TaxTMI 
TaxTMI 
2018 (12) TMI 1228
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....ch has the effect of enhancing the tax liability or reducing the amount of admissible input tax credit shall be made, unless the applicant or the appellant has been given an opportunity of being heard. 2. Under Section 103 (1) of the Act, this advance ruling pronounced by the Appellate Authority under Chapter XVII of the Act shall be binding only (a) On the applicant who had sought it in respect of any matter referred to in sub-Section (2) of Section 97 for advance ruling; (b) On the concerned officer or the jurisdictional officer in respect of the applicant. 3. Under Section 103 (2) of the Act, this advance ruling shall be binding unless the law, facts or circumstances supporting the original advance ruling have changed. 4. Under Section 104 (1) of the Act, where the Appellate Authority finds that advance ruling pronounced by it under sub-Section (1 ) of Section 1 01 has been obtained by the appellant by fraud or suppression of material facts or misrepresentation of facts, it may, by order, declare such ruling to be void ab-initio and thereupon all the provisions of this Act or the rules made thereunder shall apply to the appellant as if such advance rul....
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....yderabad ("TSMDC" or "service recipient" in short), pursuant to TSMDC's acceptance of the tender submitted by M/s.RVRC in response to TSMDC's Tender / Short E-procurement Tender No.TSMDC / SAND / EXC / Damerakunta-III / Annaram / 2016 dated 29-12-201 6 ("Tender" / "Tender document"). M/S. RVRC had quoted the rate of Rs. 74.36/- per CBM in response to the said tender and emerged as the Ll bidder. The description of scope of work as per the said Agreement/ Tender, reads as follows: "Excavation of Sand 1560000 CBM of Block No. 111, Damerakunta-III over an extent of 52.0 Ha at Submergence areas of Anaram Barrage, Kaleshwaram Project and transport the same quantity of sand to nearby Stockyard (Contractor has to identify Stock yard within 1 km from the Submergence area) and again loading ofsand into the Lorries at Stockyard." 3.2. With regard to the above Agreement and work involved therein, M/s. RVRC filed an application for Advance Ruling, inter-alia, furnishing "Statement of Relevant facts having a bearing on the question raised", "Statement containing the applicant's interpretation of law and/or facts as the case may be, in respect of the questions raised" and the "Question on ....
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....2) transportation of the excavated sand from the submergence area to the identified stockyard and (3) loading of the sand into lorries at the stockyard; which are naturally bundled, the principal supply is that of 'excavation of sand'; the services of transportation and loading are ancillary to the said service of 'excavation of sand'. Hence, that the services rendered by the applicant are classifiable as "Excavating and Earthmoving Services" under Heading 995433 of GST Tariff and rate of tax applicable is 9% CGST + 9% SGST. 3.3.2. Summary of Opinion expressed by the State Member:-. (i) Though a part of the contract i.e, construction of ramps/roads and their maintenance falls under works contract; the subject contract is a composite contract but not exclusively 'works contract' as defined under Section 2 (119) of the Act and as per Sl.No. 6 (a) of Schedule II to the Act; (ii) The contract being a composite supply with the individual elements therein being integrally connected to each other, the same is bundle of services as per these types of contracts; the intention behind the same is to shift the sand from one place to another as distinguishable from 'excavation' simplic....
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....craves leave from the Hon'ble Appellate Authority to point out the facts being misconceived/inconsistent and erroneous observations consisted in the opinion rendered by the Hon'ble Central Member of the Authority for Advance Ruling apart from the submissions of the understanding about the whole issue by the applicant. c. The facts in the contract that the applicant entered into with Telangana State Mineral Development Corporation Ltd (TSMDC) may please be ascertained from the Short Tender Document dated 29-12-2016 and also from the Agreement dated 18-03-2018. d. The above documents makes it clear that the following supplies are involved in the activity being rendered by the applicant: i) Formation of internal ramps and roads and their maintenance i.e. from the outer place of the river to the places where the sand is stagnated in order that the applicant first reaches to the later place by its vehicles viz. bulk containers. ii) Culling out the Sand from the places where it is stagnated, loading into the above containers. iii) Transporting the above loaded Sand to the places chosen by the TSMDC, unloading there for stacking. iv) Reloading the....
