TMI Blog2020 (6) TMI 489X X X X Extracts X X X X X X X X Extracts X X X X ..... equipment and erection, testing commissioning of supplied material/equipment for providing of Rural Electricity infrastructure for House hold electrification (6 35/0.24 KV single Phase Distribution Transformer sub-station 11 kv single phase line, LT single Phase line BPL connections) in selected blocks under RGGVY scheme on turnkey basis . In Dungarpur District to AVVNL, Ajmer which is a Government Entity. M/s AWNL is involved in supply of electricity to the consumers and are collecting consideration in lieu of the said supply. The 'Electricity' as per GST is classified under the category of 'goods' and thus M/s AWNL is supplying goods to consumers and is receiving consideration against the same - Explanation Clause inserted vide Notification No. 17/2018-CT dated 26.07.2018 is not applicable in the instant case as activities are not undertaken by the Central government or State Government or any local authority as public authorities. From definition of business, it is clear that any activity of trade, commerce or manufacture etc. or any other similar activity is included in the definition of business and it is immaterial whether it is done for a pecuniary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Rajasthan, 314001 (hereinafter the applicant) is fit to pronounce advance ruling as it falls under the ambit of the Section 97(2) (e) given as under : e. determination of the liability to pay tax on any goods or services or both; Further, the applicant being a registered person (GSTIN is 08AAKCA4364N1Z6/ as per the declaration given by him in Form ARA-01) the issue raised by the applicant is neither pending for proceedings nor proceedings were passed by any authority. Based on the above observations, the applicant is admitted to pronounce advance ruling. SUBMISSION AND INTERPRETATION OF THE APPLICANT: 1. The Applicant has received work orders from Ajmer Vidyut Vitran Nigam Limited (hereinafter called as AVVNL) through tender process. AWNL is a company incorporated by Govt, of Rajasthan for distribution of electricity in various parts of Ajmer district. The work orders are awarded to them through a tender and scope of work is described in respective work orders as submitted with application. The two work orders as awarded through the tenders are (a) Supply of material/equipment for providing of Rural Electricity Infrastructure for Household electrification in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e execution of such contract and hence the contract is a work contract; 4. that the first work order is for the 'supply of materials/equipments' and the second work order is for erection, testing and commissioning of the supplied goods. We are convinced that both the agreements are for the single works contract of providing electricity. The contracts would have different consideration but that should not change the way look at such work orders. The bifurcation into such agreement which themselves reveal the real intent would not impede the interpretation and applicability of the provisions. The contention as made by us is to treat the both work orders as one being a composite supply for which the principal supply is providing electricity; 5. that as per Sr. no 3(vi) of the Notification no. 11/2017- C.T. (Rate) as amended w. e. f. 25.01.2018 (w) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, provided] 12 to the Central Government, State Government, Union Territory, a local authority, a Governmental Authority or a Government Entity by way of construction, erection, commissioning, installat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (vi)(a) of the Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 as amended w. e. f. 25.01.2018? C. PERSONAL HEARING In the matter personal hearing was granted to the applicant on 19.03.2020 at Room no. 2.29 NCRB, Statue Circle, Jaipur. Shri Manish Bansal, Director of the M/s ARG Electricals Pvt. Ltd. appeared for PH. During the PH, he reiterated the submissions already made in the application. He further requested for one-week time for additional submissions which was acceded to. Further applicant vide email dated 29-4-2020 requested to give more time for final submission up to 10.5.2020 due to lock down. Till date no additional documents have been received by this office. D. COMMENTS OF THE JURISDICTIONAL OFFICER The jurisdictional officer i.e. The Assistant Commissioner, CGST Division-C, 142B, Hiran Magri, Udaipur-313001 submitted his comments vide email dated 12.3.2020. The comments are summarized as under-: M/s ARG Electrical Pvt. Ltd (GSTIN 08AAKCA4364N1Z6) are engaged in providing services of supply of material and services of erection, testing commissioning of supplied material to AWNL under RGGVY schemes on turnkey basis in Dungarpur Di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rural Electrification Corporation (REC). This scheme is applicable for all rural households living below poverty line. The RGGVY schemes was implemented by Ministry of Power, Government of India and therefore, projects undertaken by AWNL, Ajmer under (RGGVY) schemes are entrusted by Government of India. Further, the works contract has been defined in clause (119) of section 2 of the CGST Act, 2017 and the same reads as under: (119) 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;' The said contracts are covered under the definition of works contract for the reasons as under: (a) They are in relation to the completion, erection, installation and commissioning of an immovable property as all projects are turnkey projects and the property in goods cannot be remove without dismantling the same. (b) There is transfer of property in goods involved in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at 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. Therefore, the conditions to be satisfied for taking benefit of entry no. 3(vi)(a) of the Notification No.11/2017- Central Tax (Rate) dated 28.06.2017 are as under: (1) It must be a composite supply of works contract as defined in section 2(119) of the CGST Act, 2017. (2) It must