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TMI Blog2023 (2) TMI 758X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 2017 (hereinafter also referred to as the 'MGST Act') by Sterlite Technologies Limited a company incorporated the Companies Act, 1956, having its registered office at E-1, E-2, E-3, MIDC Waluj, Aurangabad, Maharashtra-431 136. (Hereinafter also referred to as 'the Appellant') against the advance Ruling No. GST-ARA-80/2019-20/8-25 dated 18.02.2022. BRIEF FACTS OF THE CASE 3.1 The Appellant is registered under the GST Acts bearing GSTIN 27AACES87I9B1ZC. The activities of Applicant involve manufacture of telecom products such as optic fiber, optic fiber cable, etc. and services in relation to laying of these optic fiber cables (either underground or hung overhead) to create a network, setting up of control centres, installation of equipment, commissioning of network and other ancillary activities that may be necessary for creation of network infrastructure for its customers in the telecom industry. 3.2 Indian Navy, governed by Ministry of Defence (Navy), intended to establish a countrywide IP/MPLS based multiprotocol converged network / Naval Communication Network (collectively referred as "network"); as core infrastructure for supporting strategic and operation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Infrastructure, Tele presence / Networking / Optic fibre Equipment, Staging area and other operational and administrative buildings. The scope of work includes civil construction, water supply, sanitary and plumbing, electrical installation, landscaping, air conditioning, roads, and firefighting and interior works. All buildings....................... c. Along with the building following additional infrastructure for the complex is also required to me made by appellant:- (i) A power room to house the silent generators also needs to be constructed. (ii) Approach road to building within Naval Station. Provision of security lights around the complex, Security Cameras inside and outside building, Guard post including rest room. Automatic Barrier at main/emergency gates. Access Control Mechanism at entrances to the building. Smoke detector, provisioning of small firefighting appliances PA system. (ii) Underground electrical wiring as per the requirement. All switches, cut out, CBS and wires, cables are to be supplied and fitted. All electrical fittings including air conditioners, fans, tube lights, CEL, exhaust fans, call bells, lightning arrester etc. is to be provided and fit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supply of 'works contract' as defined under Section 2(119) of the CGST Act. ii. Activities of the Appellant are covered by sub-clause (ii) of Entry No. 3 of the Rate Notification and attract GST al the rate of 18% 3.6.4 The appellant agrees with observation made by AAR in respect of question no. I that the supply rendered by them to BSNL are in nature of Composite Supply of 'works contract' as defined under Section 2(119) of the CGST Act. 3.6.5 Meanwhile, the Rate Notification was amended vide Notification No. 3/2019 Central Tax (Rate) dated March 29, whereby Entry No. 3(ii) as referred in the Previous Order was omitted with effect from April 01.2019. As the amendment Notification deleted Entry No. 3(ii) of the Rate Notification, the activities of Appellant necessitate an analysis qua other relevant entries of the Rate Notification. As a result, the Appellant preferred afresh Application before the Authority for Advance Ruling 18.12.2019 to ascertain whether the activities of these Appellant are covered under Entry No. 3(vi)(a) of the Rate Notification. 3.6.6 Consequently, the Authorities vide its Order No. GST-ARA-80/2019-20/B-34 dated February 18, 2022 ruled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see. 4.3.2 The second order ruled that supply of the Appellant would get covered under the residual Entry No. 3 (xii) of the Rate Notification and liable for GST @ 18%, whereas appellant continues to claim that the subject composite supply of works contract services is falling under entry No. 3 (vi) of the Notification No. 11/2017-Central Tax (Rate), Dated 28.06.2017, which prescribes total GST rate of 12%. In support of claim the appellant relied upon the entry 3(vi)(a), which is reproduced below: Sr.No. CHAPIER, SECTION OR HEADING DESCRIPTION OF SERVICE RATE (PERCENT) CONDITION 3 Heading 9954 (Construction services) (vi) Composite supply of works Contract as defined in clause (119) of Section 2 of the central Goods and Service Tax Act, 2017 other than that covered by items (i), (ia), (ib), (ic), (id), (ie), and (if) above, provided to the Central Government, State Government, Union Territory authority local governmental Authority or a Government Entity by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of- (a) a civil structure or any other original works meant predominantly for use othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fication No. 12/2017 Central Tax (Rate) dated June 28. 2017 ("Notification No. 12/2017") having persuasive value which inter alia defines the term 'original works' under clause 2(zs) as under.: "(zs) "original works" means-all new' constructions; (i) all types of additions and alterations to abandoned or damaged structures on land that are required to make them workable; (ii) erection, commissioning or installation of plant, machinery or equipment or structures, whether pre-fabricated or otherwise;" 4.3.6 The Appellant submits that, although the definitions provided in paragraph 2 of the said Notification are applicable only for the purpose of the Notification No. 12/2017. Both, the Rate Notifications, i.e.. Notification 11/2017 as well as Notification No. 12/2017 are issued by the Central Government in exercise of its powers conferred under CGST Act. As the contents of both these notifications form part of the same statutory framework. This provisions bear persuasive force to determine the scope of an identical term viz. 'original works' as used in Entry No. 3(vi)(a) of rate Notification 11/2017. 4.3.7 The appellant has referred to ruling Rajasthan Auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parlance, the Appellant refers to the scope of contract which requires it to perform activities to bring structures in the form of buildings, roads, etc. into existence. The Appellant therefore submits that since its activities result in bringing a new structure into existence, these activities indeed qualify as 'original works as referred in Entry No. 3(vi)(a) of the Rate Notification. 