TaxTMI 
TaxTMI 
2018 (5) TMI 854
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....be a Composite Supply in terms of Section 2(30) of the Central Goods and Services Tax Act, 2017 • If yes, whether the Principal Supply in such case can be said to be 'solar power generating system' which is taxable at 5% GST. • Whether benefit of concessional rate of 5% of solar power generation system and parts thereof would also be available to sub-contractors. At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / MGST Act would be mentioned as being under the "GST Act". 02. FACTS AND CONTENTION - AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus- [A] AS SUBMITTED ALONGWITH APPLICATION Statement of the relevant facts having a bearing on the aforesaid clarification(s)/ transaction(s) 1. "The ....
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.... arts for their manufacture a) Bio-gas plant b) Solar power based devices c) Solar power generating system d) Wind mills and wind operated electricity generator e) Waste to energy plants/devices f) Solar lantem/solar lamp g) Ocean waves/tidal waves energy devices/plants h) Photo voltaic cells, whether or not assembled in modules or made up into panels Per the above, concessional rate of 5% has been provided to the following (when covered under heading 84, 85 or 94): * PV modules * Solar power generating system - This term has not been defined * Parts for manufacture of solar power generating system and PV modules - There is no restriction provided on what would qualify as parts and in such case all goods which qualify as 'parts' of solar power generating system should be eligible for concessional rate of tax 1.2 Concept of composite supply and mixed supply Section 2(30) Of CGST Act defines composite Supply to mean 'a supply made by a taxable person to a recipient consisting of two or more taxable supplies of ....
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...., which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply;' Further, Principal Supply has been defined in Section 2(90) of the CGST Act as 'principal supply means the supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary' Thus, principal supply refers to the supply which is the predominant element in a composite supply. Illustration as provided in GST law is that In case goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply. Further, in terms of Section 8 of the CGST Act, it has been clarified that a composite supply comprising two or more supplies, one of which is a principal supply will be treated as supply of such principal supply. The relevant para of Section 8 of the CGST Act provides as follows: '8. Tax liability on composite and mixed supplies. - The tax liability on a composite or a mixed supply, shall be determined in t....
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....pplicable to principal supply of 'solar power generating system'. 2.2. Wide ambit of term 'solar power generation system' The term 'solar power generating system' has not been defined under GST. Solar power generating system generally are the systems which absorb sunlight and convert it into electricity which can be put to further use. Solar power system has been defined under Solar Power -Grid Connected Ground Mounted and Solar Rooftop and metering Regulation -2014 issued by State of Goa. Solar power system as per the regulation means 'a grid-connected solar generating station including the evacuation system up to the Grid inter-connection point' Typically the term system has a wide ambit. As per the Oxford Dictionary, the definition of the term 'system' is "a complex whole, a set of things working together as a mechanism or interconnecting network". Similarly, the system is defined in Chambers 20th Century Dictionary as "anything formed of parts placed together or adjusted into a regular and connected whole". Hence, system typically includes various components/ parts which are manufactured/ assembled together for performing a function....
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....he entire contract should qualify as a solar power generating system. This is in line with the concept of 'composite supply' in which case the taxability is as per the principal supply which is the solar power generating system. 2.3. Reference to Education Guide issued under service tax regime It is to be noted that the concept of composite supply under GST is identical to the concept of naturally bundled services prevailing in the erstwhile Service Tax regime. Section 66F (3) of the Finance Act, 1994 ('the Finance Act') two rules have been prescribed for determining the taxability of such services. The rules prescribed are explained as under: I. If various elements of a bundled service are naturally bundled in the ordinary course of business, it shall be treated as provision of a single service which gives such bundle its essential character' 2. If various elements of a bundled service are not naturally bundled in the ordinary course of business, it shall be treated as provision of a service which attracts the highest amount of service tax. The concept of naturally bundled services was explained in the Education Guide issued by the CBEC ....
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....illary services which help in better enjoyment of a main service. For example service of stay in a hotel is often combined with a service or laundering of3-4 items of clothing free of cost per day. Such service is an ancillary service to the provision of hotel accommodation and the resultant package would be treated as services naturally bundled in the ordinary course of business. * Other illustrative indicators, not determinative but indicative of bundling of services in ordinary course of business are: • There is a single price or the customer pays the same amount, no matter how much of the package they actually receive or use • The elements are normally advertised as a package • The different elements are not available separately. • The different elements are integral to one overall supply - if one or more is removed, the nature of the supply would be affected. Per the above, the following conclusions can be drawn: * In case more than two supplies are supplied together wherein one of the supply is principal supply would qualify as composite supply. * Further, goods supplied under the composite supply are supplied in....
