TMI Blog2022 (3) TMI 1150X X X X Extracts X X X X X X X X Extracts X X X X ..... ion with classification of goods erected and installed at site. This said CBEC order was issued in wake of plethora of judgments appear to have created some confusion with the assessing officers, the matter was examined by the Board (CBEC) in consultation with the Solicitor General of India and the matter was clarified vide said Order and the relevant extract is reproduced and it is held that its rationale and concept are relevant under GST scheme of law also. The subject supply pertains to Railways as it is for supply in railway office. As per Section 2(31)(d) Railways Act, 1989, railway includes all offices and any other works constructed for the purpose of, or in connection with, railway - The subject supplies of EPABX system for Railways is covered at entry No. 3 (v) of Notification No. 11/2017-CT (R) dated 28-6-17, as amended, and liable to 12% GST. - GUJ/GAAR/R/2022/09 - - - Dated:- 7-3-2022 - ATUL MEHTA AND ARUN RICHARD, MEMBER Present for the applicant : Ms. Ruchita Shah, CA Brief Facts M/s. Intellicon Private Limited, hereinafter referred to as Intellicon for the sake of brevity, submits that it supplies EPABX system along with its installation and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incidental equipment as stated above; b. Laying of cables to connect the EPABX machine and the main distribution frame; c. Laying extension lines cables through wall, ducts, conduit of the premises of the customer and undertake associated earthing work in order to connect various telephones installed by Intellicon to the main distribution frame, which is in turn connected to EPABX machine. This activity of laying extension line cables would also involve undertaking associated civil works. 5.2 Intellicon has submitted sample purchase order Letter No: Dhanbad Division-S AND T / SG-664-18-Tele-2019-20 dated 22-6-20 issued by Dhanbad Division-S and T, East Central Railway, in relation to such supply. The relevant clauses of scope of work is reproduced as follows: 1. Supply, Installation, Testing commissioning of Set of two Servers along with VOIP software to working as PBX SIP router as specified in the system architecture and fully Hot Standby. As per technical specification attached as Annexure - A or latest. 2. Supply of Monitoring / Maintenance Console (Desktop) Make - HP/DELL or similar. As per technical specification attached as Annexure - A or latest. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... original works pertaining to,- (a) railways, including monorail and metro; (b) a single residential unit otherwise than as a part of a residential complex; (c) low-cost houses up to a carpet area of 60 square metres per house in a housing project approved by competent authority empowered under the 'Scheme of Affordable Housing in Partnership' framed by the Ministry of Housing and Urban Poverty Alleviation, Government of India; 6% - 7.1. Section 2(119) of the Central Goods and Services Tax Act, 2017 provides the definition of works contract which reads as: (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; 7.2. The term Original Works is not defined in the CGST Act as well as the Notification. However, the same is defined under the Notification 12/2017-Centra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral part of the building/premises in which the same is installed. Installation of EPABX system involves, installation of EPABX machine, laying of cables through the walls, ducts, conduits of the premises. An EPABX system is not a ready-made assembled unit. The installation and commissioning of an EPABX system involves elaborate work and has to be correlated with and tailored to meet the needs and requirement of the customers. Accordingly, once the EPABX system is commissioned and installed in the premises, it becomes integral part of the immovable property. iv. The applicant has placed reliance on the judgement of the Hon ble Apex Court in case of M/s. Kone Elevator India Pvt. Ltd. Vs State of Tamil Nadu and others [2014 (5) TMI 265-Supreme Court] wherein the issue before the Larger Bench of the Hon ble Apex Court was to decide correctness of the Judgement in case of State of Andhra Pradesh vs. Kone Elevators [2005 (2) TMI 519- Supreme Court] wherein a three judges bench held that contract of manufacture, supply and installation of lifts is to be treated as sale of goods, as opposed to a works contract. However, the Larger Bench of the Hon ble Supreme Court overruled the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the same shall apply to the facts of this case in full force and item in question being immovable property cannot be subjected to excise under the tariff heading claimed by the Revenue. The case sought to be made out by the petitioner is also covered by the decision of the Government of India in reference, OTIS Elevator Company (India) Ltd. - 1981 (8) E.L.T. 720 (G.O.I.), wherein, it was clearly held that if an article does not come into existence until it is fully erected or installed, adjusted, tested and commissioned in a building, and on complete erection and installation of such article when it becomes part of immovable property, it cannot be described as goods attracting levy of any excise duty. Thus, applying the ratio of all the above judgments including the order of the Government of India referred to hereinabove, the case sought to be made out by the petitioner has to be upheld. The contention sought to be advanced by the petitioner has a lot of merits in their submission and the issue is squarely covered against the Revenue that once the item has been held to be an immovable property, then, for the purpose of valuation the cost of construction and proportionate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cables, connectors may possible even be damaged and will not be usable again. It can be said that a full functional EPABX system cannot be moved in as it is condition and therefore it is an immovable property. The similar view was also upheld by the Hon ble Supreme Court in the case of Commissioner of Central Excise, Indore vs. Virdi Brothers [2007 (207) ELT 321(SC)]. ix. Intellecon further places reliance on the ruling given by the Authority for Advance Ruling, Gujarat in case of M/s. The Varachha Co. Op. Bank Ltd. [2021 (8) TMI 736-AAR, Gujarat]. In the said ruling, the Hon ble Authority was deciding on the credit eligibility of the input tax incurred qua the cost of CAP, lift, electrical fittings, fire safety extinguisher and roof solar plant etc. in a building. In context of the same, the Hon ble Authority held that all these products comprise of various components and cannot be moved as it is condition, once installed and commissioned in the building. Accordingly, such products become integral part of the immovable property and thereby credit of the same is blocked under section 17(5)(c) of the CGST Act. x. Intellecon refers to the definition of term original w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... integral part of the same. EPABX system installed by the Company cannot be removed in as it is condition. Removal of the same would require dismantling the entire system and moving it in parts. Such dismantling of EPABX system would damage some parts, resulting into them being permanently nonusable. A complete EPABX system installed by Intellecon becomes an integral part of the immovable property and thereby fulfilling the condition of qualifying as works contract. Intellecon supplies, installs and commissions the EPABX machine along with various other equipments. Intellecon also installs the cables to connect the EPABX machine and the main distribution frame. Once the EPABX machine and all other equipments are installed, they cannot be removed in as it is form. They can only be removed by dismantling the entire system and moving in parts. Such dismantling of the system would result in some parts such as cables etc. being permanently damaged and unusable. Accordingly, the EPABX machine along with all other equipments installed by Intellecon becomes part of the immovable property i.e. building of the customer. Further, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time, is applicable to supplies by Intellecon under the Contract I and Contract II and resultantly, whether such supplies are subjected to 12% rate of Goods and Services Tax ( GST ). Personal Hearing 13. Personal hearing granted on 18-2-22 was attended by Ms.Ruchita Shah, CA and written submission was reiterated. Revenue s Submission 14. Revenue has neither submitted its comments nor appeared for hearing Findings 15. At the outset we would like to make it clear that the provisions of CGST Act and GGST Act are in pari materia and have the same provisions in like matter and differ from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the GGST Act. 16. We have carefully considered the submissions made by Intellicon. 17. We find that the EPABX system comes into existence by assembly and connection of various goods/components, wherein transfer of property of such goods is involved in the execution of said contracts. We note that EPABX system once installed cannot be taken to market i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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