TMI Blog2021 (11) TMI 885X X X X Extracts X X X X X X X X Extracts X X X X ..... pellate authority so as to rectify any error apparent on the face of the record, if such error is noticed by the Appellate authority on its own accord, or is brought to its notice by the concerned officer, the jurisdictional officer or the applicant within a period of six months from the date of the Order. Provided that no rectification which has the effect of enhancing the tax liability or reducing the amount of admissible input tax credit shall be made, unless the appellant has been given an opportunity of being heard. 2. Under Section 103(1) of the Act, this Advance ruling pronounced by the Appellate Authority under Chapter XVII of the Act shall be binding only (a). On the applicant who had sought it in respect of any matter referred to in sub-section (2) of Section 97 for advance ruling; (b). On the concerned officer or the jurisdictional officer in respect of the applicant. 3. Under Section 103 (2) of the Act, this advance ruling shall be binding unless the law, facts or circumstances supporting the said advance ruling have changed. 4. Under Section 104(1) of the Act, where the Appellate Authority finds that advance ruling pronounced by it under sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he General Public: The beneficiaries are identified by GCC based on their residential status of the Ward in which the water treatment plant is located. The treated water is distributed by way of smart card issued by the appellant to the beneficiaries identified by GCC. 2.2. The applicability of benefit of exemption under Serial No. 3 of the Notification No. 12/2017-CT (rate) dated 28.06.2017 for the service provided is the issue on which advance ruling was sought by them. They had submitted that the government as empowered under Section 11 of the CGST Act 2017, exempts supply of services vide Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 as amended from time to time and one of such exemptions is provided to pure services provided to the Central Government, State Government or Union Territory or local Authority or a Governmental Authority at SI.No.3 of the said Notification. It could be seen that only supply of services for a consideration without involvement of supply of goods can be termed as pure services and in the present case, no supply of goods is involved as the applicant is only providing an operation and maintenance service to GCC for dispensing treated w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or exemption provided under No. 3 of Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017. 3. The Appellant had sought Advance Ruling on the following questions: Whether the Services provided by the applicant to the recipient i.e. The Greater Chennai Corporation is a pure service provided to the local authority by way of activity in relation to functions entrusted to a Panchayat. under article 243G and Municipality under article 243W of the Constitution and eligible for benefit of exemption provided under Serial No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017? 4. The AAR pronounced the following rulings: The Supply provided by the applicant to the recipient i.e. The Greater Chennai Corporation based on the agreement to provide RO Plant and undertake O M of the same, being not a Pure service but a composite supply of goods Services, they are not eligible for benefit of exemption provided at Serial No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 5. Based on the above decision, the Appellant has filed the present appeal. The grounds of appeal are paraphrased as follows: The appellant wish to submit that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are floated for (i) Supply, erection, Commissioning of RO plants and (ii) operation and maintenance of the same, the scope of these work were separately identified along, with separate value. There are instances, where the appellant did not get the supply contract, but only O M contract when such O M Contracts were floated separately for subsequent periods. From the above narration of facts, the scope of work undertaken by the appellant comprises following.- (i) Where the supply, installation and commissioning was completed by the appellant prior to introduction of GST and O M was being undertaken by the appellant during the period after 01.07.2017. (ii) Where both works, viz., the supply, installation and commissioning and O M was being undertaken by the appellant after 01.07.2017, under distinct contracts awarded. (iii) Where only O M work was awarded to the appellant after 01.07.2017, in respect of existing RO plants. The AAR has come to the conclusion wherever the contracts involve both (i) supply, installation and commissioning of RO plants and (ii) Operation and maintenance of such plants, the exemption under S.No. 3 of Notification 11/2017 co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to 01.07.2017, as part of the composite supply along with the O . M undertaken post. 01.07.2.017 as it would amount to giving retrospective effect to the GST law. Further, the AAR has also held in para 8.2 of the impugned order that, even if it is considered that the supply of RO plant and O M of such plant are two different supplies, the appellant is supplying purified water through the vending machines to the beneficiaries; issue smart cards to the beneficiaries; and these water and smart card are goods; and also provides various services and hence the activities undertaken by the appellant are not pure services and for