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.... 'social and economic reality' of the supply and found that there was a single supply of accommodation and the adjuncts to that supply (including the use of the furniture and facilities within each room, cleaning and linen services, access to common areas and facilities such as pools and gymnasiums and various other hotel services such as porterage and concierge) were incidental and ancillary to the accommodation part of the supply.' Per the above, composite supply is taxed as supply of the dominant activity to which others are merely ancillary. In the present case also, the dominant supply is those of goods (which constitutes solar power generating system' and services is merely incidental to provision of such goods. 2.4.2. European Union Per the European Union Directive, a composite supply is a transaction where supplies with different VAT treatments are sold together as one. The supplies with a composite supply may consist Of parts that, if assessed separately, have different tax rates. Some have standard rates, reduced rates or are exempt from VAT. The European Court of Justice ECJ') has delivered several judgements on the aspect of composite sup....
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....on 8, in case of composite supply, the taxes applicable on principal supply would be applicable on the composite supply. In the present case, the intention of both the parties is to supply the whole of solar power generating system in totality' which consists of various goods and services are incidental to provision of such goods. What the customer wants is a functional solar power system and services such as erection, commissioning etc are only a means to provide the main supply of goods. 4. Contract does not constitute works contract It is submitted additionally that works contract is also defined as a composite contract and includes 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. It is our case that the intent of the contract executed by the Applicant are not in the nature of erection, commissioning or fitting out, etc. Instead the contract is entered for provisioning of sola....
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....iness of EPC contracts of supply of solar power generating system providing services, erection, testing and commissioning of solar power projects, should qualify as composite supply wherein the supply of the solar power generating system constitutes the principal supply. Other services, erection, testing and commissioning of solar power plants are ancillary to the supply of solar power generating system and hence, entire contract (including all goods as well as services) should qualify as solar power generating system taxable at 5%. • Concessional rate of 5% for supply of solar power generating system or its parts should also be available to sub-contractors." [Bl AS SUBMITTED DURING HEARING "1.5. Without prejudice and in addition to the submissions already made, the Applicant hereby make the following additional submissions. The Proposed transactions/ Contract is one for supply of 'Solar Power Generating System' as a whole and hence the rate of GST should be 5%. 1.6. It is submitted that the intent of the parties is always for supply of Solar Power Generating system as a whole 1.7. Reference is made to the draft contract (annexed herewith a....
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....or the contract to qualify as works contract. 1.12. Essence of the contract and intention of the parties involved in the contract is clearly to supply 1.12.1. As explained above, the intention of the parties entering into a contract with the Applicant, is to procure a completely functional solar power plant wherein the Applicant undertakes end to end responsibility of supply of equipment for solar power plant including designing, engineering, supply, installation, testing and commissioning of the solar power plant. The intention of the parties is not to undertake any activity on an immovable property, but to supply Solar power plant. 1.13. Solar power plant is not an immovable property 1.13.1 It is submitted that it has been highlighted in various pronouncements by the judicial authorities that in cases where an object is installed/fastened to the land for better running of the said object, and not for the benefit of land, such object will not be considered as immovable property. Further, it has been held that if fixing of a plant to a foundation is only meant to give stability to the plant and where there is no intention to make such plant permanent, the foundation wou....
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....t a given place. The plant can be moved and is indeed moved after the road construction or repair project for which it is set up is completed. Hence, the said plants were held to be movable. Relevant extract of the judgement is reproduced as under for ease of reference: 'Applying the above tests to the case at hand, we have no difficulty in holding that the manufacture Of the plants in question do not constitute annexation hence cannot be termed as immovable property for the following reasons: (i) The plants in question are not per se immovable property. (ii) Such plants cannot be said to be "attached to the earth" within the meaning of that expression as defined in Section 3 of the Transfer Of Property Act. (iii) The fixing of the plants to a foundation is meant only to give stability to the plant and keep its operation vibration free. (iv) The setting up of the plant itself is not intended to be permanent at a given place. The plant can be moved and is indeed moved after the road construction or repair project for which it is set up is completed.' 1.13.4. In furtherance to the aforesaid judgment, the Madras High Court in the case of Board of Revenue, Chepauk....
