TMI Blog2020 (10) TMI 807X X X X Extracts X X X X X X X X Extracts X X X X ..... ination and signaling system for railways - the applicant undertakes Design, manufacture, supply, installation, testing and commission of Integrated Control and Management System, Public Address and Voice Alarm System, Driver Only Operation (DOO) CCTV System, Closed Circuit Television (CCTV) System, Access Control and Intruder Detection System, Passenger Information Display(PID) System, Office Telephone System, Operational Telephone System and Master Clock System. The works are supply and Installation of lines and equipments meant for telecommunication, signaling in the CMRL project and not related to any civil engineering work - thus, the supply of the applicant to Siemens is covered under SAC 9954, more specifically under 995461 and the first requirement of the entry stands satisfied. Composite Supply or not - HELD THAT:- In the case at hand from the Purchase Order furnished by the applicant it is seen that there is supply of goods (equipments, goods, etc)) and services (installation, testing, etc) for a particular cost center/Line and the work is considered to be done on that basis. Thus, there is a natural bundle of goods and services per cost center/Line and the supply is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that it will not be possible for them to furnish the entire sub-contract agreement which contains the requisite details, we record that in the absence of the documentation we are not in a position to hold the works as Works Contract as per Section 2 (119) of the Act. Whether supply should be by way of construction, erection, commissioning, or installation of original works pertaining to railways, including monorail and metro? - HELD THAT:- The work of the applicant includes Installation of the various systems on designing, manufacture and supply and therefore is Original work as defined in the notification - The work of the applicant is on the lines, stations and locations of land appurtenant and therefore this criterion is satisfied. In the case at hand, the applicant is entrusted with certain works of design, manufacture, installation and commissioning of the Telecommunication systems including signaling system by Siemens who has been awarded the entire work relating to signaling and Telecommunication under CMRL project Phase-1 and from the preceding paragraphs it is seen that the works are composite supply of original work pertaining to railways and the only leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... copy of application in Form GST ARA - 01 and also submitted the copy of Challan evidencing payment of application fees of ₹ 5,000/-each under sub-rule (1) of Rule 104 of CGST rules 2017 and SGST Rules 2017. 2.1 The applicant is a global technology, defense and engineering group specialising in the aerospace, electronics; land systems and marine sectors. The Company, incorporated in Singapore in 1969 is an electronic system provider that serves customers in the areas of transportation, intelligent building and defense. The Company is a wholly owned subsidiary of Singapore Technologies Engineering Limited. The applicant has stated that they have entered into a Sub-contract agreement with SIEMENS Ltd., India (agreement reference no: ASA-01-Tel-IN Dated 1st September 2011) for providing services in the nature of Design, manufacture, supply installation, testing and commission (including integrated testing and commissioning and operational maintenance) of the Telecommunications Works as part of main Contract of SIEMENS Ltd pertaining to metro rail project in Chennai. SIEMENS Ltd is the main contractor to Chennai Metro Rail Limited (CMRL) for executing metro rail project in Chen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Sl.No. 3 to the Notification No. 11/2017-Central Tax (Rate) dated 28th June 2017, as amended on 25th January 2018 the composite supply of works contract as defined in clause 119 of Section 2 of CGST Act, 2017 supplied by way of construction, erection, commissioning, or installation of original works pertaining to railways, including monorail and metro is charged at 6% CGST. 2.4 In the applicants view, this entry (v) to SI.No. 3 is based on project and not based on the nature of the Contractee/recipient of service; They have drawn attention to the entries at S.No. (iii), (vi) and (vii) to S.No.3, wherein the description of service mentions as Provided to or supplied to , the benefit of reduced rate is applicable only in case of services provided to or supplied to specified contractee and have stated that at entry (v), the coverage is not based on the nature of contractee but the project itself. In the Notification 11/2017 the entries ix x to Sl.no.3 have been inserted to extend the benefit to sub contractors, when the works are that covered under SI.No. 3 (iii), (vi) and (vii). However, in respect of entry covering the relevant work or project [entry v to Sl.No.3] the requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orks are being implemented on a single purchase order. Once work is completed in each stage, CMRL issues interim payment certificate based on which invoice is raised by the applicant. They stated that they will submit the PO, all relevant extensions of the contract, invoices, linked interim payment certificate and reference in the PO and contract. They also stated that they are listed as sub contractors in agreement between SIEMENS CMRL but do not have access to it. However, all works, quality certificate are endorsed by CMRL, copies of which they have submitted. 