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....hich the general meaning of 'vessel' is to be adopted, its meaning can't be borrowed from other Statues since Statue Books of GST Acts do not mandate so as was done so in respect of so many words in the GST Acts. The applicant could also notice in the conditions prescribed in the Notification NO. 11 dated 28-06-2016 that in order to have the concessional rate oftax therein the condition is that it shall not take Input Tax Credit charged on the goods used in supplying the services. Such restriction from having ITC has exclusion to the goods i.e. for ships, vessel including bulk carriers and tankers. Therefore, 'vessel' includes bulk carriers and tankers. The word s 'other than ships' also carries much significance to give a meaning that 'Vessel' includes goods other than ships. Submissions of the applicant on the opinion rendered by Hon'ble Central Member: 1. The observation made by the Hon'ble Central Member that the contract consist three parts only [(1), (11) & (111) i.e. excavation of sand, transportation of the excavated sand from the submergence area to the identified stock yard and loading of sand into the lorries at the stock yard] is misconstrued. In fact, the tender ....
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....uthority for Advance ruling. 7. The Hon'ble Central Member pleased to hold that it is not a 'works contract' and since the contract is to held to be a 'composite supply' the principal supply is 'excavation of sand'. To hold as such, the reason assigned by the central member is without excavation of sand the transportation and loading of sand not arises. 8. The object behind the contract is in fact to take out the sand from the place at it exists to another place since the existence of sand is hinders the free flow of water in the Kaleswaram Project when it comes into existence therefore the sand from the existing place is to be transported to other place. Pre and post consequential actions are attached to such supply in which immovable property of ramps, roads do also come into existence. 9. The Hon'ble Central Member taken a view that the contract is not works contract duly assigning reason that laying of roads from stock yard to nearby connectivity roads for plying of lorries is incidental to transport the sand from excavated from the submerged areas to nearby stock yard is incidental to transport of sand excavated. Thus, the Hon'ble Central Member pleased to identify pr....
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....is qua 'mode of transportation'. This may kindly be looked into. 13. When the word 'Vessel' is not defined under the Act, it's meaning is to be considered in general and meaning of it can't be borrowed unless mandated under the Act to be done so. In the following words GST Act mandates meaning of certain words from the other Acts. a. "actionable claim" shall have the same meaning as assigned to it in section 3 of the transfer of Property Act, 1882 (4 of 1882); b. "associated enterprises" shall have the same meaning as assigned to it in section 92A of the Income-tax Act, (43 of 1961); 'Board' means the Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (54 of 1963); d. "chartered accountant" means a chartered accountant as defined in clause (b) of sub-section (1) of section 2 of the Chartered Accountants Act, 1949 (38 of1949); e. "company secretary" means a company secretary as defined in clause (c) of sub-section (1) of section 2 of the Company Secretaries Act, 1980 (56 of 1980); f. "motor vehicle" shall have the same meaning as assigned to it in clause (28) of section 2 of the Motor....
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....missions filed today may be taken to be deleted. 4. He next explained that on going through the nature of the various component activities as mentioned on page 8 of the tender document, and as explained in their written submission, it is their claim that the component activity of transportation should be considered to be the principal supply and therefore it is their claim that in terms of the relevant provisions of GST Law, the entire composite supply deserves to be treated as principal supply, namely transportation of goods. 5. He therefore claims the benefit of Central Tax (Rate) Notification No. 11/2017 (para 27 of the lower authority order refers) and claims that there are five sub-entries in this notification column No.3 and he does not fall in the entries at (i), (iii) and (iv). It is his contention that he falls in the entry (ii) and therefore does not fall in the residual entry at (v). 6. Entry at (ii) reads as "transport of goods in a vessel." While explaining his case he referred to the fact that in the lower authority's reference / ruling, the Central Member has held his vehicles to be not vessel whereas the State Member has held it to be a vessel. A video in t....