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....with the second part of these observations, which is apposite to the instant case. In the case before us, the attachment of the oil engine to earth, though it is undoubtedly a fixture, is for the beneficial enjoyment of the engine itself and in order to use the engine, it has' to be attached to the earth and the attachment lasts only so long as the engine is used. When it is not used, it can be detached and shifted to some other place. The attachment, in such a case, does not make the engine part of the land and as immovable property.' A copy of all the judgements is collectively marked and attached as Annexure - B. 1.13.7. In view of the aforesaid judgments, it is submitted that in the instant case, the solar power plants supplied by the Applicant is commissioned and installed only for the purpose of better functioning of the plant and are capable of being removed and transferred from one place to another. Hence, the fact that the plant is firmly but not permanently attached to the land means that the same is not an immovable property. 1.13.8. Reference can be made to Clause 4.1(xiii) of the draft agreement, which contemplates possibility of transferring the Plant: ....
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....ocation in case required. Hence, it is abundantly apparent that the activity of erection, commissioning and installation is for the beneficial enjoyment of the solar power plant, and hence, solar power plant should not be considered as an immovable property. Without prejudice to the above and in the alternative, even if the agreement is construed as a Composite Supply, the most critical compo Major component of Solar Power System - Solar Photovoltaic module 1.14. Section 2(30) of CGST Act defines composite supply to mean 'a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply'. 1.15. Section 2(90) defines principal supply as "principal supply" means 'the supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary'. 1.16. Further, in terms of Section 8 of the CGST Act, it has been clarified that a composite supply comp....
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....Reliance can also be placed on Chartered Engineer Certificate which provides that the most critical component is PV Modules both in terms of the value and the functionality that such Modules perform. 1.22. Even in the draft agreement, reference can be made to Schedule I of the scope of work which provides as below: "The Contractor would be responsible for Supply of Equipment and undertake all necessary activities ancillary to such supplies (such as erection, civil work etc) to ensure complete supply of Solar Power Plant. Both parties agree that of the total supplies, the most critical part of the Plant are the supply of the mounted PV Module which constitute 60%- 70% of the total contract value. Further, it is also agreed that the Contractor is responsible for the whole of the contract that is for getting-up/ supply of the Plant. For the purpose of undertaking compliances under Laws constituted in India, the parties may agree to define prices of the equipment to be supplied as part of the contract. The same shall not in any manner exceed the lump sum price agreed between the Parties and also does not in any manner dilute the responsibility of the Contractor." 1.23. F....
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....s long as it can be established (through certification or otherwise) that these are to be used in solar power generation system. This would also be in line with practice under erstwhile excise law wherein benefit was extended to sub-contractors also through MNRE certification. 3. Conclusion In view of the aforesaid submissions, the Applicant reiterates the following: 3.1 The Applicant reiterates that the Applicant is engaged in the business of supply of 'solar power generating system' and the same should be liable to tax at 5%. 3.2. The Applicant further prays that solar power generating system should not qualify as immovable property 3.3. Alternatively, even if the agreement is construed as a composite supply, the principal supply would be the supply of PV Modules which again are liable to tax @5%. 3.4. Hence, the Applicant submits that the proposed agreement with its customers should be taxable @5% GST, and the same should be applicable to sub-contractors as well. 03. CONTENTION - AS PER THE CONCERNED OFFICER The submission, as reproduced verbatim, could be seen thus- "In support to their claim that EPC contract for construction of solar power p....
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....ce there is a composite contract for supply and installation it has to be treated as works contract as it is not chattel sold as chattel. The solar power system cannot be shifted to any other place without dismantling the same. Further it is tailor-made system, which cannot be sold as it is to the other person. In the chapter 99 Service Code 995426 specifies the Services Description as "General Construction services of Power Plants and its related infrastructure". It does not specifies the type of power plants. So it is applicable to all type of power plant. The draft contract provided by the dealer specifies that principal supply is of photovoltaic module at around 60 to 70% of entire solar power plant. However submission given by the dealer is not supported by documents, such as estimate, etc. Therefore this artificial bifurcation arrived by the dealer is not acceptable. So it is submitted that as per Section 2(119) of GST Act, the EPC contract for solar power plant comes under the purview of works contract. It is also submitted that since it is works contract, question of principal supply does not arises and so GST tax rate of Solar Power Generating system is not app....