4.2 Further, to the hearing the applicant submitted the following documents on 07.05.2019 i. Copy of Purchase Order (PO) No. 4503898418 dated 11 th May 2012; ii. Copy of extension letter/agreement entered in to between applicant 85 SIEMENS; iii. Note on invoice processing followed by applicant and applicability of Time of supply from GST law perspective. 5.1 On perusal of the documents furnished, it was seen that the applicant has not furnished the complete sub-contract Agreement between them and Siemens as stated in their letter dated 26th March 2019. The Sub-Contract Agreement consists of 4 Vo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder, invoice copies along with other documents Scope of work with SIEMENS Ltd is in the nature of overall telecommunications works and consists of the following: Integrated Control and Management System Public Address and Voice Alarm System Driver Only Operation (D00) CCTV System Closed circuit Television (CCT V) System Access Control and Intruder Detection System o Passenger Information Display (PID) System Office Telephone System Operational Telephone System Master Clock System They have attached the relevant part of the contract describing the above scope of work The complete contract consists of multiple parts and is a voluminous one, which runs into more than 7000 pages and includes Appendices and Annexures. It provides amongst others, general terms and conditions, scope of work, major portion of contract are pertaining to technical aspect of the contract. All these elaborate documentation, which is part of the signed contract are privy to the contracting parties and would require enormous efforts to obtain the copyright from CMRL to share with external parties. Nevertheless, they are of the opinion that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... py of Service tax and VAT returns filed pre-GST regime (Disclosed as Works Contract) 3. Letter for additional submission dated 29.04.2019 3.1 Copy of Purchase order No. 4503898418 dt 11 May 2012 3.2 Copy of the extension letter and agreement entered between STEE and SIEMENS 3.3 Note on invoice processing followed by STEE along with list of invoices 3.4 Details of Time of supply falling on or after 25 January 2018 4. Letter for submission of additional requirements dated 20.02.2020 4.1 Copy of earlier letters 4.2 Relevant part of the contract describing the STEE scope of the work 4.3 Index of the complete volume of contracts - Status of submission of each volume in the attached index is as follows: o Volume 1 ■ Agreement including relevant Appendices and Annexures Vide letter dated 26.03.2019 o Volume 2 ■ Particular specifications Volume 4b Vide letter dated 29.04.2020 o Volume 3 - Not submitted considering the volume of pages and as the details are in the nature of technical information ■ Employers Drawings Volume 6 ■ Pricing Document Volume 7 ■ Reference Documents Vo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate) as amended by Notification No. 1/2018- C.T.(Rate) dated 25th January 2018 to the applicant i.e., Whether rate of tax at 6% CGST, available to Composite supply of works contract as defined in clause(119) of section 2 of the Central Goods and Services Tax Act, 2017 provided by way of construction, erection, commissioning, or installation of original works pertaining to Metro, vide-Notification No. 11/2017 amended vide Notification No.1/2018- Central Tax(rate) dated 25th January 2018 is applicable to a sub-contractor(Applicant) rendering the above mentioned services. 9. The facts of the case before us are that the applicant had entered into a Sub-Contract agreement with Siemens Ltd for providing a segment of work awarded to Siemens by Chennai Metro Rail Limited(CMRL)in the execution of Chennai Metro Rail Project Phase-1(hereinafter referred to as Project ). The applicant claims that the supplies made by them are in the nature of Works Contract and the applicable rate of GST on their supplies to Siemens under the said contract is 12% effective from 25.01.2018 as per Sl.No. 3(v) of Notification No. 11/2017-C.T.(Rate) dated 28.06.2017 as amended. The applicant has not furn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 100673261-Tel Sys for ASA-01-T M etc.. along with required Quantity, price and delivery date which in most of the items mentioned as 23.03.2017. The applicant has furnished letter from Siemens dated 30.10.2018, which encloses a letter from CMRL on the subject Extension of Time Stage 2 (C) of Phase-1- enabling letter based on Settlement Agreement executed on 27.10.2018-Telecom Part . This letter of CMRL, based on the Settlement Agreement between ASA-01 CMRL, executed on 27.10.2018, stipulates the enabling extensions to the relevant Key Dates of Stage 2C. The detailed description of the items mentioned in Purchase Order, the details of various stages of work to be executed by them has not been elaborated by the applicant. From the list of invoices raised in the GST regime, it is seen that they have adopted GST of 18% till 30.11.2017 (IPC 035, 036, 037) and 12% from 31/1/2018 to 31/03/2019 (IPC 038,040,041,042,044,045,046,047). On the issue of IPC(Interim Payment Certificates), the applicant has stated that as per Clause 1.1 of the agreement they raise the billings on Siemens by way of a statement on completion of events as per Appendix 4 of the Annexure to the Sub-cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 995461 Electrical installation services including Electrical wiring and fitting services, fire alarm installation services, burglar alarm system installation services Explanatory Notes to the Scheme of Classification of Service , indicates the scope and coverage of the Scheme of classification of service and is a guiding tool for classification of services, the