be provided to the Central Government, State Government, Union Territory, a local authority, a Governmental Authority, or a Government Entity (3) The contract should be by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation or alteration of a civil structure or any other original works. (4) The civil structure or original works must be meant predominantly for use other than for commerce, industry, or any other business or profession (5) Where the services are supplied to a Government Entity, they should have been procured by the said entity in relation to a w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to provide electricity to all rural households. The Scheme is funded 90% by Central government and 10% by Rural Electrification Corporation (REC). This scheme is applicable for all rural households living below poverty line. The RGGVY schemes was implemented by Ministry of Power, Government of India and therefore, projects undertaken by AWNL, Ajmer under (RGGVY) schemes are entrusted by Government of India. 3. The project is still ongoing; therefore, the advance ruling is applicable on the said project. To determine applicable rate of GST in the instant case and nature of supply, we have to examine various provisions of CGST Act, 2017 like Composite Supply, Works Contract, Notification No. 11/ 2017-CT(R) dated 28.06.2017 etc. 4. Firstly, the two work orders as explained as above arise out of single tender. The two work orders are very intricately linked to each other and without performing the one, the other part can't be done. First order is for the supply of materials that is supply of goods in which material required to develop infrastructure of electricity is created. Whereas, the second element is design, construction of the said infrastructure. In another words, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Composite Supply of Works Contract is treated as Supply of Services as provided under Para 6(a) of Schedule II of CGST Act, 2017 . The relevant extract of the said Schedule is ns under- SCHEDULE II [See section 7| ACTIVITIES TO BE TREATED AS SUPPLY OF GOODS OR SUPPLY OF SERVICES 6. Composite supply The following composite supplies shall be treated as a supply of services , namely:- (a) works contract as defined in clause (119) of section 2; and (b) supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration. 8. Whereas, reading Point-7, we find that Composite Supply of Works Contract is a Supply of Service, therefore, to determine the rate, we have to refer to Services rate Notification viz. Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017. 9. Composite Supply of Works Contract provided to Central Government, State Government or a Government Entity is covered under Entry 3(vi)(a) of N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority or a Government Entity c. The contract should be by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation or alteration of a civil structure or any other original works. d. The civil structure or original works must be meant predominantly for use other than for commerce, industry, or any other business or profession e. 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 a local authority, as the case may be. Examination of above condition in respect to instant case a. The condition one, that the work undertaken by the applicant is a composite supply of works contract has already been discussed in the Point No. 6 b. The Governmental Authority and 'Government Entity have been defined in paragraph 4 of Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 which is as under- ((ix) Governmental Authority means an authority or a board or any other body, - (i) set up by an Act of Parliament or a State Legisla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e fabricated or otherwise;' The Contract is for erection, testing commissioning of supplied material/equipment for Providing of Rural Electricity infrastructure for House hold electrification (6.35/0.24 KV Single Phase Distribution Transformer Sub-station, 11 KV Single Phase line, LT single Phase line BPL Connections) . Thus it is an original works as defined above. d. The issue under detailed discussion is whether the works are meant predominantly for use other than for commerce, industry, or any other business or profession. The term business is defined in clause (17) of section 2 of the CGST Act and it reads as under: (17) 'business includes- (a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit; (b) any activity or transaction in connection with or incidental or ancillary to sub-clause (a); (c) any activity or transaction in the nature of sub clause (a) whether or not there is volume, frequency, continuity or regularity of such transaction; (d) supply or acquisition of goods including capital goods and services in connection with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis in Dungarpur District. The Government of India launched RGGVY Scheme for creation of Rural Electricity' Infrastructure Household Electrification, in April 2005 for providing access to electricity to rural households. 10. In view of the above facts and discussions, we observe that all the five conditions prescribed implicitly by Entry No. 3(vi)(a) of the Notification No.11/ 2017 - Central Tax (Rate) dated 28.06.2017 are satisfied by the applicant except one, viz. that the activity is meant predominantly to be used other than commerce, industry, or any other business or profession. Thus, work undertaken by the applicant as per Contract RGGVY/TN-13 for AWNL, Ajmer by way of supply of material/ equipment and erection, testing commissioning of supplied material/equipment is though a Composite Supply of Works Contract but the same is not covered under the Entry' No. 3(vi)(a) of the Notification No. 11/ 2017 - Central Tax (Rate) dated 28.06.2017 (as amended). F. In view of the foregoing we rule as follows-: RULING 1. The work undertaken by the applicant as per Contract RGGVY/TN-13 entered between the applicant and AWNL along with two Work Order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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