TaxTMI 
TaxTMI 
2018 (9) TMI 1333
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....ance ruling. 1. Submission of the Applicant: Statement of relevant facts having a bearing on the question(s) raised. 1. M/s. Tag Solar System, a partnership firm which is engaged in Supply, Commissioning, Installation, Maintenance of Solar Water Pumping System within a stipulated time period. 2. Such Supplies are given on the instructions of the Rajasthan Horticulture Development Society under subsidy scheme wherein the Solar Water Systems are required to be installed at the farmer's field. The scope of work is reproduced hereunder: "supply, installation, commissioning and maintenance of Solar Water Pumping Systems" 3. Accordingly the Applicant Supplies, Installs, Commissions and Maintains the said systems and perform end to end activities in this regard. 4. There may be a consolidated price for all the activities undertaken by the Applicant which involves both the Supply of Goods and Supply of Services. 5. Applicant has no clarity with respect to the rate of tax on such Supply. As per their understanding it will be taxable at the rate of 5% being covered under Chapter 84 / 85 under the item "Solar Power Generating System". Applicant has confusion that....
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....round and can at any time be removed from the fields. They are assembled at the site for maximum operational efficiency. When the item can simply be dismantled and removed from the ground at any given time and is not affixed to the earth permanently, the said goods cannot be categorized as an immovable property. As per applicant Hon'ble Supreme Court of India in the case of Sirpur Paper Mills Ltd. vs. The Collector of Central Excise = 1997 (12) TMI 109 - SUPREME COURT OF INDIA, has held as under: "It is 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. The Tribunal has pointed out that it was for the operational efficiency of the machine that it was attached to earth. If the appellant wanted to sell the paper making machine it could always remove it from its base and sell it. 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 house-holder may purchase a water pump ....
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....ndation 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. 33. ..... 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" Applicant has contended that in the light of the abovementioned facts and judgments Solar Water Pumping Systems cannot be categorized as Immovable Property and the activity in relation to movable property cannot in any way b....
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....submission already made in the application for Advance Ruling and further requested that the case may be decided as per the submission made earlier in Advance Ruling Application. Applicant was instructed to submit copy of Work Order and some sample bill which was done by them on a later date. 4.2 The jurisdictional officer in her comments has stated that the contract given to the applicant is of supply, installation, commissioning and maintenance of Solar Water pumping system in which the dealer has to deliver a functional solar water pumping system. Hence, it is a one single contract so it is to be treated as works contract and taxed @ 18% under GST. She further stated that separate bills one for supply of goods and other for supply of services cannot be generated as it is a single contract. 5. Findings and analysis: As per copy of contract submitted by the applicant i.e. M/s. Tag Solar System has to execute "Supply of Solar Photovoltaic (SPV) water pumping system". After going through the written submissions, copy of contract and other additional statements following findings and analysis are made: a) M/S Tag Solar System, is a partnership firm is engaged in Supply, C....
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....ioning and it is not chattel sold as chattel. i) Applicant has submitted that 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, then only it would classify as works contract service . Hence it means that if aforesaid activities are undertaken for a movable property then it will not be works contract service. j) Applicant has relied upon following judgment and Circular in furtherance of their arguments of Solar Photovoltaic (SPV) water pumping system being movable property and not immovable: i) Sirpur Paper Mills Ltd. v. Collector - 1998 (97) E.L.T. 3 (S.C.) = 1997 (12) TMI 109 - SUPREME COURT OF INDIA ii) CBEC circular number 58/1/2002-CX dated 15/1/2002 iii) Commissioner of Central Excise, Ahmedabad v. Solid and Correct Engineering Works [(2010) 5 SCC 122 = 2010 (4) TMI 15 - SUPREME COURT Relying on aforesaid judgements and....
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....ry 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. 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....
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....ected. These machines cannot be lifted in an assembled condition. The judicial member noticing these facts observed that it is a physical and engineering impossibility to assemble mudguns or the drill tap hole 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 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 no 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 Narne Tulaman Manufacturers Pvt. Ltd. (supra) and also n....
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....k 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 its own weight, each tank being about 30 feet in height 50 feet in diameter weighing about 40 tons. 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 :- "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 posit....
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....mponents 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 exgibility 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 :- "The basic test therefore, of levying duty under the Act is two fold. One, that any article, must be a 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 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 appellan....
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....ection 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 Corporation of Greater Bombay, Quality Steel Tubes and Mittal Engineering Works Pvt. Ltd. (supra) as also the earlier judgment of this Court in Sirpur Paper Mills Ltd. v. Collector of Central Excise, Hyderabad - 1998 (97) E.L.T. 3 (S.C.) = 1997 (12) TMI 109 - SUPREME COURT OF INDIA. This Court observed :- "There can be no doubt that if an article is an immovable property, it cannot be termed as "excisable goods" for purposes of the Act. From a combined reading of the definition of 'immovable property' in Section 3 of the Transfer of Property Act, Section 3(25) of the General Clauses Act, it is evident that in an immovable property there is neither mobility nor marketability as understood in the Excise Law. Whether an article is permanently fastened to anything attached to the earth require determination of both the intentions as well as the factum of fastening to anything attached to the ea....
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....e without their aid a blast furnace cannot operate, it is not necessary for us to express any opinion as to whether the mudgun 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 machines 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 as another site. It was also sought to distinguish as to how a concrete base meant just to prevent wobbling of the machine would not place the machine in the category of 'immovable property' as something attached to the earth. 6. In light of above judgments and scope of work it is observed: 1) That Solar Photovoltaic (SPV) water pumping system has a permanent location (at specified farmer's field in Rajasthan) as its works is undertaken on instructions of the Rajasthan Horticulture Development Society under subsidy sc....
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....to supply a "Functional Solar Photovoltaic (SPV) water pumping system" as a whole which includes supply, installation and commissioning, maintenance for 10 years, hence instant transaction is neither a supply of i) "Solar Power Generating System" and nor a supply of ii) "Solar Power Based Devices". 9. As can be seen, the above entry under the notification describes the Tax rate on 'Goods'. If the transaction is supply of goods i.e. supply of either "Solar Power Generating System" or supply of "Solar Power Based Devices" then the applicable Schedules would have to be seen but the intent of parties in instant case is always for supply of a "Functional Solar Photovoltaic (SPV) water pumping system" as a whole which includes supply, installation and commissioning at the site of farmer along with maintenance for 10 years and is not chattel sold as chattel. Hence cannot be treated as "Composite Supply" as contended by the applicant. 10. An overview of all makes us observe that the impugned transaction for supply of Solar Photovoltaic (SPV) water pumping system which includes procurement, supply, development, testing, commissioning and providing maintenance service for 10 years is a....