Explanatory notes to SAC 995421 and 995461 are as follows: 995421 General construction services of highways, streets, roads, railways, airfield runways, bridges and tunnels This service code includes construction services i. for formations of highways, including elevated highways, roads, streets, other vehicular and pedestrian ways and open car parks; ii. footpaths, traffic-calming structures, cycle tracks, etc; iii. vehicular and pedestrian underpasses and overpasses; iv. construction or restoration of road surface and parking lots with asphalt, concrete, etc; v. installation services of crash barriers, low separating walls, traffic signs, etc.; vi. creation, maintenance and signposting of tracks and paths; vii. paint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... General Construction services of highways, streets, roads, railways, airfield runways, bridges and tunnels which are Civil engineering related works which is not the work awarded to Siemens and therefore not undertaken by the applicant in the case at hand. SAC 995461 covers installation services of telecommunication wiring, telecommunication equipment, electrical installation services of illumination and signaling system for railways. From the descriptions available before us, it is seen that the applicant undertakes Design, manufacture, supply, installation, testing and commission of Integrated Control and Management System, Public Address and Voice Alarm System, Driver Only Operation (DOO) CCTV System, Closed Circuit Television (CCTV) System, Access Control and Intruder Detection System, Passenger Information Display(PID) System, Office Telephone System, Operational Telephone System and Master Clock System. The works are supply and Installation of lines and equipments meant for telecommunication, signaling in the CMRL project and not related to any civil engineering work. Therefore, the supply of the applicant to Siemens is covered under SAC 9954, more specifically under 995461 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he applicant. On going through these sections it is observed that the work involves installation of the individual systems at platforms, stations, other select locations along the corridor and is integrated at the Operation Control Corridor(OCC) at Koyambedu and the Telecommunications Infrastructure implementation is to be synchronized with the civil construction phases. Further the scope of works of the applicant like Public Address and Voice Alarm System, CCTV System, Passenger Information Display System, Office Telephone System, etc requires installation on specific locations, namely ceiling and the like and these goods once installed, may not necessarily be damaged while removing. The applicant has not established with documents that the works contracted to them are to be executed on immovable property as required under definition of Works Contract given above. The applicant has stated that in the Pre-GST regime, under Service Tax, the applicant being a supplier of Works Contract Service relating to infrastructure project of railways, in the capacity of Sub-contractor was exempted from service tax and had claimed the benefit of entry 3 (v) of Notification 11/2017-C.T.(Rate) da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... locations of land appurtenant and therefore this criterion is satisfied. 11.5 The applicant has referred to the Ruling of Advance Ruling Authority, Maharashtra in the case of Shree Construction. The Advance Ruling is applicable only to the applicant and the ratio of Advance Rulings cannot be generalized. However, on perusal of the said Ruling, we see that Shree Construction is contracted with Civil works which are undertaken on immovable property and hence is Works Contract as per Section 2(119) of the ACT which is not the case at hand. 11.6 To summarize, we find that the entry at 3(v) do not specify the class of service provider to whom it applies. The entry is specific to the composite supply of works contract pertaining to railways including monorail and metro. This view is fortified by the justification of the recommendation of the Fitment Committee to the 25th GST Council meeting (available in Volume -2 of the Agenda) after which the downward revision of the rate was effected. The relevant point is given under: Sl.No. Represented By Proposal Justification Comments of Fitmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entire work relating to signaling and Telecommunication under CMRL project Phase-1 and from the preceding paragraphs it is seen that the works are composite supply of original work pertaining to railways and the only leg of the entry No. 3(v) of the Notification which has not been established is whether the works satisfies the definition of Works Contract under Section 2 (119) of the GST Act for which sufficient documentary proof is not furnished before us. The applicant has expressed his inability to furnish the necessary documentation and have opined that the documents furnished is sufficient for pronouncing the ruling. Therefore, considering all the submissions and that the application is pending before this authority for long, we find it appropriate to hold that the benefit of the entry at Sl.No. 3 (v) will be applicable to the applicant subject to the works undertaken by them being Works Contract as per Section 2 (119) of the Act and the applicable GST is @, 12% effective from 25.01.2018. 12. In view of the above discussions, we rule as under: RULING The rate of tax of 6% CGST as per entry No.3 (v) of Notification No. 11/2017 amended vide Notification No.1/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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