TMI Blog2019 (10) TMI 481X X X X Extracts X X X X X X X X Extracts X X X X ..... New Delhi GST registered office - Thus we are taking up the contract as one contract for which agreement has been entered into, by DMRC and the applicant situated in Maharashtra. Works Contract or Composite Supply? - HELD THAT:- The applicant first despatches the goods to DMRC under an Invoice and E-Way Bill. Thus the title in property of the said goods are transferred as soon as the delivery is completed. It is only thereafter that installation, etc takes place. We agree with the applicant s contention that the contract for supply of UPS system to DMRC does not qualify as a works contract under Section 2(119) of the CGST Act since the installed UPS system cannot be said to result in the emergence of an immovable property - Hence Works contract will be treated as service and tax would be charged accordingly. In the subject case UPS is not as immovable property as it can be dismantled and moved to a different location without any damage - it is found from the submissions and agreement that the contract is considering a clear demarcation of goods services to be provided by the applicant. Now we have to decide whether the supplies are naturally bundled in conjunction with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilar 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, the expression GST Act would mean CGST Act and MGST Act. 2. FACTS AND CONTENTION - AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus- A. STATEMENT OF THE RELEVANT FACTS HAVING A BEARING ON THE QUESTION (ON WHICH THE ADVANCE RULING IS SOUGHT) 1. Vertiv Energy Private Limited (hereinafter referred to as the applicant ) having its corporate head office at Mumbai is, inter-alia, engaged in the manufacture of various types of UPS systems, which serve as an alternate source of power for a specific period of time in the event of power failure. The applicant also supplies installation commissioning and maintenance and other services to its customers. 2. An UPS is typically used to protect hardware such as computers, data centers, telecommunication equipment or other electrical equipment where an unexpected power disruption could cause injuries, fatalities, serious business disruption or data loss. UPS units range in size from units designed to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... devices; Special tools and test equipment; Remote monitoring equipment and accessories including voltage free contacts for Alarms; Spares; Furniture for C$05 equipment Any other supply needed to provide a complete UPS system 3.3. Scope of services 3.3.1 The services to Uninterruptible Power Supply (UPS) system shall include, but not be limited to the following: Design, manufacture, supply, system assurance, installation, testing and commissioning of the UPS System; Presentations, reviews and audit support as specified in the Specification; Transportation, Handling and Storage of the material; Insurance Cover for the material supplied till taking over by Employer; User s Certificates and Test Reports as per specifications; Documentation; (Chapter 1 5) Provide all information, documents requested by Signaling, Telecommunication and AFC Contractors; Interface management as specified in the Specification; System operations and maintenance support services; Training for operations and maintenance staff; Preparation of Operation, Maintenance and Training Manuals; Decommissioning, removal and/ or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,50,539.00 6,51,33,418.00 4. Appropriate capacity (for interlocked stations and depots) VRLA maintenance free batteries (Having Two sets and another set of 6 cells) 13 0 10 8 Sets 24,18,000.00 7,49,58,000.00 5. Appropriate capacity (for secondary stations) VRLA maintenance free batteries (Having Two sets and another set of 6 cells 26 1 27 8 Sets 12,09,000.00 7,49,58,000.00 C. Documentation, Installation, Testing Commissioning S.N. Description Quantity Quantity Unit Unit rate (INR) Price (INR) JICA Non JICA JICA Non JICA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Maharashtra as supply of goods Supply of Erection, installation, commissioning, testing etc., of UPS system services from New Delhi as supply of services. 13. Accordingly, the applicant has been raising separate invoices on DMRC for supply of goods and supply of services. Illustrative copies of the invoices raised by the applicant on DMRC for supply of goods and supply of services are submitted. Thus, in the pre-GST as well as post GST regime, the applicant has been treating the supplies made to DMRC as separate supply of goods and services. 14. The above fact is corroborated by the dispatch clearance certificates issued by DMRC which direct the applicant to supply the UPS system along with the accessories to the designated locations for installation/erection. The said certificates issued by DMRC specify that the goods supplied by the applicant are to be stored in the designed location. Illustrative copies of the dispatch clearance certificates are submitted. 15. The goods are dispatched to the locations designated by DMRC under the cover of an E-way bill generated in the name of DRMC. Illustrative copy of the e-way bills e-way are submitted. 