this reason also the appellant is not entitled for exemption. ln the instant case, the raw water is supplied by GCC, which is treated by the appellant, by operating and maintaining the RO plant set up for this purpose and as per the directions of GCC, the treated water is supplied to the beneficiaries, who are identified by the smart, cards issued to them. It may be observed that the scope of supply in the hands of the appellant is treatment of the water, by operating the RO plant, ensuring proper maintenance of the RO plant and distributing such wate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r law before this Appellate Authority on 23 09 2021. The Authorized representatives of the Appellant Tvl. G. Natarajan, Advocate of the appellant company appeared for hearing. They reiterated the written submissions and emphasized that in respect of the contract for supply, Installation, Commissioning and O M of RO plant, only the O M portion falls in the GST regime and only this portion is relevant to consider the same as pure service. He also stated that under the O M activity, there is no transfer of property in goods made to the GCC. 7. Discussion: 7.1 The representative of the applicant contended that the contract signed in 2016 comprised two components, namely, supply installation and commissioning, of high quality treated drinking water plants and operation and maintenance for five years. The supply of goods, which is involved only in the first component, was completed prior to the introduction of GST. Post GST, only O M contract is operational. What is relevant to GST is only O M contract, this component does not entail any supply of goods, and is therefore pure service. The scope of service does not include supply water, as a good, as the ownership of wat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e supply or a mixed supply should be made together, and not at substantially different points of time. The time of supply of individual constitute supplies should be same or at least close to each other. Just because two or more supplies are part of one contract, they need not form either composite supply or a mixed supply. For instance, if in a contract, it us agreed that the supplier would supply hundred cars now, and another 50 bicycles a year later, each of the two constitute supplies would constitute distinct supplies, and this would be a case of a multiple supply, which is neither a composite supply nor a mixed supply. This is because the times of supply of each of the two constant supplies are significantly different, and the tax would be levied at the relevant rates applicable at the relevant two times of supply. In the present case, in as much as the contract provides for separate payment terms for supply and installation, and for O M, and the times of supply of the two are distinctly different, they will have to be treated as two distinct supplies in one contract, not constituting either a composite supply or a mixed supply. Each of the two supplies will have to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, Commissioning followed by Operation Maintenance for a period of 3 Years allotted vide the Tender floated by the Greater Chennai Corporation bearing No. P.D.T.D.C. No. A 1 /0481 /2016 i.e., the applicant has originally sought to clarify the applicability of exemption at SI.No. 3 to Notification No. 12/2017 C.T.(Rate) in respect of the O M supply made under the contract by which they are to supply RO Plant and undertake O M for a period of five years following such Commissioning. In the said situation, there is an obligation composed of multiple performances that can be separately rendered and the appellant is obligated to perform both the Supply, Installation, Commissioning of the RO Plant and Operation Maintenance of the RO Plant for 5 years after commissioning. Therefore these supplies are in Conjunction and are Composite Supplies . The definition of Composite Supply do not state that the time of Supply of individual constituent supplies should be the same or at least closer to each other, the contention that, the O M portion of the contract has only transitioned into the GST Regime and therefore only that portion which has transitioned into GST is relevan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cards undertaken during the Operation. Subsequently, the Operation involves supply of water on undertaking purification process by Operating the Plant and Supply of RFID Cards therefore is not a supply of Pure Service . For the above reasons, even the O M part of the subject contract is not supply of Pure Services . Therefore, the appellant are not eligible for exemption at SI.No. 3 of the Notification No. 12/2017 C.T.(Rate) dated 28.06.2017 In respect of cases. (ii) Where both works, viz., the supply, installation and commissioning and O M was being undertaken by the appellant after 01.07.2017, under distinct contracts awarded. (iii) Where only O M work was awarded to the appellant after 01.07.2017, in respect, of existing RO plants. The issue in (ii) is a Composite Supply involving Supply, Installation, Commissioning of the RO Plants and undertake O M of such Plant both being undertaken in the GST Regime. The supply is a Composite Supply of Works Contract and not a Pure Service , therefore the exemption at SI.No.3 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017 is not available in such situations. In respect of issue at (iii), during ..... X X X X Extracts X X X X X X X X Extracts X X X X
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