Contract (CAMC) Mechanical & Electrical. Therefore, we hold that the works based on different agreements are to be considered as separate supply and the classification of supply is to be arrived at after considering the supply involved in each of the agreement. Section 2(30) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we are not examining this transaction under this order. 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 9973 Leasing or rental services with or without operator This heading includes: - rental or operational leasing of machinery and equipment and personal and household goods, with or without operator Note: The duration of the rental service is irrelevant for its classification 997319 Leasing or rental services concerning other machinery and equipment with or without operator This service code includes: - leasing, renting or hiring services concerning all kinds of machinery, whether or not electrical, except personal or household goods, generally used as capital goods by industry, such as engines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indicating the limits of the land appurtenant to a railway; (b) all lines of rails, sidings, or yards, or branches used for the purposes of or in connection with, a railway; (c) all electric traction equipments, power supply and distribution installations used for the purposes of, or in connection with, a railway; (d) all rolling stock, stations, offices, warehouses, wharves, workshops, manufactories, fixed plant and machinery, roads and streets, running rooms, rest houses, institutes, hospitals, water works and water supply installations, staff dwellings and any other works constructed for the purpose of, or in connection with, railway; The tender and Letter of Acceptance indicate that the contract in question is for erection, commissioning installation, maintenance of a factory for manufacturing stainless steel coaches at ICF, Chennai which is a 'Production Unit' under the Ministry of Railway. Therefore, all the works under this contract is pertaining to railways as defined in Section 2(31) of Railways Act 1989. 'Original works' is defined under Para 2 (zs) of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017 as g all new constructions; (i) all types of additions and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority, a Governmental Authority or a Government Entity 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; However, it is seen that the contract is for erection, installation, commissioning of a factory for ICF, Chennai which will manufacture stainless steel coaches. The factory is meant for manufacture by ICF which is an activity of industry. Hence, Sl.No 3(vi)(a) of this notification will not be applicable in this contract. 5.4 The next issue raised by the applicant is whether the applicant is required to raise invoice on completion of events/ milestones and remit the tax. However, as per Section 97 (2) of the CGST Act, time of raising invoices is not covered under the question on which Advance Ruling can be sought. Therefore, we are not examining this issue in this order. 5.5 The last issue raised is what is the value on which invoice has to be raised in case of event/milestone invoicing is required. The agreements prescribe the value of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... axable 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 vide G.O. (Ms) No. 72 dated 29.06.2017 as amended. 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 not eligible for Sl.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 not eligible for Sl. No. 3(v)(a) of this notification.
3. The value of supply for each invoice raised by the Applicant will be the transaction value 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.
4. This Authority cannot give a Ruling on the supply for up-rooting and disposal of condemned M&Ps, under Schedule IV, in which the Applicant is a recipient as per Section 95(a) of CGST Act/TNGST Act.
5. This Authority cannot give a Ruling on the question of when to raise invoices by the Applicant as per Section 97(2) of CGST Act/TNGST Act. X X X X Extracts X X X X X X X X Extracts X X X X
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