9911796707
TMI Blog2023 (1) TMI 330X X X X Extracts X X X X X X X X Extracts X X X X ..... s 'Applicant') is engaged in the business of manufacture, sale and installation of electrical equipments, ranging from LED lightings, industrial and domestic switchgears, metering solutions, wires and cables, etc. The Applicant has its registered office in the state of Haryana, holding GSTIN 06AAACH0165J2ZT, wherein the manufacturing facility of the Applicant is situated. The Applicant also has its branch office in the state of Chhattisgarh, located at Jai Bhole Complex, behind Mata Garage Pandri, Raipur-492001, Chhattisgarh, holding GSTIN 22AAACH0165J1ZO and it falls within the jurisdiction of Division-I, Range-II, Raipur/ Division-2, Circle-7, Raipur. In the instant case, the Applicant has entered into an agreement with M/s. Adani Infra (India) Ltd. (hereinafter referred to as 'AIIL'), vide Service Order No. AIIL/HPL/SO/C/UV/33/20 dated 26.06.2020, as amended by subsequent service orders dated 18.07.2020, 21.08.2021 and 31.10.2021, for providing services for 'design, engineering, supply, testing at site, freight and transit insurance, erection, installation and commissioning and trial run of Highway Lighting System as per IRC-SP-84-2014 for the project of development, maintenan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccessories for complete highway including flyover at 0+000 chainage, major/ minor junctions, cross roads, structures, rest area, truck lay byes, toll plaza, canopy, busboys and bus shelters) and associated civil work for complete lighting solution as per Concession Agreement and IRC-SP-84-2014 for Bilaspur to Pathrapali road project from 0.000 km to 53.300 km in the State of Chhattisgarh. Scope of work covers all activities involved in the Lighting works at various locations including highway and flyover/VUPS/bridges area across the length of the project as indicated in TCS Schedule (Annexure-VI) and as per approved design basis by IE/NHAI. Supply, installation & testing of electrical materials as per BOQ. All the fixtures, panels, wires/ cables, lights, earthing materials, and other items complete in all respect, shall confirm to MoRTH specifications and other relevant codes as a minimum. Entire work shall be carried out in accordance with relevant technical specifications and applicable standards including IRC-SP-84-2014 upto the satisfaction of Employer/NHAI/lE. Approval of 'Design basis' for manufacturing clearance and approval for executed work for complete Highway lig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Work Permit, Mobilization, Demobilization, Lodging & Boarding, Transportation, Travelling to all the site visit/ Employer/'s office visit/ IE's office visit/ NHAI, Per diem charges, Material shifting, Material inspection charges, Testing charges, all Liaison work, etc. all necessary to complete the scope of work but excluding Goods & Service Tax (GST)." 2.3 The applicant has submitted that the work to be executed by the Applicant is essential for completion of the works in relation to road for which contract has been awarded to the Concessionaire by NHAI and forms part of the contract awarded by NHAI to Concessionaire. The Applicant is bound to follow the standard provided in the MANUAL OF SPECIFICATIONS AND STANDARDS FOR FOUR LANING OF HIGHWAYS THROUGH PUBLIC PRIVATE PARTNERSHIP published as IRC-SP-84-2014 as the same are part of Model Concession Agreement executed for construction and maintenance of Highway. All the works to be executed by the Applicant including approval of design for works, approval of vendors from whom material for the works is to be procured, etc. will be under the approval of NHAI or independent engineer appointed by NHAI. 3. Contentions of the applicant: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or bridge or tunnel or terminal for road transportation; iii) The said road or bridge or tunnel or terminal should be for use by general public. 3.4 The first condition is that there should be a composite supply of works contract, which term has been defined under Sec. 2(119) of CGST Act. As per the said definition, works contract is 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. Thus, under the CGST Act, a contract would qualify as a works contract only if such contract is for construction, erection, installation, commissioning, etc. of an immovable property and property is transferred in the goods involved therein. 3.5 That, it is pertinent to determine whether the contract undertaken by the Applicant for design, supply, installation and commissioning, etc. of Highway lighting system for the project of development, maintenance and management of National Highway-111 qualifies as Works co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Engineering Co. Ltd. Vs. CCE, Mumbai -111,1998 (99) E.L.T. 662 (Tribunal), That, the aforesaid decision has been further affirmed by the Supreme Court vide its judgment reported at 2002 (146) ELT 29 (SC). Alfa Laval (India) Ltd. Vs. CCE, Pune,1998 (99) E.L.T. 649 (Tribunal). 3.9 That, it can be derived from above judicial pronouncements that an immovable property would consist of the following characteristic - * It should be permanently attached to or affixed to the earth. * It should come into existence as an immovable property. * It cannot be shifted from one location to other location without dismantling it. In other words, only individual parts can be shifted and property as such cannot be shifted. * The dismantling of the property would cause substantial damage to the said property. * The said property is not attached to earth merely for operational efficiency of the said property such as to prevent it from wobbling during the operations. * There is an intention of permanently attaching the said property to the ground 3.10 That, in the present case, the Applicant has been given a service order by AIIL for design, engineering, supply, installation, commissioning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... surrounding areas at night. Though, on a highway, all the vehicles have their own headlight, but it is not possible to fully depend on headlights for night driving, as in case all the vehicles are to drive with the full headlight on, the glare problem can cause severe accidents. Thus, highway lighting is required to illuminate the carriageway and its surrounding. The lighting on highway improves traffic flow conditions as the speed of traffic improves due to better lighting. Presence of light helps in reduction of number of accidents and reduction in highway crimes at night. 