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TMI Blog2023 (12) TMI 661X X X X Extracts X X X X X X X X Extracts X X X X ..... s "1. Whether contract involving supply of equipment/machinery & erection, installation & commissioning services without civil work thereof would be contemplated as composite supply of cattle feed plant under GST regime? If the supplies would qualify as composite supply, what would be the classification of this bundle and applicable tax rate thereon in accordance with Notification No. 01/2017 - CT(Rate) dated June 28, 2017 (as amended). 2. Whether contract involving supply of equipment/machinery & erection, installation & commissioning services with civil work thereof would be contemplated as works contract service or not. If the supplies would qualify as composite supply of works contract, what would be the classification and applicable tax rate thereon in accordance with Notification No. 11/2017 - CT(Rate) dated June. 28, 2017 (as amended).? " 4. Briefly, the facts are enumerated below for ease of reference: 5. The appellant has contended that they supply cattle feed plant which includes equipment and machinery as well as erection and installation services thereof with or without civil work; that the intention of the agreement is supply and installation of cattle feed plant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heir ruling. (b) the appellant submitted that the GAAR erred in understanding the earlier ruling, wherein the two questions were, viz. "i) whether supply and installation of plant & machinery including erection & commission services for equipment on turnkey basis without civil services would be contemplated as works contract under GST regime? and ii) what would be the classification and rate of tax applicable to services provided along with supply of goods in above question when the same is not treated as 'works contract'? " to which the GAAR concluded that transaction wherein no civil work is involved would not be treated as works contract. GAAR referred the second question to Appellate authority for advance ruling. Therefore, as far as fist question is concerned, there is no dispute. (c) thus, the order of GAAR was issued in violation of norms of judicial discipline as Apex Court in case of Gammon India Ltd [2011 (269) ELT 289 (SC)] has observed that two Tribunals should not take divergent views which will create judicial uncertainty in declaring the law involved on identical issues. (d) that GAAR only considered the theory of 'test of permanency' for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be classified as 'works contract services' since the same does not amount to construction of immovable property. 11. The appellant submitted that their supply would qualify as composite supply of cattle feed plant as it involves various machineries, equipment and services which are naturally bundled and are part of overall system. The appellant further submitted that as per note 4 of Section XVI of Tariff, where a machine including combination of machine intended to contribute together a defined functioned covered by one of the headings in Chapter 84, whole falls to be classified in the heading appropriate to that function and therefore, cattle feed plant merits classification under Chapter Heading 8436. 12. During the course of personal hearing held on 06.01.2023 and 26.7.2023, the representative of the appellant reiterated the submissions made in the appeal dated 13.04.2022. FINDINGS 13. We have carefully gone through and considered the appeal papers, written submissions filed by the appellant, submissions made at the time of personal hearing, and Advance Ruling given by the GAAR and other materials available on record. 14. The main issue to be decided here is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such as MS Structural MS Chequered plates, Conveyors for transporting raw material in the plant, Electrical switch boards and cables etc. (iii) Services relating to commission, installation and erection of equipment (iii) Undertaking trial runs on the machinery installed and testing of output received 21. From the above photographs and details of supplies made we find that the various equipments assembled by the appellant at their customer's premises arc cither fitted with foundation/structures or fitted on foundation/structures. The cattle feed plant which is set up by the appellant at their customer's premises cannot be shifted from one place to another without dismantling of all the equipments, machine parts and accessories and electrical systems. We find that the cattle feed plant supplied involves supply of goods as well as services like installation, erection and commissioning of the plant. Thus, we hold that it fulfills the criteria of an 'immovable property' as cattle feed plant is type of plant and machinery which is attached to earth or permanently fastened to anything attached to the earth. 