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....e Ruling Authority to state the point/points of difference and make a reference to the Appellate Authority for a hearing and decision on such question. Whereas vide the subject reference, the Authority citing lack of uniform opinion on the issues, referred the "application filed by the applicant" to this Appellate Authority "for hearing and decision on the question on which the advance ruling was sought" The point(s) on which the Members have differed, though are reflected within the reference-order. We further observe that Section 101 (1) of the Act mandates this Appellate Authority to 'pass such order as it thinks fit, confirming or modifying the ruling appealed against or referred to'. We also take note that various provisions under Chapter XVII of the Act dealing with "Advance Ruling" i.e, sub-Section (4) of Section 101, Section 103 (1) or Section 104 (1), inter-alia, refer to 'advance ruling pronounced by Appellate Authority', which envisages pronouncement of the Advance Ruling by this Appellate Authority after addressing the points of difference/reference in such situations. 8.1.2. The applicant vide the initial application and also in their submissions before the lower Au....
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....titlement to ITC (input tax credit) to the extent mentioned in the relevant Notification. (iv) The State Member also held that the meaning of 'vessel' for the purpose of the Notification-entry (read with the proviso in Column (5) against the said entry) would stand as 'container which contains other goods which carries goods from one place to other' and hence concluded that the applicant's case is covered by the entry 'Transport of goods in a vessel'. 8.2. Keeping in view the above aspects, we now proceed to address the issue(s) involved in the matter, by considering the following as the questions falling for determination by us : (i) Whether, in the services provided by the applicant under the Agreement with TSMDC [which has been held as a "composite supply" by both the Members], the 'principal supply' is that of 'excavation of sand' as held by the Central Member or 'transportation of goods i.e., sand' as held by the State Member ? What is the classification of the "principal supply" determined under (i) above (which would thereby be the classification of the "composite supply") ? (iii) If the principal supply is determined to be "transport of goods", then whether t....
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.... the Notification. The relevant entries in the Notification are reproduced and referred at the appropriate places in the further course of our discussions. 10.1. Coming to the services involved in the case, the scope of work as described in the Agreement / Tender has already been mentioned earlier. However, the specific clause in the Contract Agreement dated 18th March, 2017 which describes the work merits a reference and hence, reproduced as under: "3. Conditions of contract: i) Scope of the Work: The Contractor shall excavate sand 15, 60, 000 CBM from Block III, of Damerakunta-III, over an extent of 52 Ha. at Submergence areas of Annaram Barrage, Kaleswaram Project and transport the same quantity of sand to nearby Stockyard (Contractor has to identify Stock yard within 1 km from the Submergence area) and again loading of sand into the Lorries at Stockyard. The contractor shall extract the sand within the assigned Geo-coordinates as specified in the tender documents. The Contractor shall not encroach upon in adjacent areas other than assigned areas without permission of TSMDC." 10.2. We find it also appropriate to reproduce the following further / other terms in the sa....
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.... laying & maintenance of roads shall be borne by the Contractor". From the above, it appears that there can be no dispute that the impugned include the element of formation/maintenance of roads apart from those of excavation, loading, transport etc., mentioned in the "Scope of Work". (iv) Clause 3(vii) of the Agreement, inter-alia, specifies Contractor's possession and deployment of a minimum (numbers) of equipment viz., 8 No.s Excavators, 2 No.s Mobile Water Tankers and 32 No.s Tractors / Tippers. (v) Clauses 3 (viii), (x) of the Agreement stipulate respectively, that Contractor shall (a) obtain necessary licenses, permits etc., as required under Telangana State Sand Mining Rules, 2015; and (b) identify the Stockyard within 1 km from Submergence area; for which TSMDC shall obtain Mineral Dealer License (MDL) and pay lease rental amount thereof not exceeding Rs. 50,000/- per acre per annum. 10.3. For the aforesaid services, the Contract Agreement dated 1 8th March, 2017 mentions the consideration as Rs. 74.36/- per CBM (cubic metre) of sand excavated. As can be seen, this is a single rate which has been agreed upon by the parties for the combined performance of the vari....
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....- TSMDC is a Corporate entity created by the State Government of Telangana with the objectives of development of mineral resources including Exploration, exploitation and beneficiation^6. Sand, undisputedly, being a mineral resource the same belongs to the State of Telangana; TSMDC is the State-instrumentality which is entrusted with the objectives as above. (ii) The Agreement and the earlier Tender floated by TSMDC, in essence, aims for removal of sand located in the specified area (Submergence Area / Reach) and shifting the same to another area, termed as Stockyard @ approx.. 1 km distance from the Submergence area. (iii) The said shifting and removal is to be done using Excavators and loading on to tippers/tractors or lorries/trucks as the case may be, which transport the sand by the ramps / roads to the said Stockyard. (iv) At the Stockyard (for which TSMDC has to obtain Mineral Dealer License and also pay lease rentals), the sand is again loaded into lorries -which is for further onward despatch as per the Contractee-TSMDC's requirements. (v) The Agreement also requires the Contractor i.e, applicant M/s. RVRC to lay/form and maintain the necessary roads / ramps etc....