3.14 Further, the importance of lighting has been emphasized even in 'Manual of specifications and standards for four laning of highways through public private partnership': IRC-SP-84-2014 published by Indian Roads Congress. Para12.3 of the said manual provides for street lighting and states that the Concessionaire shall provide lighting at specified locations of the Project Highway, using appropriate system and source of electric power. The said manual issued by IRC shows that the lighting of the highway is part and parcel of the project of construction of roads and plays a vital road in road safety, which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... installed and starts functioning. 3.20 Hence, in view of the aforesaid ruling it was applicants contention that the project to be executed by them is classifiable under Entry 3(iv)(a) of Not. No. 11/2017-CT (R) and thus, exigible to GST @ 12% (CGST 6% and SGST 6%). 3.21 That, a doubt may arise as to whether the Entry 3(iv)(a) of Not. No. 11/2017-CT (Rate) is applicable in case of services provided by the sub-contractor to the main contractor. 3.22 that the entry 3(iv) (a) neither prescribes the identity of the service provider nor the identity of the service recipient. It merely requires that the supply of works contract should be towards road, bridge, tunnel or terminal for road transportation for use by general public. Accordingly, it is submitted that the said entry is qua the service and not qua the person. In the facts of the case, it is established above that the supply by Applicant would be of works contract by way of completion, of a road for use by public, thus, the requirement of Notification is satisfied. Reliance is placed on the ruling of Appellate Authority for Advance Ruling (for short `AAAR'), Maharashtra in the case of M/s. Shree Construction, 2019 (3) TMI 1567- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and thus, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the CGGST Act, 2017. Now we sequentially proceed to discuss the issues involved in the ruling so sought by the applicant and the law as applicable in the present case. 6. Section 96 of CGST Act, 2017, Authority for advance ruling, stipulates as under: - Subject to the provisions of this Chapter, for the purposes of this Act, the Authority for advance ruling constituted under the provisions of a State Goods and Services Tax Act or Union Territory Goods and Services Tax Act shall be deemed to be the Authority for advance ruling in respect of that State or Union territory. Section 97(2) of CGST Act 2017 stipulates that: - The question, on which the advance ruling is sought under this Act, shall be in respect of- (a) classification of any goods or services or both; (b) applicability of a notification issued under the provisions of this Act; (c) determination of time and value of supply of goods or services or both; (d) admissibility of input tax credit of tax paid or deemed to have been paid; (e) determination ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of the Council, and on being satisfied that it is necessary in the public interest so to do, hereby notifies that the central tax, on the intra-State supply of services of description as specified in column (3) of the Table below, falling under Chapter, Section or Heading of scheme of classification of services as specified in column (2), shall be levied at the rate as specified in the corresponding entry in column (4), subject to the conditions as specified in the corresponding entry in column (5) of the said Table:- Table S.No. Chapter, Section or Heading Description of Service Rate (per cent.) Condition (1) (2) (3) (4) (5) 1 Chapter 99 All Services 2 Section 5 Construction Services 3 Heading 9954 (Construction services) (i)............. .......... .......... .... - (ii) .... - (iii) .... - (iv) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017 other than that covered by items (i), (ia), (ib), (ic), (id), (ie) and (if) above, supplied by way of construction, erection, commissioning, installation, completion, fitting out, rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating walls, traffic signs, etc.; vi. creation, maintenance and signposting of tracks and paths; vii. painting services of markings on roads, parking lots and similar surfaces; viii. railway roadbeds for long-line and commuter rails, street tramways and underground or elevated urban rapid transit systems; ix. railway electrification structures including laying services of ballast and rails; x. installation services of switch gear, points and crossings; xi. construction services of control and safety systems for railway tracks; xii. construction services of funicular railways and cable car systems; xiii. construction services for airfield runways, including taxiways, aprons and related airport structures other than buildings; xiv. construction of bridges, highway, road and railway tunnels and tunnels for underground railway traffic 99543 Site preparation services 99544 Assembly and erection of prefabricated constructions : 99545 Special trade construction services 99546 Installation services 995461 Electrical installation services including electrical wiring & fitting services, fire alarm installation services, burglar alarm installation services This s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LASSIFICATION OF SERVICES UNDER GST Preface The Scheme of Classification of Services adopted for the purposes of GST is a modified version of the United Nations Central Product Classification. 