TaxTMI 
TaxTMI 
2018 (5) TMI 963
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.... • Whether parts supplied on standalone basis (when supplied without PV modules)would also be eligible to concessional rate of 5% as parts of solar power generation system? • 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 MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to tire CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, hence fourth 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. M/s. Fermi Solar Farms Private Ltd. (hereinafter called as "Fermi") is eng....
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....spares 6. As part of the services contract, various services are provided including the following: • Construction of complete buildings including control rooms and inverter rooms, roads and drainage system, boundary walls/fencing, bore walls • All civil and foundation works for switchyard, solar plant and all other equipment • Site enabling facilities • Leveling and grading • Erection, commissioning and testing for solar modules, mounting structures, power transformers, inverters, SCADA, complete switchyard, inverter transformers, connectors, earthing lines etc. 7. Please note that the following two scenarios can arise in this context: • Case 1 - All goods may be supplied by EPC contractor - In such case, entire contract is executed by EPC contractor and all goods required are supplied by the contractor (including PV modules). • Case 2 - Certain goods supplied by EPC contractor - In such case, modules may be procured directly by Project Developer and balance goods would be supplied by EPC Contractor (i.e. the project Developer procures/ imports PV modules o....
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....ans '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.' On a plain reading of the definition of composite supply, it emerges that the following conditions must be satisfied for a supply to qualify as a "composite supply":- • the supplies being made must be taxable supplies • the supplies should be naturally bundled and supplied in conjunction with each other in the ordinary course of business • there must be a principal supply 1.4 Our understanding in present context Per the above legal provisions, we understand that in present case, since there are separate contracts for supply of goods and services, the taxability should be as under: • Contract for goods wherein solar PV modules are also supplied- Entire contract should qualify as supply of solar power generating system and should be taxable at 5% • Contract for goods wherein solar PV modules are not supplied - In such case, the goods which qualify as parts of solar power generating system and are covered under heading 84,8....
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.... of notification by the adjudicating authority is not sustainable. The impugned order is set aside and the appeals are allowed'. 2.7 Further, in the case of Bangalore Tribunal in the case of B.H.E.L. vs. Commissioner of Central Excise, Hyderabad it was held that "In the present case, the appellants have claimed exemption in respect of "inverter charger card" as solar power generating system. The appellants actually manufactured SPV lantern. The above lantern required electricity for its working. it is possible to convert solar energy to electricity with the help of inverter charger manufactured by the appellants. The Dy. General Manager has certified that the inverter merger constitutes solar power generating system as it performs the function of generating the required high frequency AC power from Sun-light with, the help of SPV module and supplying it to the compact fluorescent lamp of a solar lantern. In view of the above, expert opinion, we hold that the impugned item can be considered as solar power generating system and is entitled for the benefit of the exemption Notification. Therefore, we allow the appeal with consequential relief." 2.8 In M/s Phenix Construction Tec....
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....ction 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. 2.15 Base on the above, a conclusion can be drawn that where a contract consists of supply of various goods all of which are intended for setting up a solar power plant, the entire contract should be treated as a composite supply for which the principal supply is providing a solar power generating system and hence, entire supply contract (which would include PV modules as well as all other goods ) should be taxable at 5% as 'solar power generation system'. It is further submitted that Ministry of New and Renewable Energy ('MNRE') in various instances has also approved entire BOQ consisting of various parts e.g. cables, module mounting structures, spares, etc. as essential to solar power generating system and hence the concessions applicable have been extended to such parts. Drawing a corollary, concessional rate of 5% should be applicable on all the goods approved under BOQ by MNRE as well. 3. Taxability of parts of solar power generating system 3.1 In certain cases,....
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....n which provides exemption form payment of excise duty to wind operated electricity generators and its components and parts thereof. It was held that such doors would also be eligible for the exemption. This was also ratified by the Supreme Court [2015 (315) ELT A82 (SC)] • In Elecon Engineering Co. Ltd. Vs. Commissioner of Customs [1998 (103) ELT 395 (Tri)] the issue was whether power cables, earthing cables, wind farmer computer will be eligible for benefit of exemption under Notification No. 64/94 - Cus. The Tribunal held that power cables and control cables together form part of inside cabling of wind turbine controller. Since, control cables are eligible for exemption has to be extended to power cables also • In Pushpam Forging Vs. CCE, Raigad [2006 (193) ELT 334 (Tri.- Mumbai)]. the Tribunal held that flanges are parts of windmill tower which is inturn a part of Wind Operated Electricity Generators. Once tower is accepted and held to be a part of WOEG, flanges of the tower will be a part of the whole Wine Operated Electricity Generator • In CCE Vs. Megatech Control Pvt. Ltd. [2002 (145) ELT 379 (Tri. - Chennai)], the Tribunal held that c....