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.... in question. 12.6. The State Member's view (expressed in para 22 of the subject reference order) that 'the intention behind the contract is to shift the goods viz., sand from one place to other distinguishable from excavation simplicitor' is in a nut-shell, the correct conclusion arrived, with which we are in agreement with in view of the findings mentioned above. 13. In view of the above, we hold that the principal supply involved in this case is 'transportation of goods' as held by the State Member and not 'excavation of sand' as held by the Central Member. 14.1. The second question for determination is What is the classification of the "principal supply" determined under (i) above which would thereby be the classification of the "composite supply" as held by the lower Authority ? 14.2. As determined above, the 'principal supply' in the instant case is that of transportation of goods i.e., sand. It is an urn-disputed fact and also explicitly recorded in the Agreement and tender documents that the said transport is by road only. The Scheme of Classification of services is laid down in the Annexure to the Notification No. 1 1/201 7-Central Tax (Rate) dated 28-6-201 7 w....
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.... as Heading 9965. Under the said classification, 'Land Transport services' is a sub-classification with 5-digit Code i.e, Group 99651. The said sub-classification is further divided into four categories of services, each with a six-digit Service Code (Tariff). The said four categories pertain to different forms / modes of transport i.e, road transport, rail transport, transport via pipeline and the residual entry covering such Land transport services other than those specified in the earlier three Service Codes. 14.4. The impugned services, being road transport services of goods evidently fall under Service Code (Tariff) 996511 which covers the specific description as "Road Transport of Goods... by trucks / other vehicles". The other two specific Service Codes 996512 and 996513 pertain to Railway Transport and transport via pipeline, which are not applicable to the applicant's case. In as much as by specific description of 'road transport by trucks/ other vehicles' the impugned services are covered by the Service Code 996511, the application of residuary entry i.e, Service Code 996519 does not arise. 14.5. On the aforesaid basis, we therefore hold that the classification of t....
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....nsport services other than (i), (ii), (iii) and (iv) above. 9 15.3. The applicant's claim is that their activities, as a composite supply with principal supply of 'transportation of goods/sand', would be covered by the category "Transport of goods in a vessel" (appearing at sub-category (ii) under Column (3) in the entry at Sl.No.9 in the Table to the said Notification - hereinafter referred as 'impugned entry'). The differing views expressed by Members of lower authority as also the applicant's claims / contentions in this regard, including during personal hearing before us, have already been reproduced above and hence, not reiterated here; but duly taken into consideration. 15.4. The relevant textual references / definitions / meanings of the word 'vessel' and inferences drawn therefrom by the two Members of the lower Authority as also the applicant, are summarised as follows: (i) Uniformly, the Members as well as applicant averred to the fact that 'vessel' is not defined in the Act. (ii) The Central Member referred to the definition of 'conveyance' vide Section 2 (34) of the Act and that of 'vessel' as per Section 2 (z) of the Major Port Trusts Act, 1963....
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.... and hence not correct. They support the finding of State Member in this regard. 15.5. With regard to the above, we find as follows: (i) The word 'vessel' is not defined in the Notification nor in the Act (nor also in the allied Acts to which reference is made by sub-Section (120)^8 of the Act). (ii) However, the word 'vessel' finds a mention in the Act in the definition of 'conveyance' cited earlier. The said definition shows that 'vessel', apart from 'an aircraft' and 'a vehicle' are included therein as three separate types of conveyances. In other words, in the very same statutory definition of 'conveyance', the words 'vessel' and 'vehicle' have been separately mentioned. It is a settled principle of legal interpretation that when two expressions are used in a statute they have to be assigned two different meanings and both cannot be construed as having the same meaning. The said principle is enunciated / reflected in a catena of decisions. To cite a few, Hon'ble Supreme Court in Commissioner of Trade Tax, UP vs S.S. Ayodhya Distillery 2009 (233) ELT.146 (SC) = 2008 (12) TMI 394 - SUPREME COURT OF INDIA, Collector of C.Ex vs Himalayan Coop Milk Product Union Ltd 2000....