2. The Explanatory notes for the said Scheme of Classification of Services is based on the explanatory notes to the UNCPC, and as recommended by the committee constituted for the purpose, is annexed. 3. The explanatory notes indicate the scope and coverage of the heading, groups and service codes of the Scheme of Classification of These may be used by the assessee and the tax administration as a guiding tool for classification of services. However, it may be noted that where a service is capable of differential treatment for any purpose based on its description, the most specific description shall be preferred over a more general description. EXPLANATORY NOTES FOR SUPPLY OF SERVICES UNDER GST [Chapter 99] 9954 Construction services : This heading includes : i. General construction services for all complete ii. Specialized construction services i.e., services related to parts of buildings or civil engineering works, rather than the complete construction object. ........ . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommunications equipment; ix. electrical installation services of illumination and signalling systems for roads, railways, airports, harbours and similar- premises; x. installation services of heavy electrical equipment; Page 11 of 130 xi. installation services of telecommunications wiring, including of fibre optic cables; xii. other electrical installation services n.e.c. 995423 General construction services of long-distance underground/overland/submarine pipelines, communication and electric power lines (cables); pumping stations and related works; transformer stations and related works This service code includes construction of i. long-distance overland, underground and submarine pipelines for the conveyance of petroleum products, gas, water or other products; ii. pumping stations and similar related structures; iii. long-distance overland, underground or submarine telecommunication cables &transmission lines; iv. long-distance high tension electric power transmission lines (cables); v. long-distance electricity power lines for railways; vi. transformer stations, pylons etc 978736 Installation services of electrical machinery and apparatus n.e.c. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26.06.2020, the relevant portion of which reads as under: 2.1.1 "Design, engineering, supply, testing at Site/Works, freight and transit insurance, erection, installation and commissioning and Trial run (SITC) of Highway Lighting System (which includes lighting pole, luminaries, cable, feeder panels, high mast, DG set and its accessories for complete highway including flyover at 0+000 chainage, major/ minor junctions, cross roads, structures, rest area, truck lay byes, toll plaza, canopy, busboys and bus shelters) and associated civil work for complete lighting solution as per Concession Agreement and IRC-SP-84-2014 for Bilaspur to Pathratpali road project from 0.000 km to 53.300 km in the State of Chhattisgarh. 2.1.2 Scope of work covers all activities involved in the Lighting works at various locations including highway and flyover/VUPS/bridges area across the length of the project as indicated in TCS Schedule (Annexure-VI) and as per approved design basis by IE/NHAI 2.1.3 Supply, installation & testing of electrical materials as per BOQ. All the fixtures, panels, wires/cables, lights, earthing materials, and other items complete in all respect, shall confirm to MoRTH speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for material sources and will execute the work as per the relevant specifications of MoRTH, methodology approved by NHAI/IE/Employer. 2.2 The Basic Price shall be inclusive of applicable Taxes (except GST), inclusive of all cost towards required Manpower, Material, Equipment, Tools & Tackles, Insurance, Safety equipment, PPE, Statutory Compliance, License, Work Permit, Mobilization, Demobilization, Lodging & Boarding, Transportation, Travelling to all the site visit/ Employer/'s office visit/ IE's office visit/ NHAI, Per diem charges, Material shifting, Material inspection charges, Testing charges, all Liaison work, etc. all necessary to complete the scope of work but excluding Goods & Service Tax (GST)." 7.4.2 Thus, from the above it gets revealed that the scope of work awarded to the applicant covers only the activities involved in the Lighting works at various locations including highway and flyover/VUPS/bridges area across the length of the project as indicated in TCS Schedule and as per approved design basis by IE/NHAI. In addition to the above work of electrification or lighting works the applicant is responsible for Supply, installation & testing of electrical materials a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ", being special trade installation services involving the installation of basic electrical wiring circuits or fittings in buildings and other construction projects, as also being electrical installation services of illumination and signalling systems for roads. Further the work of supply and laying of cable aptly falls under SAC entry no. 995423 and supply of safety equipment under SAC 998736 in respect of supply of electrical materials as per BOQ furnished by applicant. As can be seen from above, the said EXPLANATORY NOTES TO SCHEME OF CLASSIFICATION OF SERVICES UNDER GST in very unambiguous way stipulates that where a service is capable of differential treatment for any purpose based on its description, the most specific description shall be preferred over a more general description. The work undertaken by the applicant in entirety, as elaborately discussed herein is nothing but electrical "Installation services" of illumination for roads and by no stretch of imagination can be termed as civil engineering works. The applicant in their application in the instant proceedings while listing out the essentialities required for availing the benefit as provided under S.no. 3(iv)(a) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods is a principal supply; 7.5.1 On perusal of the copy of clause 