16. Further, the L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be registered under this Act in the State or Union territory , other than special category States, from where he makes a taxable supply of goods or services or both if his aggregate turnover in a financial year exceeds twenty lakh rupees: Emphasis Supplied A.4 The above referred Section can be vivisected into following essentials: - a. A supplier shall be liable to be registered under CGST Act in the State or Union Territory, from where he makes taxable supply of goods or services or both; b. If the aggregate turnover in the financial year exceeds rupees twenty lakh. A.5 The applicant submits that it is registered in the state of Maharashtra and is also making taxable supplies of goods and services from the state of Maharashtra to its customers located in state of Maharashtra and elsewhere, Further, the turnover of the applicant exceeds rupees twenty lakhs in the financial year. Given this, it is submitted that applicant clearly satisfies the definition of applicant under sub Section (c) of the Section 95 of the CGST Act. A.6 Section 95(1) of the CGST Act defines the term advance ruling as under:- (a) advance ruling means a decision provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 96 of the CGST Act provides for appointment of advance ruling authority and reads as under: 96. Subject to the provisions of this Chapter, for the purposes of this Act, the Authority for advance ruling constituted under the provisions of a State Goods and Services Tax Act or Union Territory Goods and Services Tax Act shall be deemed to be the Authority for advance ruling in respect of that State or Union territory, Emphasis Supplied A.11 Hence, an Advance Ruling Authority appointed by the concerned State or Union Government under concerned State or Union Territory Goods and Service Tax Act, shall be the deemed to be the Advance Ruling Authority for the purpose of CGST Act. Section 96 of the Maharashtra Goods and Service Tax Act, 2017, reads as under: 96. (1) The Government shall, by notification, constitute an Authority to be known as the Maharashtra Authority for Advance Ruling : Provided that the Government may, on the recommendation of the Council, notify any Authority located in another State to act as the Authority for the State. (2) The Authority shall consist of- (i) one member from amongst the officers of central tax ; and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he two supplies separately. C.2. The aforesaid submission is clearly supported by the fact that the scope of work under the contract with DMRC (read with the tender documents) clearly specify the various goods and services to be supplied to DMRC and also provides separate consideration to be paid/payable by DMRC to the applicant for the supply of goods and for the supply of services. C.3 The applicant submits that the applicant makes a supply of goods i.e. UPS system to DMRC from state of Maharashtra and issues a tax invoice for this supply. A perusal of the tax invoice for supply of UPS system establishes that the applicant has transferred the title in the goods to DMRC. The goods are consigned to DMRC at the time of removal from the manufacturing unit. C.4 Thus, at the time of removal of the goods from the factory, the goods are appropriated towards the contract entered into with DMRC. The applicant submit that the goods once removed from the factory and consigned to DMRC s location cannot be diverted by the applicants for supply to any other customer. This proves that the property in the goods stands transferred to DMRC once the said goods are dispatched by the applican ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erty in the goods i.e. UPS system is not transferred to DMRC during the execution of the contract. Once this is the factual position, the applicant submits that the contract entered into with DMRC would not qualify as works contract. C.13 Further, for a supply to be treated as works contract, the pre-requisite is that the same should be in relation to an immovable property . In other words, the contract should result in the emergence of an immovable property. C.14 In the present case, the applicant submits that the UPS system supplied by the applicant is merely fixed to a foundation by way of nuts and bolts for its proper 17 functioning. Further, the said UPS system is capable of being dismantled and installed elsewhere, if required. Therefore the applicants submit that the supply of UPS System does not result in the emergency of any immovable property . Once this is the factual position, the applicant submits that the contract with DMRC does not qualify as a works contract under Section 2(119) of the CGST Act. C.15 The above submission is supported by the decision of Hon ble Supreme Court in case of CCE, Ahmedabad vs. Solid Correct Engineering Works reported at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o fall in that category it must be for permanent beneficial enjoyment of that to which the plant is attached. 