TMI Blog2022 (2) TMI 824X X X X Extracts X X X X X X X X Extracts X X X X ..... ite nature of the contract is clear from the facts that first Contract and second contract cannot be performed satisfactorily unless the goods have been transported and delivered to the contractee's site as per third contract. The 'cross fall breach clause', settles unambiguously that supply of goods, their transportation to the contractee's site and related services of insurance, unloading and handling at site, installation including civil work, testing etc. are not separate contracts, but only form parts of an indivisible composite supply of goods and services with single source responsibility - it is seen that the supply of the goods and the supply of services are inextricably linked with each other. The contract awarded in substance and essence is a composite contract as defined in section 2(30) of the C.G.S.T. Act, 2017 for supply of goods and services. The Contracts involve two supplies, one for the supply of goods and the other for the supply of services. The contracts fulfill the conditions of the 'composite supply' as the supply of goods and services are naturally bundled in the sense that both the goods and services may require to fulfill th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ARYA, MEMBER Represented by : Shri Sivarajan Kalyanraman Authorized representative ORDER UNDER SECTION 98(4) OF THE CGST ACT, 2017 UNDER SECTION 98 (4) OF THE UPGST ACT, 2017 1. M/s Toshiba JSW Power Systems Private Limited, Meja TPP Site, Kodhar, Allahabad 212305 (here in after referred to as the applicant) is a registered assessee under GST having GSTN: 09AADCT0151D1ZS. 2. The applicant has filed application for advance ruling in Form ARA-01 and submitted as under- (1) They are engaged in the business of erection, procurement and commissioning (`EPC') of thermal power plants in India. The applicant was awarded the erection, procurement and commissioning package for 1x660 MW Harduaganj TPS Extn-II thermal power station located in Harduaganj, Aligarh, Uttar Pradesh by the Uttar Pradesh Rajya Vidyut Utpadan Nigam Limited (hereinafter referred to as the UPRVUNL). The said project is composed of the following four separate contracts: Contract 1: Supply of plant and equipment from abroad Contract 2: Supply of domestically manufactured plant and equipment. Under the contract there are two categories of supplies - a) Supply of goods manufactured ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transportation by road to be provided by it under the said contract. (8) The applicable legal provisions which are relevant in the instant case as under. (8.1) The taxable event under GST law is supply of goods and services and as per GST law all forms of supply of goods or services or both are liable to tax under GST, unless specifically exempted. (8.2) With respect to services of goods transport by road, an exemption from GST has been provided except where such services are provided by a goods transport agency (GTA) or by a courier agency as per entry no. 18 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. (8.3) The term GTA has been defined as per Para 2(ze) of N/N 12/2017-Central Tax (Rate) dated 28th June 2017 as under- goods transport agency means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called (8.4) The term consignment note has not been defined under the GST law. Guidance in this regard can be taken from the meaning prescribed to the term in the erstwhile Service tax regime. As per Explanation to rule 4B of the Service Tax Rules, 1994 For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices of such GTA, who assumes agency functions, that is being brought into the GST net (c) The Customs Excise and Service Tax Appellate Tribunal (CESTAT) in the case of Nandganj Sihori Sugar Co. CCE observed that- (i) Mere transportation of the goods in a Motor Vehicle is not the service provided by a Goods Transport Agency. (ii) The transportation of goods without issue of consignment note would be simple transportation and not the service of Goods Transport Agency. (iii) Consignment note issued by GTA represents its liability to - (a) transport consignment handed over to it to destination, (b) undertake delivery of same to consignee, and (c) temporarily store till delivery. Mere bill issued for transportation of goods cannot be treated as a consignment note. (8.7) as per the 'Carriage by Road Act, 2007' a common carrier is a person who carries out the specified activities under a goods receipt. Only such persons are required to undertake registration under the said act, and only such persons may engage in the activities of a goods carrier. Under the said act, issuance of a document specifying the liability of the person transport ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on the matter. The Joint Commissioner, (Corporate), Commercial Taxes, Prayagraj vide his letter C.No. 48/2021-22/Joint Comm. (Corporate) Va. Ka. Prayagraj Dated 12.07.2021 (addressed to Additional Commissioner Grade-1, Commercial Taxes, Prayagraj) submitted that as per entry no. (V) of notification No. 11/2017 dated 28.06.2017, the rate of tax is 9% CGST and 9% SGST on Goods transport services other than (i), (ii), (iii) and (iv). It is also mentioned in the report that no proceedings on the question raised by the applicant are pending. 