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....not specify the persons who would be eligible for concessional rate of 5% i. e. developer, EPC contractor or manufacturer/ supplier/ sun-contractor. 4.3 Since the concessional rate of 5% is provided to renewable energy products and parts thereof, the same should be applicable to all suppliers providing such products as 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. 5. Taxability of contract for services 5.1 A separate contract is awarded to the EPC contractor for provision of services which consists of the following:- • Construction of complete buildings including control rooms and inverter rooms, roads and drainage system, boundary walls/ fencing, bore walls • All civil and foundation works for switchyard, solar plant and all other equipment • Site enabling facilities • Leveling and grading • Erection, commissioning and testing for solar modules, mounting structures, power transforme....
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....solar power generating system to the buyers. Fermi Solar Farms Pvt. Ltd enters into two types of agreement with the buyers- 1) Agreement of solar power generating system where supplier supplies solar power generating equipment with intention of setting up solar power generating system. 2) Agreement for engineering and construction services to be provided by supplier to the buyers. (I) Fermi Solar Farms Pvt. Ltd supplies following main equipment to set up solar power generating system. 1) Solar panel consisting of solar cells, i.e. solar photovoltaic cells- 2) Inverter to convert DC power to AC power- 3) HT Switchgear, isolator, circuit breaker. Auxiliary transformer, main transformer- 4) Transmission line- (II) Fermi solar farms Pvt. Ltd supplies following engineering and construction services to the buyer for setting up solar power generating system. 1. Earthing 2. Inverter Room 3. Cable routing 4. Solar panel foundation arrangement. 5. Arrangement of roads and drains. (III) As per Notification dates 15.11.2017 chapter heading 84,85, or 94 following renewable energy devic....
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....ion that- (1) The applicable GST rate for supply of equipment's for solar power plant will be @5% (2) However for installation and engineering services, the supplier will need to raise separate works contract invoices with GST @18%" 04. HEARING The case was taken up for hearing on dt.17.01.2018 and on dt. 12.02.2018. when Sh. Prashant Agarwal (Partner, PricewaterhouseCoopers Pvt. Ltd.) attended and reiterated the contention as made in the written submission. During the hearing on dt. 12.02.2018, copy of the agreements in such types of contracts was submitted and our attention was invited to various clauses therein. The concerned officer holding the post of State Tax Officer was absent on both the occasions. However, a written submission has been reproduced above. 05. OBSERVATIONS We have gone through the facts of the case. The issue put before us is the classification of a future transaction which would be effected on the lines of sample agreement copies as have been tendered during hearing. It has been submitted by the applicant that the sample agreement is customarily the way in which transactions of the nature as before us are effected. There ar....
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.... effect form time to time and as listed in Schedule N herein; • "Certificate of Commissioning" shall mean plant commissioning certificate issued from competent Government Authority for complete capacity. • "Equipment, Spare Parts and Materials" shall mean the equipment and materials and Spare Parts to be delivered by the supplier under this Agreement and as specified in Schedule A and Schedule E; • "Final Acceptance" means, the date of commencement of commercial operations of the Plant, provided that if at any point with respect to the supply items are pending as on the date of commencement of commercial operations, the Final Acceptance shall be the date on which all such pending supplies are completed in accordance with the terms of this Agreement, which date shall be intimated in writing by the Buyer to the Supplier; • "Other Contractors" shall mean other contractors engaged by the Supplier to implement, operate and maintain the Plant: • "Plant/s" shall have 60 MW (AC) Solar PV Power Project at __________ , Karnataka; • "Plant Completion" shall mean the date of commencement of commerci....