20. It is nobody's case that the attachment of the plant to the foundation is meant for permanent beneficial enjoyment of either the foundation or the land in which the same is imbedded. 24. Applying the above tests to the case at hand, we have no difficulty in holding that the manufacture of the plants in question do not constitute annexation hence cannot be termed as immovable property for the following reasons: (i) The plants in question are not per se immovable property. (ii) Such plants cannot be said to be attached to the earth within the meaning of that expression as defined in Section 3 of the Transfer of Property Act. (iii) The fixing of the plants to a foundation is meant only to give stability to the plant and keep its operation vibration free. (iv) The setting up of the plant itself is not intended to be permanent at a given place. The plant can be moved and is indeed moved after the road construction or repair project for which it is set up is completed. 29. Applying the above test to the case at hand, the plants in ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, the applicable rate of tax would be 12% and not 18% which the applicant has been paying till date. C.22 In view of the above possibility of the contract with DMRC being treated as a works contract under Section 2(119) of the CGST Act and the tax consequences that may follow, we request the authority for advance ruling to expedite the resolution of the matter at hand and issue a ruling on the question as to whether contract entered into with DMRC for supply, erection and installation of UPS system qualifies as a supply of works contract service under Section 2(119) of the CGST Act and whether such supply would be taxable at the rate of 12% in terms of amended Sr. no. 3(v) of Notification No. 11/2017 - C.T. (Rate). 03. CONTENTION - AS PER THE CONCERNED OFFICER: Comments C-1 to C-20 - No comments C-21 Though the foundation/civil work is required, the UPS system can be uninstalled without causing any significant damage to its parts are be shifted to another location, if required, as stated by the applicant in para C- 17 hence cannot be treated as immovable property therefore cannot be treated as a Works Contract and would be liable for 18% rate of duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffordable Housing in Partnership component of the Housing for All. (Urban) Mission/Pradhan Mantri Awas Yojana; (2) any housing scheme of a State Government; (e) Post-harvest storage infrastructure for agricultural produce including a cold storage for such purposes; or (f) mechanized food grain handling system, machinery or equipment for units processing agricultural produce as food stuff excluding alcoholic beverages Services provided to the Central 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 or the use of their employees or other persons specified in paragraph 3 of the Schedule Ill of the Central Goods and Services Tax Act, 2017. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly of both goods as well as services to be provided by the under the said contract. We find that they will be supplying various UPS systems which will be installed, tested and commissioned by them. They have also mentioned that they will give Presentations, reviews and audit support; handle Transportation, Handling and Storage of the material; provide Insurance Cover for the material supplied, Provide all information, documents requested by Signaling, Telecommunication and AFC Contractors; provide System operations and maintenance support services, Training for operations and maintenance staff, prepare Operation, Maintenance and Training Manuals, etc. The applicant has submitted that from the tender document and contract it is clear that separate consideration for supply of goods and services have been provided and therefore this is not a case where the supply of goods and services for one lump-sum consideration. The applicant has also submitted that whereas the goods are supplied by the applicant from their Maharashtra GST registered premises, the service portion of the contract i.e. erection, installation and commissioning service are rendered by their New Delhi branch which is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r form) involved in the execution of a works contract. Hence Works contract will be treated as service and tax would be charged accordingly. As per Section 2(119) of the CGST Act, 2017, unless the context otherwise requires, the term 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 We have already observed that, the applicant, in the subject case UPS is not as immovable property as it can be dismantled and moved to a different location without any damage. We find from their submissions and agreement that the contract is considering a clear demarcation of goods services to be provided by the applicant. Now we have to decide whether the supplies are naturally bundled in conjunction with each other as required by the definition of composite supply. Hence we refer to the definition of Composite Supply as mentioned in sub-section (30) of Section 2 of CGST A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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