1.1 of the service order dated 26.06.2020 issued by AIIL to the applicant, the scope of work awarded is 'design, engineering, supply, testing at site/works, freight and transit insurance, erection, installation and commissioning and trial run (SITC) of Highway Lighting System (which includes lighting pole, luminaires, cable, feeder panels, high mast, DG set and its accessories for complete highway including flyover at 0+000 chainage, major/ minor junctions, cross roads, structures, rest area, truck lay byes, toll plaza, canopy, bus bays and bus shelters) and associated civil work for complete lighting solution as per Concession Agreement and IRC-SP-84-2014 for Bilaspur to Pathrapali road project from 0.000 km to 53.300 km in the state of Chhattisgarh'. Further clause 1.3 of the service order provides that 'supply, installation & testing of electrical materials as per BOQ. All the fixtures, panels, wires/ cables, lights, earthing materials, and other items complete in all respect, shall confirm to MoRTH specifications and other relevant codes as a minimum'. Clause 1.10 provides that the construction of suitable f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce order read with Bill of Quantities (BOQ), it is clear that the Applicant is supplying all the goods required for highway lighting system as well is responsible for installation of such goods, such as lighting pole, lights, earthing work, etc. The applicant in their submissions before us, to bring home their point has cited reference to clauses 1.10 and 1.11 of the service order wherein the Applicant has been entrusted and made responsible for all the works including construction of foundation, other civil works including excavation, wall, road cutting, fixing of poles, installation of lights, etc. We find considerable strength in the applicants contention that the scope of Applicant's work is not only limited to fixing of lights, but also fixing of poles, which when once installed as lighting system along the road of significant length, there cannot be any intention to move the same to another place during its useful life without making the same defunct. The contract also involves civil work and various items are permanently embedded into earth and these civil works are for completion of the Electrical "Installation services" entrusted upon the applicant and not the other way r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the definition of term works contract per se under GST. Such contracts would continue to remain composite supplies, but will not be treated as a Works Contract for the purposes of GST. As per Para 6 (a) of Schedule II to the CGST Act, 2017, works contracts as defined in section 2(119) of the CGST Act, 2017 shall be treated as a supply of services. Thus, there exists a clear demarcation of a works contract as a supply of service under GST. Besides this, as per section 17(5) (c) of the CGST Act, 2017, input tax credit shall not be available in respect of the works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service. Thus, ITC for works contract also stands restricted and can be availed only by one' who is in the same line of business and is using such services received for further supply of works contract service. For example, a building developer may engage services of a subcontractor for certain portion of the whole work. The subcontractor will charge GST in the tax invoice raised on the main contractor. The main contractor will be entitled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the applicant on the National Highway comes into existence in an immovable condition and there appears no intention to move the same in future to any other place. The applicant has further submitted that it is not possible to shift the lighting system from one place to another without causing damage/breaking up the existing system. On dismantling, what would be taken out are parts/components of the system and not the system itself. Thus, highway lighting system installed by the Applicant is immovable in nature. 7.6.4 Now the allied aspect for a contract to qualify as 'works contract' is that the contract should involve transfer of property in goods. In this context, it is seen that clauses 1.1, 1.3, 1.26, 6.2 and 8.3 of the service order dated 26.06.2020 supra read with Annexure 1 to the said service order bring to the fore the fact that the applicant is responsible for supply of goods as well as installation thereof, which in our opinion is sufficient enough to conclude that there exits transfer of property as well as of goods being supplied in the instant "Installation services" under the contract. 7.7 As regards to the condition stipulated that the works contract should be f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , as the basic requirement for eligibility to the said exemption as provided under S.no. 3(iv)(a) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended, of getting covered under "Construction service" under Heading 9954 stands unfulfilled, whereas the instant supply pertains to electrical "Installation services" . The work undertaken by the applicant is electrical installation services of illumination for roads, as discussed above. As regards the issue of applicability of Entry 3(iv) (a) of Not. No. 11/2017-CT (Rate) as applicable in case of sees provided by the sub-contractor raised by the applicant, hem sae has no relevance as the applicant eligible to be benefit of the claimed exemption. 8. Having regard to the facts and circumstances of the case and discussions as above, we pass the following order:- ORDER (Under section 98 of the Chhattisgarh Goods and Services Tax Act, 2017) No. STC/AAR/02/2022 Raipur Dated 02.05.2022 RULING The ruling so sought by HPL Electric and Power Limited, behind Mata Garage, Jai Bhole Complex, Pandri, Raipur, Chhattisgarh, 492001 GSTIN-22AA/CH016511ZO, the applicant is accordingly answered as under: The aforementioned sup ..... X X X X Extracts X X X X X X X X Extracts X X X X
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