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....s a contract for building, construction, fabrication, completion, erection, installation, fitting out, 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; It can be seen that works contract involves activities of building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning. However, these activities are in terms of an immovable property. This is the highlight in the definition. We have known a 'works contract' in the Sales Tax regime to be activities as building, construction, manufacture, processing, fabrication, erection, installation, fitting out, improvement, modification, repair or commissioning of any movable or immovable property. Thus, activities in relation to movable and immovable property were covered earlier whereas the GST regime requires it to be restricted to immovable property only. It is with this distinctive difference that the applicant puts before us the contention tha....
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....vacuation Infrastructure to Grid Substation and Installation and energization of the Plant to the Evacuation Infrastructure. subsequently and the evacuation of power is possible from the Plant to the Grid Substation; 1.1.23. "Commissioning Certificate " shall have its meaning under Clause 15.5; 1.1.24. "Completion Certificate" shall have its meaning under Clause 15.4; 1.1.39. "Equipment" shall mean and include all the equipment and Major Equipment (as defined later) along with its associated accessories, conductors, electrical cables, instruments, apparatus and other items/ equipment required to be supplied by the Contractor for completing and integrating the SPP, as per the Technical Specification, excluding Free Issue Equipment; 1.1.43. "Execution Schedule" means the schedule of Supply of Equipment, construction, installation and Commissioning of the SPP as elaborated under the Schedule 4 (Execution Schedule); 1.1.67. "Major Equipment(s) " means P V solar modules which is an assembly of solar cells that helps in converting solar power into electricity and all other Equipments specified in Schedule 3 (Contract Price and Payment Milestones) for facilitation of Paymen....
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....ility Practices, in addition to the training required by such persons for the performance of obligations), technicians, material, equipment, machinery, cranes, tools and tackles, etc., required for the execution and completion of the Scope of the Contract and all equipment, machinery, items, materials, consumables, accessories, components, etc. as required for the safe development and Commissioning of the Works. • The Contractor shall provide all required tools and instruments for installation, testing and Commissioning of the Plant. 6. 1. Contract Price and Advance (iii) The Contract Price shall be paid by the Owner in accordance with the Payment Milestones specified in the Schedule 3 (Contract Price and Payment Milestones); and shall include all costs and charges incurred towards performance of the Scope of the Contract and all obligations as set out under this Contract. 6.5. Effect of Payment No payment of the Contract Price or part thereof made by the Owner, shall be deemed to constitute acceptance by the Owner of the performance of (any part or whole) of the Scope of Contract by the Contractor, and shall not relieve the Contractor of any of its o....
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....ly sub-contract its obligations (in respect of Supply of Equipment) under this Contract to one of the pre-approved Sub-Contractors as set out under Schedule 13 (List of Approved Vendors). 14.1. Time Schedule The Owner and the Contractor agrees that the time is of essence of this Contract and subject to the terms of this Contract, the Contractor shall execute the entire scope of Works to achieve Commissioning as per the below schedule ("Scheduled Commercial Operation Date/ SCOD"): • 20 MW by on or before________; and • 40 MW by an or before____________ 15.5. Commissioning (i) Upon being ready for Commissioning, the Contractor shall provide the Owner or the Owner 's Representative, 5 (five) Business Days' written notice for being present at the Commissioning ("Notice Of Commissioning"). In this regard, the following shall be the pre-requisites for achievement of Commissioning: (a) successful installation, testing and Commissioning including generation of electrical energy and charging of 100% DC capacity of Relevant MW size of the Plant; (b) the Plant is mechanically and electrically completed meeting minimum functional, technical a....
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....elieve the Contractor from its Obligations for Commissioning of SPP as per Technical Specification 15.6. Punch List and Completion (i) Parties shall within 15 (fifteen) Business Days from the date of Commissioning of the Entire SPP, jointly prepare a punch list of the outstanding items/works to be performed by the Contractor as per the Technical Specification ("Punch List"). The Contractor shall perform all the Punch List within 30(thirty) Business Days of the finalising the Punch List or the timeline mutually agreed and notify the Owner of such rectification and/or completion ("Punch List Completion "). It is hereby clarified that the Punch List shall not comprise any such items or Works the lack of completion of which would prevent the operation and function of the Plant as envisaged under the terms of this Contract and/or which would prevent the achievement of Functional Guarantees. (ii) The Owner shall within 10 (ten) Business Days of receipt of notice under Clause 15.6 (i) from the Contractor, inspect and verify that all items in the Punch List have been duly completed by the Contractor as per Technical Specifications and terms of this Contract. In the event that the ....
