TMI Blog2021 (4) TMI 614X X X X Extracts X X X X X X X X Extracts X X X X ..... ut a splitting up of the intended purchase of the Transformer, as a one whole, into a purchase of goods and a purchase of services. However, the intended purpose to present the agreement as a contract for supply of goods ONLY has not achieved the desired purpose. The agreement is for supply of an effectively running Transformer. The clauses mentioned in Technical Specification reveal that the Supplier is involved in the process right from the early engineering period to procurement and implementation stage - it is seen that the supply of the goods and the supply of service are inextricably linked with each other. It is not that the applicant has been assigned with the work of supply of goods only. But the applicant has been given the task of setting up the Aluminium Foil type Winding Inverter Duty Transformers . Thus, though the Purchase Order s are made separately, it is one indivisible contract for the setting up of the Aluminium Foil type Winding Inverter Duty Transformers. In fact the technical specification is single for both the supply of goods and Service - thus, the work order for supply of goods and service is one whole and not separate as per the technical specific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. All Telecom Transformers are tested for QA both during production and before shipping. Incoming quality control tests are conducted on all raw materials. The quality control department of Applicant is equipped with the latest computerized equipment available. Each shipment is provided with a full quality control report and certificate of compliance (COC). Applicant also manufactures Standard Line transformers for R-core as well as Toroidal Models. Their standard line transformers are available for 9/18V output, 12/24V output and isolation transformers for 115/230V output. The input for all the above transformers is 115 V/230V. The standard line transformers of Applicant meet CSA and CE standards as well as class B insulation system. 5. The Applicant submitted that they have attained expertise in manufacturing Power Transformers in a very short span of time after venturing into the business of Distribution Transformers. The Applicant is capable of manufacturing 25MVA, 66KV Class Power Transformer. The Transformers of Applicant are manufactured under stringent stage wise Quality Checks till dispatch. The state-of-the-art facility accompanied by a team of qualified and experienc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited, the recipient of supply is developing and setting up a 75MW Solar Project at Chitrakoot, Uttar Pradesh (UPNEDA Project) for which an approval has been granted to the recipient of supply from the Ministry of New Renewable Energy. (iv) For the above initial setting of the Solar Project, the recipient of supply of the applicant require machine, equipment, power cables, transformers and many other parts components of the solar Power plant, for direct use in its manufacturing and initial setting up. The recipient of supply also confirmed that these Inverter Duty Transformers being procured are parts of Solar Power Generating System and will be used only for the said application. (v) The Technical specification issued by the recipient of supply for the above contract awarded to the Applicant (Ref: 5353-E-SEP-EES-TE-S-I-002) for Aluminium Winding Inverter Duty Transformers to be procured for 50MW Solar Project at Jalabad, 50MW Solar Project at Sahaswan and 50+25MW i.e 75MW Solar Project at Chitrakoot Uttarpradesh for which the contract has been awarded to the Applicant contains scope of supply and services along with intent of specification at page no. 3 which reads ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of erection, testing commissioning of transformer. c) Submission of progress report. d) Participation in project review /Technical Coordination meetings. 2.4.0 Exclusion a) Civil works. b) Fire Fighting Equipments. c) Receipt, Unloading Storage d) Erection, Testing and Commissioning. 2.5.0 Terminal Points a) HV Bushing for termination in Cable Box. b) LV Bushing for termination in Cable Box. c) Transformer Earthing Pads. The Copy of the technical specification is enclosed with the application. 10. The applicant submitted that it can be seen from para 2.3.0 above, the services are also included and hence the recipient of supply of service has issued a separate Service Order No. 5700280769 dated 23.12.2019 for supervision of erection, testing and Commissioning charges for the transformer to be supplied / supplied by the Applicant which is enclosed herewith for the kind consideration. The Applicant is going to charge 18% GST on the same being classified as service. At this juncture, it is worth mentioning that actual erection, commissioning and installation is not supposed to be carried out by the applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2018 read with similar Notification issued under the provisions of the Gujarat GST Act,2017 which prescribes an 18% GST rate for services under chapter 9954, which pertains to construction services, or 9983, which pertains to other professional, technical and business services (except research, development, legal and accounting services), or 9987, which pertains to maintenance, repair and installation (except construction) services , by way of construction or engineering or installation or other technical services, provided in relation of setting up of bio-gas plant, solar power generating system, waste-to-energy plants/devices. 