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....including the design, engineering, manufacturing, inspection, shop testing, Packing, fabricating, procuring and delivering all the Equipment, Spare Parts and Materials which are integral part of the Plant, at the Plant Site (for onshore supplies)/destination port in India for off shore supply items (ICD, Airport, Seaport) as set out in detail in Schedule A and Schedule E as per the Specifications (the "Scope of supplies") in accordance with the terms of this Agreement. The Equipment, Spare Parts and Materials shall be suitable and fit for its intended purpose as provided in this Agreement. All Equipments, Spare Parts and Materials supplied shall be new and without defects. Separate prices are specified for different equipments which are supplied under the agreement for commercial convenience. However, as a general trade practice all the equipments which are being are supplied under the agreement are supplied together for setting up a solar power generating system. Further, the document in title of the equipment imported and supplied is directly transferred to the owner by way of High Seas Sale for commercial convenience and in order to avail benefit of concessional customs duty ....
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....rials in accordance with the Supply Schedule. 2.3 Compliance with Applicable Laws The Supplier shall comply with and shall cause the entire solar generating system including all Equipments, Spare Parts and Materials supplied hereunder to comply and be capable of complying, with all Applicable Laws and Applicable Permits. 2.4 Supply Schedule The Supply Schedule for supply of Equipment, Spare Parts and Materials in accordance with the Scope of Supplies, as agreed between the Parties, is set-forth in Schedule C hereof. The equipment covered under the scope will be partly off shore supply and partly on shore supplies as detailed in Schedule A. The Supplier shall be obligated to adhere to the supply Schedule thereby agreed and any variation there from shall require the prior written consent of the Buyer. Provided that the Buyer may vary the Supply Schedule on account of occurrence of a Force Majeure Event or with prior written notice of 30 (thirty) days to the Supplier. In the event of such variation of such Supply Schedule by the Buyer, the Buyer shall be liable for and shall compensate the Supplier for additional costs agreed in writing by the Buyer on account of such chan....
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....n the event that the Supplier has completed all its obligations required to be completed till Final Acceptance under the terms of this Agreement but the date of commercial operations of the Plant is not achieved within a period of 30 (thirty) days from the Scheduled Project Completion Date ("Wait Period"), on account of failure on part of the Buyer to provide Grid Connectivity except if such failure is attributable to a default on part of the Supplier to perform its obligations under terms of this Agreement, the Buyer shall on the expiry of the afore-mentioned Wait Period, be obliged to pay the Supplier such amounts of the Contract Price as were due and payable on the start of commercial operation of the plant in accordance with Schedule B hereof. 16. INDEPENDENT SUPPLIER 16.1 Supplier as Independent Supplier The Supplier shall be an independent supplier with respect to the Equipment, Spare Parts and Materials and each part thereof, and neither the Supplier nor its Sub-vendors nor the employees of either shall be deemed to be agents, representatives, employees or servants of the Buyer in the performance of the Supplier's obligations hereunder, or any part thereof....
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....ment and/or system complete in all respects are deemed to be included whether or not these items are specifically mentioned in the Agreement. 1.3. The Supplier shall provide the erection procedures/manuals for the equipment being supplied. The "preliminary" erection procedure / manuals document shall be submitted within 15 (fifteen) days of signing this agreement. 2. MAJOR EQUIPMENT, SPARE PARTS AND MATERIALS LIST. The list of equipment and material to be supplied under the terms of the Agreement shall include but not limited to the following: Complete supplies required for the construction of the 60MW AC/81 MW DC Solar PV project shall be in the scope of the supplier. The major areas are covered here below. However, it is understood and agreed that any item not listed out below, but required for the completion of the project shall be in the scope. OFFHORE SUPPLIES: - Delivered at Destination port in India a. Solar Modules, which are an assembly of solar cells that helps in converting solar power into electricity. Solar modules constitute more than 60% of the solar power generating system, hence, qualify as one of the most significant....
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....oned below: SI Milestone Description % Detail Condition description 1 Advance 15% A. Within 10 days of issue of contract Against submission of Corporate contract 10% B (a) Proportionately on Submission and approval of LI Schedule & BBU 2 On receipt of material at site 70% Proportionately on dispatch of material at site as per agreed BBU against MDCC 3 on successful Plant Completion 5% on successful Plant Completion SCHEDULE- J SPECIFICATIONS Specifications/ Design Basis for various equipments shall be mutually agreed between Supplier and Buyer during the early engineering period. However, Supplier agrees and confirms that all equipment shall be as per latest engineering/industry practice and shall conform to relevant IEC/IS. SCHEDULE -N LIST OF APPLICABLE PERMITS The parties having the primary responsibility to obtain permits / approvals from appropriate authorities are listed below. Part A: Buyer Permits 1. Import Export Certificate (IEC) 2. KPTCL approval for power evacuation 3. GST Registration Part B: permits to be obtained by the Supplier 1. Local transpo....