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....ities under this Contract and shall be without prejudice to any other rights available to the Owner under this Contract. 20. RISKS AND LIABILITIES 20.1. The risk and liabilities pertaining to all the equipment provided and to the development, design, procurement, supply, development, construction, testing and commissioning of the Plant shall be borne by the Contractor till the completion of the Plant. This is notwithstanding the fact that the document in title of the equipment imported and supplied is directly transferred to the Owner by way Of High Seas Sale, or the other equipment domestically supplied by the Contractor are priced separately under this contract for commercial convenience, but the risk and liabilities accruing in relation to all those equipment shall remain with the Contractor tilt the completion of the Plant. 20.2. After the completion of the Plant, the risk and liabilities shall shift to the Owner after completion certificate is duly issued. 22.1. Risk, Custody and Care All risk of the Contractor in the Equipment's, Work and SPP shall stand transferred to the Owner from and upon Commissioning of the Relevant MW size of the Plant. However, Cont....
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....ified by the Hon. Court - "2. The facts Of the case are not in dispute. The appellant Company pursuant to the acceptance of its tender, entered into an agreement with M/s SAIL, Bhilai Steel Plant for design, supply, supervision of erection and commissioning of four sets of hydraulic mudguns and tap hole-drilling machines required for Blast Furnaces Nos. 4 and 6 of Bhilai Steel Plant. For this purpose, it imported several components and also manufactured some of the components at their factory in Marai Malai Nagar, Chennai, These components were transported to the site at Bhilai where the manufacture and commissioning of the aforesaid machines took place. It is undisputed that duty was paid in respect of the components manufactured at its workshop in Chennai, but no duty was paid on manufacture of the aforesaid mudguns and drilling machines which were erected and Commissioned on site." We can now look at how the judgment has been delivered - "8. In their reply to the show-cause, the respondents explained the processes involved, the manner in which the equipments were assembled and erected as also their specifications in terms of volume and weight. It was explained that the ....
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.... floor 25-feet high near the concrete platform where drilling machine and mudgun have to be erected. The weight of the mudgun is approximately 19 tons and the weight of the drilling machine approximately 11 tons. The volume of the mudgun is 1.5 x 4.5 x 1 metre and that of the drilling machine 1 x 6.5 x 1 metre. Having regard to the volume and weight of these machines, there is nothing like assembling them at ground level and then lifting them to a height of 25 feet for taking to the cast house floor and then to the platform over which it is mounted and erected. These machines cannot be lifted in an assembled condition. 10. The judicial member noticing these facts observed that it is a physical and engineering impossibility to assemble mudguns or the tap hole-drilling machines elsewhere in a fully assembled condition and thereafter erect or install the same at a height of 25 feet on the cast floor of the blast furnace. She found that even the adjudicating authority conceded the fact that the equipments have to be assembled/erected on the base frame projection of the furnace. She also accepted the submission urged on behalf of the appellant that if the machines are to be removed f....
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....for consideration is whether the processes undertaken by the appellant at Bhilai for the erection of mudguns and drilling machines resulted in the emergence of goods leviable to excise duty or whether it resulted in erection of immovable property and not "goods". 21. The appellant has placed considerable reliance on the principles enunciated and the test laid down by this Court in Municipal Corpn. of Greater Bombay [1991 Supp (2) SCC 18 = 1990 (11) TMI 407 - SUPREME COURT ] to determine what is immovable property. In that case the facts were that the respondent had taken on lease land over which it had put up, apart from other structures and buildings, six oil tanks for storage of petrol and petroleum products. Each tank rested on a foundation of sand having a height of 2 feet 6 inches with four inches thick asphalt layers to retain the sand. The steel plates were spread on the asphalt layer and the tank was put on the steel plates which acted as bottom of the tanks which rested freely on the asphalt layer. There were no bolts and nuts for holding the tanks on to the foundation. The tanks remained in position by their own weight, each tank being about 30 feet in height, 5....