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....taken to have intended to express a different intention. [CIT v. East West Imports and Exports (P) Ltd. - (1989) 1 SCC 760 = 1989 (2) TMI 1 - SUPREME COURT] (iii) More significantly, we find that in the very same Notification No. 11/2017Central Tax (Rate) dated 28-6-2017 containing the impugned entry, the Annexure containing Scheme of Classification of services depicts the Goods Transport Services as follows: ANNEXURE : SCHEME OF CLASSIFICATION OF SERVICES S.No. Chapter, Section, Heading or Group Service Code (Tariff) Service Description (1) (2) (3) (4) 107 Heading 9965 Goods Transport Services 108 Group 99651 Land transport services of Goods 109 996511 Road transport services of Goods including letters, parcels, live animals, household and office furniture, containers and the like by refrigerator vehicles, trucks, trailers, man or animal drawn vehicles or any other vehicles 110 996512 Railway transport services of Goods including letters, parcels, live animals, household and office furniture, intermodal containers, bulk cargo and the like 111 996513 Transpor....
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.... the word 'vehicles' with a specific inclusive mention of 'trucks' has only been used. In other words, apart from the definition in the main Act, the Notification also Uses the word 'vessel' in the specific context of and with a specific connotation vis-a-vis 'Transport by water' only and none else. In other words, the Notification has employed an unambiguous and distinct usage of the word "vessel" in relation to "water transport services only", while using the words "vehicles / trucks" in relation to Land transport services. Hence, the ratio of the principle laid down in the above-cited case laws squarely applies in this context to arrive at the conclusion that the word 'vessel' as used in the Notification would not cover the trucks or lorries or tractors/tippers used by the applicant in the impugned services. 15.6. The applicant's contention in this regard is that the definition / meaning of 'vessel' as per General Clauses Act and Law Lexicon as also that of 'conveyance' in the Act is an inclusive definition and hence as also by considering a general meaning, the word 'vessel' in the impugned entry would also cover their vehicles -trucks/lorries. We find no merit in the abo....
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....a vessel would include any vehicle / truck / lorry etc. (vi) Further, it would be pertinent to mention that during the hearing, the applicant's advocate, in response to our query vis-d-vis the definition of 'conveyance' in the Act, had fairly stated that among the three categories viz., a vessel or an aircraft or a vehicle in the definition, they would fall under 'a vehicle'. 15.7. The State Member's opinion that 'vessel' used in the impugned entry Would cover all / any types of containers containing other goods - basing on a deductive inference from the words appearing in the proviso to the said entry, is thus found to be incorrect. The proviso only specifies a 'condition' for fulfilment in respect of the particular service 'transport of goods in a vessel'. The wording used in such a 'condition' can by no means be interpreted in a manner negating and distorting the meaning assigned in the Act/Notification to the word 'vessel' as detailed earlier. The reference in the proviso to 'goods' or the exclusion clause 'ships, vessels including bulk carriers and tankers' also has to be construed harmoniously vis-d-vis the scope of the service-description wherein the word 'vessel' appe....
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....z., "Goods transport services other than (i), (ii), (iii) and (iv) above" for which the applicable rate of tax is prescribed as 9% CGST (and correspondingly 9 % SGST). Hence, the applicable rate of tax on the impugned services is 9 % CGST + 9 % SGST (aggregating to 18%). 18. In view of the aforesaid discussion and findings, we pronounce the Advance Ruling in respect of the question framed by the applicant in the instant proceedings, as follows: S.No. Question framed for Advance ruling Ruling by this Appellate Authority A) The combination of services of excavation of sand including loading with machinery at reach, Formation of Ramps and Maintenance of Roads, Transportation charges for the tractors/tippers of sand from reach to stockyard and Loading cost at sand from stockyard to lorries, whether is "Works Contract" or "Composite Supply" and what is the rate of tax on the consideration received therefor ? In the said services held by lower Authority as 'composite supply', the principal supply is 'Transport of goods by road' and hence, these are classifiable under Service Code 996511 of the Scheme of Classification of Services vide Annexure to Notification No. 11 ....