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....o be completed only after the system has been put into place. One can also see that the risk and liabilities accruing in relation to all the equipment shall remain with the Supplier till the completion of the Project. Thus, it can be seen that though it has been contended that the agreement is for supply of equipments, it actually is a contract for the supply of the entire solar power generating system which requires the supplier to provide goods as well as services to the Buyer. 6. The payment for this agreement also helps us to understand the nature of the agreement. We see that the payment is linked to the successful completion of the project. This should not have been the criterion if the contract was for supply of 'goods' only. We are convinced that the impugned contract is for supply of a solar power generating system, as a whole, and in addition, further responsibility in respect of execution and implementation of the Project/Plant is also proposed to be undertaken by the Supplier as per terms and conditions of the contract submitted before us. Having certain clauses in the agreement that the Supplier would supply only the equipments or goods would ....
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.... be liable for clearance of R.O. Supply of all on line non-HDPE materials, MS line from trunk line Tee point to PRS station with a value, flange only." 25. We have perused the clause 3 "scope of work". We have also perused the other clauses which are referred to the earlier part of the judgment and in particular clause 9 "payment terms", clause 15, clause 21 and clause 23. We have also perused the annexure 1 by which the parties had agreed to the rates forming the consideration in the contract. After having gone through the relevant clauses, we are inclined to observe that the said agreement between the applicants and the Assam Gas was a works contract and it could not be divided into two parts, namely, contract to supply the pipes and a contract to lay down the pipelines. The use of HDPE pipes was an integral part of the performance of the contractual obligation by the applicants in as much as the applicants were required to lay down the tranches and lay down the pipes which would be reaching at site. In order to comply with the contractual obligation cast on the applicants, the applicants were required to do various acts set out in clause 3 "scope of work" ultimately to ....
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....that would have been the understanding between the parties, the terms of the annexure I would have been different inasmuch as the installation rate rupees per meter would not have been quoted to form a part of the total amount payable in respect of a particular description of a pipe. Annexure I also indicates the expected quantity of pipes which would be required for the purposes of laying down the pipeline as per the terms of the agreement. The amount of money payable was dependant upon total quantity of pipes which would be used to create the pipeline. Same is the case as regards the various items which are mentioned at Sr. No. 2 to 7 in annexure I. We are, therefore, inclined to accept the submission of learned advocate Mr. Joshi that monies payable to the applicants were in regard to the work to be carried out in its entirety. Learned advocate Mr. Joshi's submission with reference to the raising of invoices is required to be accepted to hold that the transaction between the applicants and Assam Gas was indivisible for the purposes of determining the liability under the said Act. A typical invoice at page 47 raised by the applicants was so as to comply with the provisions of....
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....resent the agreement as a contract for supply of goods ONLY has not achieved the desired purpose. The agreement is for supply of an effectively running solar power plant. The agreement clauses reveal that the Supplier is involved in the process right from the early engineering period to procurement and implementation stage. We have seen that the payment for this agreement is also linked to the successful Plant completion. If the agreement was for supply of materials ONLY, there should have arisen no occasion to link the payment to the completion of the Project. What more do we need to prove that the impugned agreement contended to be for supply of goods is actually a works contract involving engineering, design, procurement and commissioning of the solar power plant. Having satisfied ourselves that the impugned agreement is actually a works contract agreement, we look at the definition of 'works contract' under the provisions of the GST Act, 'Works contract' is defined in clause (119) of section 2 of the GST Act as - "works contract" means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improv....
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....ines 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 function of the drilling machine is to drill hole in the blast furnace to enable the molten steel to flow out of the blast furnace for collection in ladles for further processing. After the molten material is taken out of the blast furnace, the hole in the wall of the furnace has to be closed by spraying special clay. This function is performed by the mudgun which is brought to its position and locked against the wall for exerting a force of 240-300 tons to fill up the hole in the furnace. The blast furnace in which the inputs are loaded is a massive vessel of 1719-cubic-metre capacity and the size of its outer diameter is 10.6 metres, and t....