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....something which is in the nature of being immovable, and if required to be moved, cannot be moved without first dismantling it, and then re-erecting it at some other place, Some Of the other decisions which we shall hereafter notice clarify the position further. 24. In Quality Steel Tubes (P) Ltd. v. CCE [(1995) 2 SCC 372 : (1995) 75 ELT 17 = 1994 (12) TMI 75 - SUPREME COURT OF INDIA ] the facts were that a tube mill and welding head were erected and installed by the appellant, a manufacturer of steel pipes and tubes, by purchasing certain items of plant and machinery in market and embedding them to earth and installing them to form a part of the tube mill and purchasing certain components from the market and assembling and installing them on the site to form part of the tube mill which was also covered in the process of welding facility. After noticing several decisions of this Court, the Court observed that the twin tests of exigibility of an article to duty under the Excise Act are that it must be a goods mentioned either in the Schedule or under Item 68 and must be marketable. The word "goods" applied to those which can be brought to market for being bought and sold a....
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....ges were not goods within the meaning of the Act was neither raised nor decided in that case. After considering the material placed on the record it was held that the mono vertical crystalliser has to be assembled, erected and attached to the earth by a foundation at the site of the sugar factory. It is not capable of being sold as it is, without anything more. This Court, therefore, concluded that mono vertical crystallisers are not "goods " within the meaning of the Act and, therefore, not exigible to excise duty. In Triveni Engg. & Industries Ltd. v. CCE [(2000) 7 SCC 29 : (2000) 120 ELT 273 = 2000 (8) TMI 86 - SUPREME COURT OF INDIA ] a question arose regarding excisability of turbo alternator. In the facts of that case, it was held that installation or erection of turbo alternator on a concrete base specially constructed on the land cannot be treated as a common base and, therefore, it follows that installation or erection of turbo alternator on the platform constructed on the land would be immovable property, as such it cannot be an excisable goods falling within the meaning of Heading 85.02. In reaching this conclusion this Court considered the earlier judgments of th....
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....r in which the equipments were assembled and erected. We have also noticed the volume of the machines concerned and their weight. Taking all these facts into consideration and having regard to the nature of structure erected for basing these machines, we are satisfied that the judicial member of CEGAT was right in reaching the conclusion that what ultimately emerged as a result of processes undertaken and erections done cannot be described as "goods " within the meaning of the Excise Act and exigible to excise duty. We find considerable similarity of facts of the case in hand and the facts in Mittal Engg. [(1997) 1 SCC 203 : (1996) 88 ELT 622] and Quality Steel Tubes [(1995) 2 SCC 372 ; (1995) 75 ELT 17] and the principles underlying those decisions must apply to the facts of the case in hand. It cannot be disputed that such drilling machines and mudguns are not equipments which are usually shifted from one place to another, nor is it practicable to shift them frequently. Counsel for the appellant submitted before us that once they are erected and assembled they continue to operate from where they are positioned till such time as they are worn out or discarded. According to him the....
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....also admitted that all the five concerns referred to above are closely held by Shri Hasmukhbhai, his brothers and the members of their families. 5. An inspection of the factories of the respondents by a team of officers from the Central Excise, Preventing Wing, Headquarters, Ahmedabad, led to the issue of a notice dated 30-11-1999 to the four manufacturing units as well as to Solidmec calling upon them to show cause why the amounts mentioned in the said notice be not recovered from them towards Central excise duty. The notice accused the four manufacturing units of having wrongly declared and classified parts and components being manufactured by them as complete plants/systems, even when they were merely parts and components and not machines or plants functional by themselves. The erroneous classification and declaration was, according to the notice, intended to avoid payment of higher rate of duty applicable to parts of such plants and machinery at the material point of time. The notice also pointed out that the units manufacturing parts and components of the plants had availed benefit of exemption wrongly and in breach of the provisions of Rules 9(1) and 173-F and other rules ....
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....he following meaning to the expression "attached to the earth": (a) rooted in the earth, as in the case of trees and shrubs; (b) imbedded in the earth, as in the case of walls and buildings; (c) attached to what is so imbedded for the permanent beneficial enjoyment of that to which it is attached." 25. It is evident from the above that the expression '"attached to the earth" has three distinct dimensions, viz. (a) rooted in the earth as in the case of trees and shrubs (b) imbedded in the earth as in the case of walls or buildings or (c) attached to what is imbedded for the permanent beneficial enjoyment of that to which it is attached. Attachment of the plant in question with the help of nuts and bolts to a foundation not more than 1 = feet deep 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 under any one of the three clauses extracted above. That is because attachment of the plant to the foundation is not comparable or synonymous to trees and shrubs rooted in earth. It is also not synonymous to imbedding in earth of the plant as in the case of walls ....
