TaxTMI 
TaxTMI 
2018 (9) TMI 693
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....Based on the above observations, the application is 'admitted' to pronounce advance ruling. 1. SUBMISSION OF THE APPLICANT: M/s. RFE Solar Private Limited is engaged in business of developing power projects in India. It is undertakes development, design, engineering, supply, installation, testing and commissioning to establish solar power plant at various states in India. M/s. RFE Solar Private Limited is private limited company under the provisions of the Companies Act 2013 and is also registered under the provisions of the Central Goods and Services Tax Act 2017 read with the provisions of the Rajasthan State Goods and Services Tax Act 2017 ("Assessee"). It will undertake itself in executing 'Engineering Procurement and Commissioning "EPC" contacts for Solar Power Generation System commonly known as "Solar Power Plants". The contract between the assessee and its clients flows in a way wherein firstly they (assessee) shall agree and enter into 'Terms of Engagement' with each other defining the scope of work to be executed by assessee for client, the commercials for and timelines for EPC work as a whole to be undertaken. Thereafter in some cases, for....
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....on 15 and at such rates, not exceeding twenty per cent., as may be notified by the Government on the recommendations Of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person. The term "goods" has been defined under section 2(52) as "goods" means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply. The term "services" has been defined under section 2(102) "services" means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged. Further, section of the CGST Act 2017 provides for the activities which shall be treated as either supply of goods or supply of services in accordance with Schedule II of the Act. The point no 6 of the Schedule Il is read as under: The following composite supplies shall be treated as a supply o....
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....are involved along with transfer of property in goods. However under GST, there is a monumental shift in concept of Works Contract which was prevalent under erstwhile VAT and Service Tax regime. In GST, as per definition of works contract service if construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning is for immovable property only, then it will classify as works contract only. Hence it means that aforesaid activities if they are undertaken for a movable property then it will not be works contract service. That the contract between the client and the assessee covers not only supply of material but extends to erection and commissioning of the plant as well. That the assessee is required to undertake all the activities necessary for beginning the operations of the Solar Power Plant and then handover the same to the client. However, the consideration involved in the contract pre-dominantly consists of the value of material. The value of supply of material is almost 90%. Hence it can be deduced that under the given supplies, if the supply cannot be classified as works co....
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....unctioning, it does not automatically become an immovable property. Further in case of Municipal Corporation of Greater Bombay & Ors. v. Indian Oil Corporation Ltd. [1991 Suppl. (2) SCC 181, = 1990 (11) TMI 407 - SUPREME COURT one of the questions SC Court considered was whether a petrol tank, resting on earth on its own weight without being fixed with nuts and bolts, had been erected permanently without being shifted from place to place. It was pointed out that the test was one of permanency: if the chattel was movable to another place of use in the same position or liable to be dismantled and re-erected at the later place. if the answer to the former is in the positive it must be a movable property but if the answer to the latter part is in the positive then it would be treated a permanently attached to the earth. It is pertinent to note that Solar Power Plant has two blocks namely Solar Block and Power Block which has various components. The essential ingredients of Solar Power Plant and it's blocks are PV Modules, Panels, Cables, Module Mounting Structures; Fuse Connectors, Inventors and Transformers to be installed by assessee on any piece of land. A solar Power P....
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....ed down condition contribute to ultimate product. namely boiler/generator which cannot be supplied in one lot - Following ratio of decision in case of Hemraj Gordhandas [1978 (2) E.L. T. (J350) (S.C.)] = 1968 (9) TMI 112 - SUPREME COURT OF INDIA. items cleared in parts have individual identity, it cannot be said that product cleared is not a device for purpose of generating non- conventional energy - Appellant eligible for exemption under Notification No. 6/2002. The ultimate intention of parties is also to supply the Solar Power Plant and not the individual components. Hence in view of above precedence and facts of the case, the given supply should be treated as supply of Solar Power Plant Only. Further under notification No 01/2017-CT (Rate) dated 28.06.2017, at S.No. 234, under HSN Classification 84, 85 and 94, for description. Following renewable energy devices parts for their manufacture (c) Solar Power Generating System The rate Of CGST has been mentioned as 2.5%. In given case also, it has been specified that intention of parties was to supply solar power plant only. Hence according to assessee, the correct classification of given supply should be Chapter 84: ....
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....acuation of power (Evacuation Infrastructure) at Kushtagi village, Karnataka. c) Contract includes civil work such as development of site, structure foundation, Structure for 110kv transmission, building cable trenches, civil work relating to invertors and control buildings, store rooms, canopies and such other civil structure and related activities as set out in Scope of work and the Technical Specifications. d) The intention of the owner and the contractor is not to procure goods of solar power generating system but to procure a completely functional solar power plant as a whole wherein applicant undertakes end to end responsibility of supply of equipments of solar power plant including designing, engineering, supplies, installation to technical specification, testing and commissioning of a functional solar power plant as well as laying of transmission lines for transmission of the electricity generated up to storage or the grid. e) In clause 4.26 of the Contract, all risk and liabilities accruing in relation of works (temporary or permanent), and of all equipments, machinery, materials, shall be with contractor until occurrence of the Final Acceptance. f) Schedule 2 ....