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....oticing 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 the behalf of the appellant that if the machines are to be removed from the blast furnace, they have to be first dismantled into parts and brought down to the ground only by using cranes and trolley ways considering the size, and also considering the fact that there is not space available for moving the machines in assembled condition due to their volume and weight. She considered the authorities on the subject and came to the conclusion that erection of mudgun and tap hole-drilling machine results in erection of immovable property. She noticed the judgment of this Court in Name Tulaman Manufacturers (P) Ltd. [(1989) 1 SCC172: 1989 SCC(Tax) 64: (1988) 38 ELT 566: 1988 Supp (5) SCR 1 = 1988 (9) TMI 51 - S....
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....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 50 feet in diameter, weighing about 40tons. The tanks were connected with pump house with pipes for pumping petroleum products into the tank and sending them back to the pump house. The question arose in the context of ascertaining the rateable value of the structures under the Bombay Municipal Corporation Act. The High Court held that the tanks are neither structure nor a building nor land under the Act. While allowing the appeal this Court observed: (SCC p. 33, para 32) "32. The tanks, though, are resting on earth on their own weight without being fixed with nuts and bolts, they have permanently been erected without being ....
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.... 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 and therefore, it implied that it applied to such goods as are movable. It noticed the decisions of this Court laying down the marketability tests. Thereafter this Court observed: (SCC p. 376, para 5) "The basic test, therefore, of levying duty under the Act is twofold. One, that any article must be goods and second, that it should be marketable or capable of being brought to market. Goods which are attached to the earth and thus become immovable and do not satisfy the test of being goods within the meaning of the Act nor it can be said to be capable of being brought to the market for being bought and sold. Therefore, both the....
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....] 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 this Court in Municipal Corpn. of Greater Bombay [1991 Supp (2) SCC 18], Quality Steel Tubes [(1995) 2 SCC372: (1995) 75 ELT 17] and Mittal Engg. Works (P) Ltd. [(1997) I SCC 203: (1996) 88 ELT 622] as also the earlier judgment of this court in Sirpur Paper Mills Ltd. v. CCE [(1998) 1 SCC 400: (1998) 97 ELT 3] . This Court observed: (SCC pp. 35-36, para 14) "14. There can be no doubt that if an article is an immovable property, it cannot be termed as 'excisable goods' for purpose of the Act. From a combined reading of the definition of 'immovable property' in Section 3 of the Transfer of Property Act, Section 3(26) of the....
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....hat such drilling machines and mudguns are not equipments which are usually shifted from one place to another, nor it is 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 they really become a component of the plant and machinery because without their aid a blast furnace cannot operate. It is not necessary for us to express any opinion as to whether the mudguns and the drilling machines are really a component of the plant and machinery of the steel plant, but we are satisfied that having regard to the manner in which these machine are erected and installed upon concrete structures, they do not answer the description of "goods" within the meaning of the term in the excise Act." Thus, it can be seen that the Hon. Supreme Court while holding the machines as immovable property took into account facts such that the machines could not be shifted without first dismantling it and then re-erecting it at another site. It was also sought to distinguish as to how a concrete base meant just t....
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....nd 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 regulating the grant of such benefit. 6. Insofar as Solidmec marketing company was concerned, the show-cause notice alleged that solidmec was engaged in the manufacturing of asphalt batch mix and drum mix/hot mix plants by assembling and installing the parts and components manufactured by the manufacturing units of the group. According to the notice the process of assembly of the parts and components at the site provided by the purchasers of such plants was tantamount to manufacture of such plants as a distinct product with a new name, quality, usage and character emerged out of the said process. Resultantly, the end product, namely, asphalt drum/hot mix plants became exigible to Central excise duty, which duty Solidmec had successfully avoided The notice also proposed to levy penalties upon all the five co....
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....oes 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 and buildings, for the obvious reason that a building imbedded in the earth is permanent and cannot be detached without demolition. imbedding of wall in the earth is also in no way comparable to attachment of a plant to a foundation meant only to provide stability to the plant especially because the attachment is not permanent and what is attached can be easily detached from the foundation, so also the attachment of the plant to the foundation at which it rests does not fall in the third category, for an attachment to fall in that category it must be for permanent beneficial enjoyment of that to which the plant is attached. It is nobody's case that the attachment of the plant to the foundation is meant for permanent beneficial enjoyment of either the foundation or the land in which the same is imbedded. 26. In English law the general rule is that what i....