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....ry installed by monthly tenant was held to be moveable property as in cases where the lease itself contemplated the removal of the machinery by the tenant at the end of the tenancy. The mode of annexation has been similarly given considerable significance by the courts in this country in order to be treated as fixture. Attachment to the earth must be as defined in Section 3 of the Transfer of Property Act. For instance a hut is an immovable property, even if it is sold with the option to pull it down. A mortgage of the super structure of a house though expressed to be exclusive of the land beneath, creates an interest in immovable property, for it is permanently attached to the ground on which it is built. 30. The courts in this country have applied the test whether the annexation is with the object of permanent beneficial enjoyment of the and or building. Machinery for metal-shaping and electro-plating which was attached by bolts to special concrete bases and could not be easily removed, was not treated to be a part of structure or the soil beneath it, as the attachment was not for more beneficial enjoyment of either the soil or concrete. Attachment in order to qualify the expr....
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.... 33. In sirpur Paper Mills Ltd. [(1998) I SCC 400] this Court was dealing with a near similar situation as in the present case. The question there was whether the paper machine assembled at site mainly with the help of components bought from the market was dutiable under the Central Excise Act, 1944. The argument advanced on behalf of the assessee was that since the machine was embedded in a concrete base the same was immovable property even when the embedding was meant only to provide a wobble free operation of the machine. Repelling that contention this Court held that just because the machine was attached to earth for a more efficient working and operation the same did not per se become immovable property. 34. The Court observed: (Sirpur Paper Mills Ltd. case [(1998) I SCC 400] , SCC p. 402, para 5) "5. Apart from this finding of fact made by the Tribunal, the point advanced on behalf of the appellant, that whatever is embedded in earth must be treated as immovable property is basically not sound. For example, a factory owner or a householder may purchase a water pump and fix it on a cement base for operational efficiency and also for security. That will not make the wa....
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....d as goods within the meaning of the Central Excise Act, 1944. This Court on facts noted that mono vertical crystallisers are fixed on a solid RCC slab having a load bearing capacity of about 30 tonnes per square metre and are assembled at site with bottom plates, tanks, coils, drive frames, supports, plates, distance places, cutters, cutter supports, tank ribs, distance plate angles, water tanks, coil extension pipes, loose bend angles, coil supports, railing stands, intermediate platforms, drive frame railings and flats, oil trough, worm wheels, shafts, housing, stirrer arms and support channels, pipes, floats, heaters, ladders, platforms, etc. The Court noted that the mono vertical crystallisers have to be assembled, erected and attached to the earth on a foundation at the site of the sugar factory and are incapable of being sold to the consumers in the market as it is without anything more. 41. Relying upon the decision of this Court in Quality Steel Tubes (P) Ltd 2 SCC 372 : (1995) 75 ELT 17] , the erection and installation of mono vertical crystallisers was held not dutiable under the Excise Act. This court observed that: [Mittal Engg. Works (P) Ltd. case [(1997) 1 SCC 203....
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....lation of the machine With the structure permanently, would stand on a different footing. 44. In the instant case all that has been said by the assessee is that the machine is fixed by nuts and bolts to a foundation not because the intention was to permanently attach it to the earth but because a foundation was necessary to provide a wobble free operation to the machine. An attachment of this kind without the necessary intent of making the same permanent cannot, in our opinion, constitute permanent fixing, embedding or attachment in the sense that would make the machine a part and parcel of the earth permanently. In that view of the matter we see no difficulty in holding that the plants in question were not immovable property so as to be immune from the levy of excise duty. Our answer to Question 1 is accordingly in the affirmative. Thus, we see how the Hon. Courts have evolved the term 'immovable property' when faced with the question of what constitutes movable and immovable property. It is seen that the applicant, too, has referred to this decision but has failed to appreciate the decision in the correct sense. Though not issued for the purposes of the GST Act, ....