4.3.12 Furthermore, reference is drawn to the Advance Ruling by West Bengal Authority and Tamil Nadu Authority in case of ABB India Limited and S T Engineering Electronics Limited Respectively wherein it was pronounced that the term 'original works' is wide enough to cover ambit all activities which include new constructions involving every type of additions/aIterations on the land that are required to make the structure workable. It was also discussed that the term erection/commissioning/installation of plant, machinery, equipment or structures which are not in the nature of repairs/maintenance shall qualify as 'original works. In the present facts, the set-up built by the Appellant requires re-erection of civiI structure along with re-installation of the all necessary equipment wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipal of law that if an activity is covered by specific description of an entry. then the same ought to be covered by said specific entry. Reliance in this regard is placed on the decision of Hon'ble High Court of Gauhati in case of CCE v. Jellalpore Tea Estate. [2011 (268) E.LT. 14 (Gau.)] wherein the Hon'ble Court held that "what is required to be done in a manner prescribed by law, ought to be done in that manner only or not at all.". Reliance in this regard is also placed on the decision of the Larger Bench of Hon'ble Tribunal in the case of M/s. Avis Electronics Pvt. Ltd. [2000 (117) E.LT. 571 (Tri. -LB)] 4.5 Consequently, activities of the Appellant ought to be covered under Entry No. 3(vi)(a) of the Rate Notification. Accordingly, these activities are required to assessed for GST at the rate of 12% as prescribed under said Entry No. 3(vi)(a) of rate Notification. It is also submitted that the Ruling, being silent on the additional submissions, is bad in law and is therefore liable to be modified as prayed for in the present Appeal. PERSONAL HEARING 5.1 A personal hearing in the matter was held on 10.1 1.2022. Shri. Rohit Jain. Advocate. Shri. Srinivas Kali, Ste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aced reliance on the assumption that the appellant had accepted the earlier (first) ruling of this Authority. The MAAR ruled that applicable tax rate on said impugned activity would be 18%. 6.2 Discussion on Merit Issue of Tax Rate For the sake of brevity, Entry No. 3(vi)(a) of Notification No. 11/2017-Cenlral Tax (Rate) dated 28.06.2017. as amended is reproduced below: Sr. No. CHAPIER, SECTION OR HEADING DESCRIPTION OF SERVICE RATE (PERCENT) CONDITION 3 Heading 9954 (Construction services) (vi) Composite supply of works Contract as defined in clause (119) of Section 2 of the central Goods and Service Tax Act, 2017 other than that covered by items (i), (ia), (ib), (ic), (id), (ie), and (if) above, provided to the Central Government, State Government, Union Territory authority local governmental Authority or a Government Entity by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of- (a) a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession; (b)................. (c)................. Explanation - For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in relation to a work entrusted to it by the Central Government, State Government, Union Territory or a local authority, as the case may be. 6.3 We find that there is no dispute in both rulings of MAAR in respect of question no. 1 that the supplies rendered by the appellant to BSNL are in nature of Composite Supply of Works Contract. For the sake of reference, question and reply from first ruling is reproduced as follows: Question:- Whether the supply of goods or services for 'setting up of network' would qualify as 'works contract' as defined in Section 2(119) of the CGST Act? Answer:- The supply of goods or services for 'setting up of network' would qualify as a Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017. 6.4 Thus, the only dispute to be decided is whether the said composite supply of works contract is covered under Entry No. 3(vi)(a) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 (as amended) or not. The first ruling has concluded that all the conditions prescribed implicitly by Entry No. 3(vi)(a) of the Notification No. 11/2017- Central Tax (Rate) dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defined in clause (zs) of para 2 of Notification No. 12/2017 -Central Tax (Rate). Though this definition is given in relation to the Notification No. 12/2017 -Central lax (Rale), the same has persuasive value and can be adopted in relation to Notification No. 11/2017 - Central Tax (Rate) also. On careful examination of the above definition, it is seen that only "all new constructions, erection, commissioning or installation of plant & machinery, equipment or structures" are treated as original works. During personal hearing, appellant has submitted "Firm Price Schedule" issued by BSNL. which clearly shows material (indigenous & imported) and services costs. The tender is intended to setup a Next Generation Network, which will support net-centric operations, a key enabler for the administrative operations/ war fighting operations of the Indian Navy. Thus, requirement of Navy is of robust and zero failure network infrastructure. The supply of material and services for setting up of network, supply of satellite connectivity vehicle and training service being made in pursuance of setting up and effective operation of the network as a turnkey contract where contractor undertakes holist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. In this case, supply is to BSNL which is held in aforesaid paras as a Government Entity. Hence, for entry at Sr No 3(vi) this condition given in column (5) is applicable in present case. The Navy (under the Ministry of Defence, a central government ministry) has entrusted the BSNL. by agreement, works contract to supply, install, commission next generation network along with all materials, civil structure, equipment, satellite connectivity, routers, switches and services to make entire setup to establish network for Indian Navy. BSNL has procured these services in relation to work entrusted by the Indian Navy (central government). 6.11. Judgments in the case of Parle Agro and A R Thermosets (both cited supra) are duly considered. Basically, both deal with applicability' of specific entry rather than residual entry. 6.12. It may be noted that the Notification No 11/2017 has been further amended vide Notification No. 22/2021-CENTRAL TAX (RATE) dated 31.12.2021 (w.e.f. 1.1.2022) by which concessional rate of 12% for specific works contract services provided to Government authority and Government entity have been withdrawn. Said principal notification is further amended vide ..... X X X X Extracts X X X X X X X X Extracts X X X X
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