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....inery 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 expression attached to the earth must be for the beneficial attachment of that to which it is attached. Doors, windows and shutters of a house are attached to the house, which is imbedded in the earth. They are attached to the house which is imbedded in the earth for the beneficial enjoyment of the houses. They have no separate existence from the house. Articles attached that do not form part of the house such as window blinds, and sashes, and ornamental articles such as glasses and tapestry fixed by tenant, are not affixtures. 31. 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 reason: (i) The plants in question are not per se immovable property. (ii) Such plants cannot be said to be "attach....
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....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 water pump an item of immovable property. Some of the components of the water pump may even be assembled on site. That too will not make any difference to the principle. The test is whether the paper-making machine can be sold in the market. The Tribunal has found as a fact that it can be sold. In view of that finding, we are unable to uphold the contention of the appellant that the machine must be treated as a part of the immovable property of the company. Just because a plant and machinery are fixed in the earth for better functioning, it does not automatically become an immovable property." 38. Reliance was placed by Mr Bagaria upon the decision of this Court in Quality Steel Tubes (p) Ltd. v. CCE [(1995) 2 SCC 372: (1995) 75 ELT17] and Mittal Engg. Works (P) Ltd. v. CCE [(1997)1 SCC 203 : (1996) 88 ELT622]. In Quality Steel Tubes (p) Ltd. case [(1995) 2 ....
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....as it is without anything more. 41. Relying upon the decision of this Court in Quality Steel Tubes (P) Ltd. case[(1995) 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 : (1996) 88 ELT 622], SCC p. 208, para 10] "10. ... The Tribunal ought to have remembered... that mono vertical crystallisers had, apart from assembly, to be erected and attached by foundations to the earth and, therefore, were not, in any event, marketable as they were. " This decision also, in our opinion, does not lend any support to the case of the assessee in these appeals as we are not dealing with the case of a machine like mono vertical crystallisers which is permanently embedded in the structure of a sugar factory as was the position in Mittal Engg. Works (P) Ltd. case [(1997) 1 SCC 203 : (1996) 88 ELT 622]. The plants with which we are dealing are entirely over ground and are not assimilated in any structure. They are simply fixed to the foundation with the help of nuts and bolts in order to provide stability from vibrations duri....
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....s, we see how the Hon. Courts have evolved the term 'immovable property' when faced with the question of what constitutes movable and immovable property. Though not issued for the purposes of the GST Act, we may as well mention herein the reference by the Hon. Bombay High Court in M/s. Bharti Airtel Ltd. (earlier known as Bharti Tele-Ventures Ltd.) v. The Commissioner of Central Excise (2014 SCC OnLine Bom 907 : (2015) 77 VST 434) with regard to a Circular being issued by the Central Board of Excise & Customs in a decision of the same Hon. Bombay High Court - "(i) In the decision of the Division Bench of this Court in the case of "Commissioner of C.Ex. Mumbai-IV v. Hutchison Max Telecom P. Ltd., (2008 (224) E.L.T 191 (Bom.)", the issue which fell for consideration of the Division Bench inter alia was pertaining to transmission tower set up by the assessee and whether the setting up of the towers amounted to manufacture as the towers being a new product with a distinct name, characteristics and use and is distinct from the components used in the manufacture as contended on behalf of the Revenue. The Division Bench after making the following observations in paragraphs 7 to....
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....d it was not 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 global system for mobile communication (GSM). The infrastructure for GSM is similar to other networks. The Tribunal then set out the various infrastructure required for GSM and noted that GSM Architecture consists of Radio Station Sub Systems (constitution of MS, BTS, & BSCs) which are networked with the operation support subsystem (constitued MSCs) which networked with the Public network. The entire sub systems of BTSs and BSCs or MSCs and the number of constituents would depend on the Geographical area covered by the Cellular Network and there is no fixed designation numbers to constitute a component of transmission apparatus. It is not necessary to set out the other facts in detail considering the the Tribunal has in extenso set out the facts. The Tribunal relying on para 20 in the case of Triveni Engineering & India Ltd. (supra) on the test of marketability, held that the so called BTS/BSC site erected, installed a....