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....ption signals and other equipments were not part of the same, the argument was held as not acceptable as without the tower, UPS, Cable trays, AC., etc., the BTS would not be in a position to function as transmitting and receiving apparatus. The contention of the assessee that various equipments installed at site were individual machine was rejected. The Commissioner further held that with the assembly of various equipment installed what emerges is a commodity with a distinct name, identity, character and use; distinct from inputs and classifiable under chapter 8525 of Central Excise Tariff and the same is distinct and separate from the various equipments which have gone into manufacture of the above transmission apparatus. The argument that after installation of BTS of cell site it becomes immovable properly was rejected. The statement of Narayan in his statement dated 28/1/2004 was partly relied upon to hold it was nor immovable property. 8. The Learned Tribunal re-examining the various aspects of what is described as determination of levy of duty of base station, noted that the appellant is engaged in providing Mobile Telecommunication Service (MTS) and is based on globa....
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....nd accordingly, the orders were set aside. 9. It is not necessary for us to answer the issue as to whether the activities is purely service and consequently, the appellants are not manufacturers. We proceed on the footing that what has been assembled and installed is a commodity having a distinct name from the components from which it was assembled. The question is whether this new commodity is marketable. We have already considered the test of marketability as laid down by the Supreme Court in Triveni Engineering & India Ltd. (supra) and also Moti Laminates Pvt. Ltd. (supra). At this stage, we also note that we proceed on the footing by ignoring the second finding of marketability recorded by the Tribunal namely that BTS/BSC is not marketable as licence is required from the Department of Telecommunication, Government of India. The facts on record would indicate that the equipments erected are embedded in the earth or on a building. The Tribunal noted that revenue does not contest or dispute the fact that whenever BTS/BSC site has to be relocated, all the equipments like BTS/BSC, Microwave Equipment, batteries, control panels, air conditioners, UPS, tower antennae are required t....
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....thus - There is a definition of "SPP"-"mean 60MWAC/ 81 MWDC Solar Power Plant to be Supplied, installed and Commissioned at the Plant Site by the Contractor, which is forming part of the solar power generating system". The contract would be to develop a 60 MWAC/ 81 MWDC solar power plant for onward sale of power to its consumers. It is a big project and has a permanent location. Such a plant would, therefore, have an inherent element of permanency. Further, here the output of the project i.e the power would be available to an identifiable segment of consumers. Thus, this output supply would involve an element of permanency for which it would not be possible and prudent to shift base from time to time or locate the Plant elsewhere at frequent intervals. The project would be using goods which would be imported. Are such high end equipments frequently dislocated? Would there not be damage to the materials if moved places frequently and if so, would it perform as effectively as it would have when without damage? The questions itself would give the answers. The definition of the word "Commissioning" as found in the agreement brings out the enormity of the scale of operat....
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.... by the Owners." would by no means amount to making the impugned transaction, a works contract resulting into movable property. Such type of clauses fall in the precautionary nature of clauses in legal documents. An overview of all above makes us observe that the impugned transaction for supply of the Solar Power Plant which includes engineering, design, procurement, supply, development, testing and Commissioning is a "works contract" in terms of clause (119) of section 2 of the GST Act. The case laws cited by the applicant in support of the argument that the transaction is not related to 'immovable property' need not be dealt with as we have so elaborately discussed the very case law in Solid and Correct Engineering Works (cited supra) on which reliance has been placed by the applicant. And we have observed earlier that the applicant has not understood the case law in the correct sense. Further, we have to observe that each judgment has to be understood in terms of the facts as available therein. The applicant has not appreciated the case laws in the sense in which they should have been understood. Like in Solid and Correct Engineering Works (cited supra), the ....
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....0) the GST Act. In view thereof, we are constrained, with reasons, to answer the first question in the negative. We move on to the second question. Question 2 If yes, whether the Principal Supply in such case can be said to be 'solar power generating system' which is taxable at 5% GST? This question arises from the assumption of the applicant that the impugned transaction is a transaction of supply of 'goods'. We have elaborately dealt with earlier as to how the impugned transaction is a 'works contract' u/ s 2(119) the GST Act and further that, that para 6 of SCHEDULE II [ACTIVITIES TO BE TREATED AS SUPPLY OF GOODS OR SUPPLY OF SERVICES] treats "works contracts" u/ s 2(119) as supply of 'services'. In view thereof, there arises no occasion to visit the entries prescribing tax rates for 'goods'. Since the transaction is treated as a "works contract" and not as a "composite supply", there would be no relevance of "principal supply". And therefore, there arises no occasion to answer the question as to what would be the "principal supply" in the impugned transaction. We proceed to the third question. Question 3 Whether benefit of ....