6. The applicant was granted a personal hearing on 22.09.2021 which was attended by Shri Sivarajan Kalyanraman, Authorized representative through video conferencing during which he reiterated the submissions made in the application of advance ruling and submitted a Paper Book containing relevant details. DISCUSSION AND FINDINGS- 7. At the outset, we would like to make it clear that the provisions of both the CGST Act and the UPGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chennai vide PO Number TJPSG/17-18/39480 dated 27.10.2017. M/s NTC LOGISTICS INDIA (P) LIMITED, Chennai have issued Invoice No. DLHB/1819/00057 dated 31.07.2018 to the applicant for transportation wherein IGST @ 12% has been charged on transportation charges under SAC 996791 which is in accordance with the rate prescribed vide Notification No. 11/2017-CT(rate) dated 28.06.2017 as amended. But, the applicant have also issued Invoice No. UPSD1804210008 dated 29.06.2018 to M/s UPRVUNL for local transportation wherein CGST 9% and SGST 9% have been charged under SAC 996749. 12. Moreover, the applicant have submitted that they are not Goods Transport Agency (GTA) as they do not issue consignment note so GST on transportation services provided by them to M/s UPRVUNL is exempted as per entry no. 18 of Notification No. 12/2017-CT(rate) dated 28.06.2017. 13. The arguments of the applicant regarding exemption on the transportation service is in fact based on the assumption that the supply of service is in total isolation from the whole contract and without considering the terms and obligations created under all the contracts of supply of goods and services under erection, procurement an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsion-II (1*650 MW) as per bidding documents no. specification no. D-1-4029-4100-00-T-RSB (hereinafter refer to as the 'First Contract', `Second Contract' and Fourth Contract). You shall also be fully responsible for the works to be executed under the 'First Contract' Second Contract' and Fourth Contract and it is expressly understood and agreed by you that any breach under the First Contract and/or `Second Contract' and/or Fourth Contract shall automatically be deemed as a breach of this 'Third Contract' and vice-versa and any such breach or occurance or default giving us a right to terminate the First Contract, and/or Second contract and/or 'Fourth Contract' and recover damages thereunder , shall give us an absolute right to terminate the Contract and/or recover damages under this 'Third Contract' as well and vice-versa. However, such breach of default or occurrence in the 'First Contract' and/or 'Second Contract' and/or 'Fourth Contract' shall not automatically relieve you of any of your responsibilities/obligations under this 'Third Contract'. It is also expressly understood and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esponse to a single tender notification. Apart from this, all the contracts are linked by a 'cross fall breach clause' which means that a breach in one contract will automatically be classified as a breach of the other contract. Thus, the 'cross fall breach clause' provides the recipient M/s UPRUVNL an absolute right to either terminate all the contracts or claim damages accordingly. The 'cross fall breach clause', settles unambiguously that supply of goods, their transportation to the contractee's site, delivery and related services are not separate contracts, but only form parts of an indivisible composite works contract supply, as defined under Section 2 (119) of the CGST Act, 2017. The composite nature of the contract is clear from the facts that first Contract and second contract cannot be performed satisfactorily unless the goods have been transported and delivered to the contractee's site as per third contract. The contracts for supply of the goods and allied services are not separately enforceable. The recipient M/s UPRUVNL has not entered into contract of ex - factory supply of material, but for the supply at site alongwith design, engineeri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble supplies are separately quoted or there is single consideration for two supplies, both types of scenarios are covered under composite supply till the conditions as mentioned above for composite supply are fulfilled (i.e. naturally bundled supplies and one being principal supply and other ancillary supply to principal supply). The entire transaction of providing the goods and the services is naturally bundled and hence this is clearly a case of composite supply of goods and supply of services. 20. Now, we proceed to examine as to whether the contracts/agreement before us is a 'works contract as defined in clause (119) of section 2 of the CGST Act, 2017 or otherwise. The definition of works contract is reproduced below. (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; 21. It is seen from the definition that works contract involves activities of build ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led designing, ground work. Further foundations in cement concrete, cement concrete walls as well as cement concrete structures are to be constructed during the execution of the project. The mode of annexation shows that the groundwork, being the necessary foundation, is an important part of the project. The object of annexation, as said earlier, cannot be to make it movable from one place to the other. Hence considering the scope of the work, it can be concluded that completion of the installation, erection of the total project is resulting into immovable property wherein transfer of property in goods is involved. 23.1 We find that the Hon'ble Supreme Court decision in the case of Duncans Industries Ltd vs State Of U.P. Ors on 3 December, 1999 is relevant to the instant case where the SC had to decide whether the 'plant and machinery' in the fertilizer is 'goods' or 'immoveable property. The Apex Court held that the same is immoveable property and observed the following-.. .. The question whether a machinery which is embedded in the earth is movable property or an immovable property, depends upon the facts and circumstances of each case. Primar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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