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....ded 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 to be dismantled into individual components, then they are to be moved from the existing site and reassembled at new site. This involves damages to certain parts like cable trays, etc. which tire embedded/fixed to the Civil structure as also the BTS microwave equipment itself. All the components of the new product cannot be shifted as an illustration the room housing the equipment. This act of dismantling from the permanent site would render such goods not marketable. Apart from that the goods cannot be re-erected as in the previous place as the requirement of each place is different. Further, from the statement of Narayan as set out in the order of the Commissioner, it may be noted that he had stated that regarding installation of BTS the designing team after survey identified the location as per the requirements of the local coverage needs, determining the shelter location, fabrication of I-beam and p....
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.... The Owner desires to purchase from the Contractor to do erection testing and commissioning of certain Equipment (to be arranged and administered by the Owner), certain services and Materials (as hereinafter defined) for the Plant and the Contractor has agreed to provide same to the Owner in accordance with the terms and conditions herein specified. (C) The Parties are entering into this Agreement to define their respective mutual rights and obligations and to lay down the terms and conditions of their understanding with respect to execution of the Work by the Contractor. 1.1 Definitions • "Addenda" shall mean changes to the Work before the commencement of the Works; • shall mean all plant, machinery, tools, vessels, material, vehicles including but not limited to solar photovoltaic modules and inverters necessary for the completion of the Work to be provided by the Owner; • are all supplies, including consumables, used by the Contractor for performance of the Work of Plant; • shall mean 60 MW (AC) Solar PV Power Project at Village - ___________ Karnataka; • "Work Completion Deadline" shall have the meanin....
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....with the terms of this Agreement, to the satisfaction of the Owner. It is further clarified that the Owner will have a right to accept or reject a Affiliates or Subcontractor at its discretion and Owner's decision in this regards would be binding on the Contractor, provided such acceptance shall not be unreasonable withheld 3.2 The Contractor agrees that pursuant to Clause 3.1 above, in the event the Work (either in whole or in part) is to be executed by one or more of its Affiliates or Subcontractors, it shall cause and ensure that all such Affiliate(s) and/or Subcontractor(s) (as the case may be), agree to bind itself or themselves (as the case may be) to the terms of this Agreement and that appropriate legally binding agreement(s)/contract(s) are executed by the Contractor with such Affiliate(s) or the Subcontractors, the terms whereof shall be in conjunction and not in contravention to any of the term(s) or provisions of this Agreement. 3.3 In addition to the Work, the Contractor agrees and undertakes that it shall execute and perform all such acts, deeds, works and services as may be conducive, incidental, necessary and requisite for performance of its obligations un....
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....icable Laws and such insurances as may be necessary or prudent in accordance with good industry practice. Further, all insurances need to be endorsed in favor of Lender / Security Trustee of the project. All lender related clauses (as advised by lenders insurance agent) to be endorsed in the policies. 13. PLANT START UP, ACCEPTANCE TESTING AND PERFORMANCE GUARANTEE 13.1 The Contractor agrees that it shall be responsible for carrying out, coordinating all tasks and responsibilities associated with the successful completion and commissioning of the Plant on or before the Work Completion Deadline. 13.5 The Contractor agrees and acknowledges that notwithstanding the issue of the Work Completion Certificate it shall not be absolved of its liability for any Defects in Plant (including but not limited to the Equipment and machinery) and Deficiency in execution of Work, even if such Defects and Deficiency existed on or before the issue of Work Completion Certificate. It shall also not affect in any manner any warranties or guarantees in relation to the Work or Plant. 13.6 The Contractor agrees and acknowledges that its liability shall not terminate upon the co....
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....l Design Documents and other documents prepared by Contractor with respect to performance of its obligations under this Agreement (other than any documents/information pertaining exclusively to the Contractors proprietary processes) shall be the sole and exclusive property of the Owner subject to the Contractor having received payments for the Work performed and the designs contained in them shall not be reproduced or used by Contractor in connection with any other project. The Contractor agrees that all such documents, as well as any drawings, tracings, specifications, calculations, memoranda, data, notes and other materials that are supplied by the Owner and come into the possession of Contractor for the purposes of performing its obligations under this Agreement, shall be delivered to the Owner upon commissioning of the Plant. 21.5 Use of Drawings by the Contractor The Contractor shall be entitled to retain and use solely and specifically in connection with performance of its obligations under this Agreement a reproducible set of all Design Documents and other documents delivered to the Owner. 24. MISCELLANEOUS 24.11 Execution in Counterparts This Agreement ....