14. The applicant submitted that two separate contracts have been issued by the recipient of supply as supply and services have separately been bided by the Applicant as there was not at all a compulsion from the recipient of supply to bid two different contracts as the supply of goods also could have been sufficed and accordingly the explanation as inserted above and reproduced and mentioned herein above shall not be applicable and thus Applicant believes that the supply of Transformers to be executed / should be liable to GST at 2.5% CGST and 2.5% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5MVA, 66KV Class. 21. The Applicant has received an Order from M/s. Adani Green Energy Limited (PO: 4500315135 dated 08.11.2019), for supply of 25MVA ONAN/ONAF 33/0 8/0 8KV Aluminium Foil Type Winding Inverter Duty Transformers, Mandatory Spares for Transformers which also includes Packing and Forwarding, Freight and Insurance charges up to the Site of the customer. 22. In this regard, applicant has submitted an indemnity / undertaking dated 05.02.2020 given by M/s. Adani Green Energy Private Limited i.e. recipient of supply of Aluminium Foil Type Winding Inverter Duty Transformer wherein it is stated that, M/s. Adani Green Energy Limited is developing and setting up (75MW Chitrakoot Solar Project. Uttar Pradesh, UPNEDA Project). for which approval from the Ministry of New Renewable Energy has already been received; that the entire lot to be received from the applicant will be used only in the initial setting of the above project and not elsewhere or not for any other purposes. 23. The applicant submitted that two separate Purchase Orders have been issued by the recipient of supply as supply of goods and services. The applicant has received the order P.O. 4500315135 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E, RECTIFIERS) and INDUCTORS . The impugned product i.e. Inverter Duty Transformer is classifiable under Tariff Heading 8504. CTH 85049010 of Customs Tariff Act, 1975 covers the parts of Transformer . Thus applicant satisfies first condition that the goods i.e. Inverter Duty Transformer and their parts are covered Chapter 85 of Customs Tariff Act, 1975. 25.3 Now we turn to the next aspect of the notification to find out whether the impugned goods i.e. Inverter Duty Transformer is a device or parts for the manufacture of especially Solar Power Generating System. Solar Power Generating System and words devices and parts are not defined under the provision of GST Act or Rules or the notifications issued there under. 25.4 Therefore in common parlance Solar power generating systems generally are the systems which absorb sunlight and convert it into electricity which can be put to further use. A Solar Energy System is a renewable energy generating system that collects photovoltaic energy from the sun and converts it into usable electricity. A solar energy generating system relies on four main components: solar panels, inverter, controller and batteries and details are as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nverts electrical power from one type to another. Some of the major types of transformers used in UPS systems and inverters are mentioned below. Inverter transformers or electronic transformers: These are commonly used for small power conversion or to get the desired voltage. It can be said that all inverter transformers are power transformers but not all power transformers are inverter transformers. Inverter duty transformers: These are mainly used in solar applications and operate at the fundamental frequency of an alternating system. They are designed for one or more output windings connected to the inverter s load. Owing to multiple outputs, multiple inverters paralleled to photovoltaic arrays are connected to these transformers and reduce the project cost without compromising on the transformer s functions. Generally, with the three-and five-winding construction to address the harmonics, they can also be customised to suit the voltage, power, low losses, sound level and operating conditions, environmental impact and safety issues. Other features include galvanic isolation between the solar inverter and the feeding network. Instrument transformers: Als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nction of generating the required high frequency AC power from Sunlight with the help of SPV module and supplying it to the compact fluorescent lamp of a solar lantern. In view of the above expert opinion, we hold that the impugned item can be considered as solar power generating system and is entitled for the benefit of the exemption Notification. Therefore, we allow the appeal with consequential relief . (iii) In M/s. Phenix Construction Technology v. Commissioner of Central Excise Service Tax, Ahmedabad-II [2017-TIOL-3281-CESTAT-AHM = 2017 (358) E.L.T. 241 (Tri. - Ahmd.)] the question under consideration was whether the structures and parts of structures cleared for initial setting up of solar power plant are eligible for the benefit of Notification No. 15/2010-C.E. The point of dispute in the said case law was that whether the aforesaid goods would qualify as components of the solar power plant. Hon ble CESTAT has decided that the items required for initial setting up of the plant would qualify as component; hence the benefit of exemption would extend to such items also as solar power generating system. (iv) In Jindal Strips Ltd. v. Collector of Customs, Bombay [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the entry was added by Notification No. 24/2018-Central Tax (Rate), dated 31-12-2018 w.e.from 01.01.2019. 