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....2-cx dated 15/1/2002 v) Board of Revenue, Chepauk, Madras v. K. Venkataswami Naidu (AIR 1955 Mad 620, 1955 CriLJ 1369) = 1955 (3) TMI 46 - MADRAS HIGH COURT vi) Commissioner of Central Excise v. Solid and Correct Engg Works & ors. (2010 (175) ECR 8 (SC)) = 2010-TIOL-25-SC-CX = 2010 (4) TMI 15 - SUPREME COURT Relying on aforesaid judgements and citations the applicant contends that as the solar plant, once installed is capable of being removed and transferred from one place to another without substantial damage hence same should qualify as movable property. Hence in view of above precedence and facts of the case, the given supply should be treated as supply of Solar Power Plant only. k) As per the terms and conditions laid in EPC Contract the contractor i.e. the applicant has to undertake activities from engineering, design, to procurement of the material and has also to test and commission a functional plant before Final Acceptance. In contracts of such a nature, the liability of the contractor doesn't end with the procuring of materials but it extends till the successful testing and commissioning of the system. The transaction is a 'work contract' but....
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....e 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 m cubic metre capacity and the size of its outer diameter is 10.6 metres, and the height 31.25 metres. Hot air at 1200 degrees centigrade is fed into the blast furnace at various levels to melt the raw materials. With a view to protect the shell against heat, the blast furnace is lined with refractory brick of one metre thickness. Thus, the drilling machine has to drill a hole through one metre thickness of the refractory brick lining. The drilling machine as well as the mudgun are erected on a concrete platform described as the cast house floor which is in the nature of a concrete platform around the furnace. The cast house floor is at a height of 25 feet above the ground level. On this platform concrete foundation intended for housing drilling machine and mudgun are erected. The concrete foundation itself is 5 feet high and it is grouted ....
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....ng 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 Narne Tulaman Manufacturers Pvt. Ltd. (supra) and also noticed the judgment of the Tribunal in Gwalior Rayon Silk Manufacturing (Weaving) Co. Ltd. v. CCE - 1993 (65) E.L.T. 121; = 1992 (10) TMI 188 - CEGAT, NEW DELHI which held that the issue of immovable property was never raised before the Supreme Court in Narne Tulaman Manufacturers Pvt. Ltd. She found support for her conclusion in the decision of this Court in Municipal Corporation of Greater Bombay & Ors. v. The Indian Oil Corporation Ltd. (1991) Supp. (2) SCC 18; = 1990 (11) TMI 407 - SUPREME COURT and held that the twin tests laid down by this Court to determine whether assembly/erection would result in immovable property or not were fully satisfied in the facts of this case. She concluded :- "The test laid down by the Supreme Court is that if the chattel is movable to another place as such for use, it is movable but if it has to be disma....
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....Court observed :- "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 shifted from place to place. Permanency is the test. The chattel whether is movable to another place of use in the same position or liable to be dismantled and re-erected at the later place? If the answer is yes to the former it must be a movable property and thereby it must be held that it is not attached to the earth. If the answer is yes to the latter it is attached to the earth. If the answer is yes to the latter it is attached to the earth." Applying the permanency test laid down in the aforesaid decision, counsel for the appellant contended that having regard to the facts of this case which are not in dispute, it must be held that what emerged as a result of the processes undertaken by the appellant was an immovable property. It cannot be moved from the place where it is erected as it is, and if it becomes necessary to move it, it has first to be dismantled and then re-erected at another place. This factual position was also accepted by the Adjudicating Authority. The technical membe....
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....ket. Goods which are attached to the earth and thus become immoveable 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 tests, as explained by this Court, were not satisfied in the case of appellant as the tube mill or welding head having been erected and installed in the premises and embedded to earth they ceased to be goods within meaning of Section 3 of the Act." 26.In Mittal Engineering Works Pvt. Ltd. v. CCE - 1996 (88) E.L.T. 622 (S.C.); = 1996 (11) TMI 66 - SUPREME COURT OF INDIA this Court was concerned with the exigibility to duty of mono vertical crystallisers which are used in sugar factories to exhaust molasses of sugar. The material on record described the functions and manufacturing process. A mono vertical crystaliser is fixed on a solid RCC slab having a load bearing capacity of about 30 tons per square meter. It is assembled at site in different sections and consists of bottom plates, tanks, coils, drive frames, supports, plates etc. The aforesaid parts were cleared from the premises of the appellants and the mono vertical cryst....
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....of the General Clauses Act, it is evident that in an immovable property there is neither mobility nor marketability as understood in the Excise Law. Whether an article is permanently fastened to anything attached to the earth require determination of both the intentions as well as the factum of fastening to anything attached to the earth. And this has to be ascertained from the facts and circumstances of each case." It was also held that the decision of this Court in Sirpur Paper Mills Ltd. must be viewed in the light of the findings recorded by the CEGAT therein, that the whole purpose behind attaching the machine to a concrete base was to prevent wobbling of the machine and to secure maximum operational efficiency and also safety. In view of those findings it was not possible to hold that the machinery assembled and erected by the appellant at its factory site was immovable property as something attached to earth like a building or a tree. Keeping in view the principles laid down in the judgments noticed above, and having regard to the facts of this case, we have no doubt in our mind that the mudguns and the drilling machines erected at site by the appellant on ....
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....ble property' as something attached to the earth. 5. In light of above judgements and scope of work it is observed: 1) That the Solar Power Plant is a big project and has a permanent location as it is meant for onward sale of power to the consumer. Such plant would therefore have an inherent element of permanency. 2) The output of the project i.e. power, would be available to an identifiable segment of consumer. 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. 3) The Solar Power Plant cannot be shifted to any other place without dismantling the same. Further it is a tailor made system which cannot be sold as it is to the other person. 4) Solar Power Plant includes civil work such as development of site, structure Structure for 110kv transmission , building cable trenches, foundation, civil work relating to invertors and control buildings, store rooms , canopies and such other civil structure and related activities as set out in Scope of work and the Technical Specifications. Civil structure cannot be dismantled and move....