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....nsformers 14. Auxiliary Transformers 15. SCB, PV connectors 16. HT & LT Switchgears, RMUs 17. HT & LT power signal and control Cables (AC as well as DC and communication cables). 18. Illumination and ventilation system 19. AC BOS and DC BOS 20. Earthing system (maintenance free) 21. Lightening Protection. 22. Battery and battery charger. 23. AC/DC trench work and cabling 24. Module cleaning arrangement as applicable 25. Any other items required for the completion of the agreed scope Handing over of entirely completed 60 MW-AC solar power project as per agreed scope Arranging the land for the complete project, free from all encumbrances shall be the scope of Owner All the major equipments / materials / items shall be procured by Owner and will be handed over to Contractor for erection and commissioning works. However, all the construction material shall be in scope of Contractor TERMINAL POINT: Remote end substation of Karnataka Power Transmission Company Limited (KPTCL) 110kV Switchyard DESIGN BASIS FOR 60 MW AC SOLAR PV POWER PLANT Contractor shall submit the design basis meeting the agreed technical specification to the Owner ....
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....connection / termination Schedule g. Auxiliary Power Supply Arrangement CONSTRUCTION DRAWINGS:- a. Solar panel foundation arrangement b. Layout and detail of roads and drains c. Architectural details & Finishing schedule. d. Building layout & details for foundations, trenches, grade slab, plinth beam, equipment foundations, roof, etc. e. Drawing of Module Supporting Structures. 6. DOCUMENTS a. Bill of Material and Bill of Quantities for all equipments with quantity, model, maker name, year of manufacturing, specifications, standard etc. b. Detailed project schedule for every step till commissioning. c. General safety, protection, and other terms and conditions. d. Solar Radiation and other weather data measurement methodology, automation, calibration procedures e. Equipment DIAGRAMS AND DRAWINGS SCHEDULE IV: PAYMENT OF CONSIDERATION Contract Price Item No Description Contract Price 1 Engineering, Procurement, Construction and associated works for 60-MW AC Solar PV Project including all tax and GST Total contract price &nbs....
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....have seen earlier that this arrangement fails. In the first agreement purported to be for 'supply of goods', there were clauses such as - other contractors engaged by the Supplier to implement, operate and maintain the Plant. In the second agreement that we just saw, there is a clause which says -This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute one and the same instrument. We are convinced that both the agreements are for the single works contract of setting up of a solar power plant. The contracts would have different consideration but that should not change the way look at such agreements. The bifurcation into such agreement which themselves reveal the real intent would not impede the interpretation and applicability of the provisions. The contention as made by the applicant reveals that the applicant desires to treat the first agreement as one being for supply of goods, a composite supply for which the principal supply is providing a solar power generating system which attracts tax at 5% as 'solar power generation system'. However we have seen above that the co....
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....ly of services, we have seen that the same involved supply of goods and services, as well and has been inferred by us to be a "works contract" in terms of clause (119) of section 2 of the GST Act. Having seen so, we observe that depending upon the nature of supply, intra-State or inter-State, the rate of tax would be governed by the entry no.3(ii) of the Notification No.8/2017-Integrated Tax (Rate) under the Integrated Goods and Services Tax Act, 2017 (IGST Act) or the Notification no. 11/2017 - Central Tax / State Tax (Rate) under the CGST Act and MGST Acts, as reproduced below. The rate of tax would be 18% under the IGST Act and 9% each under the CGST Act and the MGST Act, aggregating to 18% of CGST and MGST. The entry reads thus - SI No. Chapter, Section or Heading Description of Service Rate (per cent.) [CGST + MGST = IGST] Condition 3 Heading 9954 (Construction services) (ii) composite supply of works contract as defined in clause 119 of section 2 of Central Goods and Services Tax Act, 2017. 9 + 9 = 18 - Question 2 Whether parts supplied on standalone basis (when supplied without PV modules) would also be eligible to concessiona....