TMI Blog2024 (2) TMI 1059X X X X Extracts X X X X X X X X Extracts X X X X ..... rved that attachment of the plant in question with the help of nuts and bolts to a foundation intended to provide stability to the working of the plant and prevent vibration/wobble free operation does not qualify for being described as attached to the earth. The court further held that manufacture of the plants in question do not constitute annexation hence cannot be termed as immovable property. However, in the case at hand, there can be no dispute in this regard that the intention of annexation of air conditioning system and fire extinguishing system involves significant degree of permanence. Further, contrary to the observation made by the Hon ble Apex court that the plant can be moved and is indeed moved after the road construction or repair project , air conditioning system and fire extinguishing system are not intended to be moved and indeed not moved after they are installed in the building. In the instant case, rate of tax on supply of hiring services of air conditioning system and fire extinguishing system would not be determined vide serial number 17(iii) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. According to our view, each of the supplies wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... henceforth for the purposes of these proceedings, the expression GST Act would mean the CGST Act and the WBGST Act both. 1.2 The applicant submits that being a 100% Export Oriented Unit registered with Software Technology Park of India, Kolkata, it provides ITes services to its clients located in USA. The applicant, as a sub lessee, has entered into a Sub Lease Deed with M/s Bengal Intelligent Parks Private Limited (hereinafter referred to as, BIPPL) whereby the sub lessor grants the applicant to use a specified area on the 11th floor in the Building Omega of Bengal Intelligent Park, Block EP GP, Sector V, Salt lake to conduct business activities from the said premises. 1.3 The applicant submits further that BIPPL has made arrangements with M/s TCG Urban Infrastructure Holding Pvt Ltd (hereinafter referred to as, TCGUIH) to provide assets and fit-outs on hire to the licensees and sublessees of the said building. Accordingly, the applicant has entered into an agreement with TCGUIH to avail facilities and services installed in the building which includes inter alia central air conditioning system, DG set, electrical equipment, sprinkler system etc. 1.4 The applicant c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tters or any questions specified in sub-section (2) of section 97 or sub-section (1) of section 100 of the GST Act in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant. In the instant case, the question on which the applicant seeks an advance ruling is not in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant rather it is found to be in relation to supply being received by the applicant. 1.9 Further, sub-section (1) of section 103 of the GST Act categorically speaks that the ruling pronounced is binding only on the applicant and on the concerned officer or the jurisdictional officer in respect of the applicant. Therefore, if an application is filed by the recipient of goods or services or both on the taxability of his inward supply of goods or services and ruling is pronounced accordingly, such ruling shall be binding only on him and on the concerned officer or the jurisdictional officer of him. In no way, the ruling shall be binding on the supplier of such goods or services. In the instant case, the applicant has sought an advance ruling on the applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... each floor through installed Air Handling Unit (AHU) Duct systems. Also, there is common DG set in order to provide emergency power back up for each floor. There are also fit outs, assets like electrical equipment, fire extinguishing sprinkler system etc. installed to provide required facilities and services through such assets to the said sub-leased space. The applicants have no control/title over the said fit outs and assets, but have the right to use the facilities and services of such fit outs, fixed assets and services on payment of agreed rate as hire charges. 1.13 As per the agreement between TCGUIH and the applicant, the legal possession of the assets shall be with TCGUIH at all times. The applicant only has right to use the said fit outs and assets, facilities/ services till the period of the agreement. Hence, nature of agreement between TCGUIH and the applicant is not that of hire purchase but only operational service lease. 1.14 The applicant has furnished copies of few invoices wherefrom it is noticed that tax has been charged @ 28% by TCGUIH declaring the same under SAC 997314. However, the applicant contends that the instant supply of services would attract tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equipment (except computers) with or without operator under SAC 997314. 1.18 Rate of tax of leasing or rental services under Heading 9973 has been specified in serial number 17 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 (corresponding West Bengal State Notification No. 1135 F.T. dated 28.06.2017), as amended from time to time. As on date, the said entry reads as under: Sl. No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (per cent.) Condition 17 Heading 9973 (Leasing or rental services, without operator) (i) omitted (ii) Temporary or permanent transfer or permitting the use or enjoyment of Intellectual Property (IP) right. 9 (iii) Transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omposite supply. 1.20 Now to determine whether the instant supply may be treated as a mixed supply, we need to examine whether the supply involves following characteristics: (1) that the supply is consisting of two or more individual supplies of goods or services, or any combination thereof; (2) that such different supplies are made in conjunction with each other for a single price; (3) that the supply does not constitute a composite supply. We have already expressed our view that the instant supply does not constitute a composite supply. Further, the supplies are made for a single price. Furthermore, in the instant case, we find that two or more individual supplies, independent of each other, are supplied in conjunction with each other out of which any particular supply does not bear the predominant element. In other way, the supply is a combination of two or more individual supplies without any principal supply against a single price. We are of the view that all the conditions specified in clause (74) of section 2 of the GST Act get satisfied in respect of the instant supply and we, therefore, hold the supply to be a mixed supply. 1.21 Tax liability on com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s) intended to contribute together to a clearly defined function covered by one of the headings in Chapter 84 or Chapter 85, then the whole falls to be classified in the heading appropriate to that function. 5. For the purposes of these Notes, the expression machine means any machine, machinery, plant, equipment, apparatus or appliance cited in the headings of Chapter 84 or 85. 1.23 It thus appears that hiring of air conditioning machine and fire extinguisher would attract tax @ 28% and @ 18% respectively being the same rate applicable for supply of such items and when such are supplied in conjunction with each other for a single price, the supply being a mixed supply would attract tax @ 28%. However, in the instant case, we are of the view that air conditioning system and the fire extinguishing systems which have been installed in the building have lost its character of a movable property and thereby cannot be regarded as goods. 1.24 In Solid and Correct Engineering Works [2010 (252) E.L.T. 481 (S.C.)], the Hon ble Supreme Court of India observed that attachment of the plant in question with the help of nuts and bolts to a foundation intended to provide stability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h air distribution system i.e., ducting with the help of fan or blower to the room to be air conditioned. The air, which is to be conditioned, is directly allowed to flow over the evaporator coil. Low pressure and the temperature refrigerant passing through evaporator coil absorb heat from the air. Thus the air gets cooled. 15.6 As the construction of central air conditioning plant via a works contract services as pointed out above, makes it an immovable property, it ceases to be a plant and machinery. 19.3 In the present case too we find that there is an intention to install the Fire Safety Extinguishers permanently to the building. The Fire Safety Extinguishers once fitted, no longer remains movable goods as it gets assimilated in a permanent structure i.e., the administrative building of the appellant . 1.27 In the light of foregoing discussions, we are of the opinion that in the instant case, rate of tax on supply of hiring services of air conditioning system and fire extinguishing system would not be determined vide serial number 17(iii) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. According to our view, each of the supplies would attract ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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