28. Further vide Notification No. 27/2018-Central Tax (Rate), dated 31-12-2018, an amendment was carried out and Serial No. 38 was inserted in Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017 in respect of services related to setting up of solar power plants. The entry at Serial No. 38 is as follows: Sl.No. Chapter, Section or Heading Description of Service Rate (%) Condition 38 9954 or 9983 or 9987 Service by way of construction or engineering or installation or other technical services, provided in relation of setting up of following, - (a) Bio-gas plant (b) Solar power based devices (c) Solar power generating system (d) Wind mills, Wind Operated Electricity Generator (WOEG) (e) Waste to energy plants/devices (f) Ocean waves/tidal waves energy devices/plants 9 - Explanation :- This entry sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transit insurance charges on FOR Site basis of Inverter Duty Transformer along with Accessories (5/6 25MWA, ONAN/ONAF, 33/0.8/0.8kv Aluminium Foil Type Winding Inverter Duty Transformer (IDT)) for the above mentioned subject Project. 1.2 The detailed Scope of supply shall be as per, Technical Specification subsequent clarification issued on Tender Document (if any) various correspondences exchanged as referred above. In case of any ambiguity in the documents the later document shall prevail. 1.4 Contractor has to comply short circuit test of transformer as per our technical requirements, it shall not absolve the contractor from performing his obligation under this contract and it shall in no way limit the liabilities and responsibilities of the contractor. In respect of the agreed parameters/ specification and the desired performance of the Plant/item/Material, short circuit of transformer to be performed in parallel to the schedule which was agreed in the contract. If found short circuit failed in first attempt of test, contractor has to perform Root Cause of failure (RCA) and the report to be submitted to Employer for evaluation and approval. Upon approval of sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs document in soft form as per the drawing/document submission schedule. b) Supervision of erection, testing commissioning of transformer. c) Submission of progress report. d) Participation in project review / Technical Coordination meetings. 2.4 Exclusion a) Civil Works. b) Fire Fighting Equipments. c) Receipt, Unloading Storage d) Erection, Testing and Commissioning 29.1 On going through the clauses of both the purchase order and technical Specification it is observed that recipient of supply of goods and service i.e. M/s. Adani Green Energy Ltd. have given two Purchase order to the applicant one for supply of goods and second for supply of Service whereas the Technical Specification Ref: 5353-E-SEP-EES-TE-S-I-002 of above contract is single and contains both scope of supply of goods and service. Further, in the purchase order of goods covers scope of work as, complete Design, engineering, manufacture, assembly, inspection and testing at manufacturer s works, packing forwarding, Dispatch/ Transformer along with transit insurance charges on FOR Site basis of Inverter Duty Transformer along with Accessories . Purch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. The clauses mentioned in Technical Specification reveal that the Supplier is involved in the process right from the early engineering period to procurement and implementation stage. In fact, we find that the applicant has tried to bifurcate the works contract of setting up of a Aluminium Foil type Winding Inverter Duty Transformers into contract for supply of goods and supply of services. We see that both the Purchase Order tendered are for setting up of Aluminium Foil type Winding Inverter Duty Transformers. 31. Thus, from the above it is seen that the supply of the goods and the supply of service are inextricably linked with each other. It is not that the applicant has been assigned with the work of supply of goods only. But the applicant has been given the task of setting up the Aluminium Foil type Winding Inverter Duty Transformers . Thus, though the Purchase Order s are made separately, it is one indivisible contract for the setting up of the Aluminium Foil type Winding Inverter Duty Transformers. In fact the technical specification is single for both the supply of goods and Service. Further, at the time of Personal hearing, we members have requested to the represen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case hand to cover under the said entry the applicant should satisfy the two conditions one the supplying the goods should be taxable and specified under entry No. 234 of Not. No. 01/2017-CT (Rate) and second there should also be supply of service alongwith the goods and said service should be taxable in terms of Entry No. 38 of Not. No. 11/2017-CT (Rate). The applicant is supplying the goods Aluminium Foil type Winding Inverter Duty Transformers and covers under CTH No. 85 of Custom Tariff Act, 1975, which are specified under Entry No. 234 of Not. No. 01/2017-CT (Rate) and taxable. Hence first condition is satisfied . The applicant is supplying the service i.e. design, engineering, inspection, testing and supervision of erection Commissioning etc. which is directly related to the Inserter duty transformer and such service covers under entry No. 38 of Not. No. 11/2017-CT (Rate) under other technical services provided in relation of setting up of Solar Power Generating System . Hence second condition is also satisfied. 33. Therefore, in view of the above discussion we hold that the applicant is liable for payment of GST in terms of Explanation inserted i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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