22. We find that in the case of Duncans Industries Ltd., [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpose of sale as machinery at any point of time. The facts as could be found also show that the purpose for which these machines were embedded was to use the plant as a factory for the manufacture of fertiliser at various stages of its production. Hence, the contention that these machines should be treated as movables cannot be accepted. Nor can it be said that the plant and machinery could have been transferred by delivery of possession on any date prior to the date of conveyance of the title to the land. Mr. Verma, in support of his contention that the machineries in question are not immovable properties, relied on a judgment of this Court in Sirpur Paper Mills Ltd. v. Collector of Central Excise, Hyderabad (1998 1 SCC 400). In the said case, this Court while considering the leviability of excise duty on paper-making machines, based on the facts of that case, came to the conclusion that the machineries involved in that case did not constitute immovable property. As stated above, whether a machinery embedded in the earth can be treated as movable or immovable property depends upon the facts and circumstances of each case. The Court considering the said question will have to take i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r liable to be dismantled and re-erected at the later place. If the answer is yes to the former it must be a moveable property and thereby it must be held that it is not attached to the earth. If the answer is yes to the latter it is attached to the earth. For instance a shop for sale of merchandise or eatables is a structure. The same could he sold by keeping in a push cart which has its mobility from place to place. Merely it is stationed at a particular place and business was carried on. it cannot he said that push cart is a shop. The fact that no nuts and bolts were used to imbed the tank to the earth by itself is not conclusive. Though the witness stated that the tank is capable of being shifted, as a fact the tanks were never shifted from the places of erection. By scientific process, the tanks stand on their own weight on the earth at the place of erection as a permanent structure. 33. The petroleum products are being stored through pipes and are taken out by mechanical process. The operational mechanisation also though relevant, is not conclusive. The rateable is based on the rent, which the building or land is capable to fetch. Due to erection of the tanks whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the machine immovable in character. The Court declared that while determining whether an article is permanently fastened to anything attached to the earth both the intention as well as the factum of fastening has to be ascertained from the facts and circumstances of each case. The following passage is apposite in this regard: "There can be no doubt that if an article is an immovable property, it cannot be termed as "excisable goods "for purposes of the Act. From a combined reading of the definition of "immovable property" in Section 3 of the Transfer of Property Act, Section 3(25) of the General Clauses Act, it is evident that in an immovable property there is neither mobility nor marketability as understood in the excise law. Whether an article is permanently fastened to anything attached to the earth requires determination of both the intention as well as the factum of fastening to anything attached to the earth. And this has to be ascertained from the facts and circumstances of each case. " (emphasis supplied) 30. Reliance was placed by Mr. Bagaria upon the decision of this Court in Quality Steel Tubes (P) Ltd. v. CCE, U.P. - 1995 (75) E.L.T. 17 (S.C.) and Mittal Engineerin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was to prevent wobbling and to secure maximum operational efficiency. On going through the above judgment, it is observed that goods involved i.e. Paper making machine is much different from subject goods i.e. cattle feed plant. Further, Supreme Court, in above case, reasoned if someone fix a water pump on a cement base for operational efficiency and also for security it will not make the water pump an immovable property. The above reasoning cannot be applied in case of cattle feed plant as both goods have major different aspects in design, installation, size, specification and operation. Also above case was rendered under the provisions of Central Excise Act, 1944 and rules and provisions made there under are not pari materia with the GST Act. Therefore, the case of Sirpur Paper Mills also doesn't help the present case of appellant. Further this case was distinguished by Hon'ble Supreme Court of India in the case of Duncans Industries Ltd., Vs. State of U.P. & Ors discussed at para 22 supra. 26. On going through the submission made by appellant before this appellate authority and before GAAR, following facts were observed: i. All the machines, apparatus, equipment are v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... installation and commissioning of the above equipments of Cattle Feed Plant. 27. The orders of advance ruling authorities relied upon by appellant are completely distinguishable from the facts of the present case. In the present case the erection, commissioning and installation of cattle feed plant results in emergence of immovable property. Furthermore, as per Section 103 (1) of CGST Act, 2017, any advance ruling is binding only on the applicant who had sought it and the concerned officer or the jurisdictional officer in respect of applicant. 28. The appellant's reliance on an earlier order passed by GAAR in their own case vide reference order No. GUJ/GAAR/REFERENCE/2017-18/1 dated 13.12.2017 is highly misplaced as GAAR in the referred order could not finalize the ruling and had referred the issue to appellate advance ruling. The appellate authority did not decide the issue for lack of adequate information in the order of GAAR. Further the facts in the said case were different to that of the present case. Further, in the case relied upon, the supply was with regard to setting up of Dairy Plant. In this regard, we refer to the Board Circular No. 177/09/2022-TRU dated 03.08.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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