TaxTMI 
TaxTMI 
2019 (1) TMI 1367
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.... Statement containing the applicant's interpretation of law & relevant facts and requested for advance ruling on classification of services rendered by them and rate of tax applicable. They have submitted a copy of Challan evidencing payment of application fee of Rs. 10,000/-. 3. A personal hearing was held in this case and the assessee have appeared for personal hearing on 3-4-2018 along with their Advocate Dr. T. Ramesh Babu and explained their case as under : (a) The applicant is a contractor to Telangana State Mineral Development Corporation Limited (TSMDC). TSMDC has entrusted the following work to the applicant: • excavation of sand including loading with machinery at reach • transportation of above sand from the reach to stockyard • loading the so stocked sand to the lorries for further transportation by the contractee • formation of ramps, roads and their maintenance (b) The place where the above contract is being executed in all its respects is in fact related to the Kaleshwaram project when it comes into existence, the sand existing there would hit the flow/ storage of water when the object of the project is....
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.... a Registered Company under the Companies Act, 2013 (TSMDC for brevity) and M/s. R. VidyaSagar Rao Construction, a registered partnership firm dealing with mining business and having its place of business at Yellareddyguda, Hyderabad (contractor/applicant for brevity), we find that TSMDC had accepted the tender submitted by the applicant who emerged as L1 Bidder by quoting Rs. 74.36 per CBM of sand for excavation of 15,60,000 CBM of sand from Block III, Damerakunta-III, over an extent of 52 Ha., at submergence areas of Annaram Barrage, Kaleshwaram Project and transport the same quantity of sand to nearby stockyard (within 1 Km from the submergence area) and again loading of sand into Lorries at stockyard. TSMDC had issued the letter of intent to the contractor on 27-1-2017 for execution of the agreement for excavation of the sand as mentioned above. (a) On perusal of the scope of the work specified in the said agreement, it is found that the contractor shall excavate sand and transport the same to the stockyard and again load the same into the lorries at stockyard. The equipment/vehicles and manpower required for the said activities is the responsibility of the contractor. The s....
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....onsisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply"; The three components of the services: (i) excavation of sand; (ii) transportation of the excavated sand from the submergence area to the identified stockyard and (iii) loading of the sand into lorries at the stockyard, as mentioned above are naturally bundled and the principal supply is 'excavation of sand'. Without excavation of sand, transportation and loading of sand to the lorries doesn't arise. The services of transportation of sand and loading of sand to the lorries are ancillary to the service of 'Excavation of sand' and hence excavation of sand is the principal supply in the composite supply of the services rendered by the applicant. In view of the above discussion, the contention of the applicant that the impugned contract needs to be treated as 'Works contract' is not acceptable and hence the question of application of tax rate of 5% (2.5% + 2.5%) as per Notification No. 46/2017-CGST (R....
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....;vessel' referred to in the above said notification means ship/ large boat used for transport of goods by sea/inland waters. Hence the case on hand do not fall under '(ii) Transport of goods in a vessel.' as claimed by the applicant. The word 'vessel' has been defined under clause (z) of Section 2 of Major Port Trusts Act, 1963 and the same is extracted here under: "(z) "vessel" includes anything made for the conveyance, mainly by water, of human beings or of goods and a caisson" As per Section 2(34) of the CGST Act, 2017 "Conveyance" includes a vessel, an aircraft and a vehicle. Hence the words "Transport of goods in a vessel" as Specified at (ii) under column (3) against Sl. No. 9 of the Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017 mainly refers to the mode of transport, and the word "vessel" cannot be considered as a "container" as argued by the applicant. 7. In terms of the above statutory provision, vessel includes all types of transport conveyances by water like ships, barges, boats, tankers, etc. But the case on hand is distinguishable as the vehicles used for transportation of the sand is by road and therefore the same are not co....
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....ver an extent of 52 Ha. At submerged areas of Annaram Barrage, Kaleswaram Project and transport the same quantity of sand nearby Stockyard and again loading of sand into the lorries at Stockyard.......Page 2 & 3. Laying roads: It is the sole responsibility of the Contractor to lay/ form required road from stockyard to nearby connectivity road for plying of lorries/vehicles, any incidental expenditure incurred and involved for laying & maintenance of roads shall be borne by the Contractor...... Page 8. Letter of intent dated 27-1-2017: At its page 1 the acceptance of price for CBM consisting the above contract fixed at Rs. 74.36 and accepted and communicated by the contractee. In view of the above terms of tender called for which was fructified into an agreement between TSNMDC and the applicant since the applicant quoted the lowest bid and hence was successful in the bid and need to execute this contract. Understanding by the applicant: about the nature of contract and rate of tax there on : 1. Firstly as per the information/ details provided along the application for ruling and also written submissions filed at the time of hearing the case, the applicant opines this ....
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....nd services used in supplying the service has not been taken [Please refer to Explanation no. (iv)] (iv) Transport of goods in containers by rail by any person other than Indian Railways. 6 - (v) Goods transport services other than (i), (ii), (iii) and (iv) above. 9 Analysis of the facts & Conclusions: 1. Before proceeding further, it needs to kept in view that in Rs. 74/- the same ratios as mentioned above are there for the independent components of supplies since there is no change in the denoted supplies in the tender and the agreement, the change is in overall price only. Basis for the agreement is the tender and such fact is not to be ignored. 2. For brevity in the foregoing paragraphs, TSMDC is referred to as 'receiver' and the applicant is as 'provider'. 3. In order to address the above questions, it is necessary to examine whether or not the work entrusted to the provider by the receiver is just for a 'supply' simplicitor or does it involved with more than one 'supply' viz.: in combination of 'supply of goods and supply of services' or 'supply of different services joined together' in the event of which th....
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....ansportation of sand. 8. In the above activity, the construction of ramps and roads and their maintenance falls under WCT. 9. The next one is supply of transportation service i.e. from reach i.e. source wherefrom the sand culled out and loaded and to the place of stockyard. 10. Then the service of loading the sand from stockyard to lorries of 3rd parties starts. 11. Last service is formation of the road from the stockyard to the nearest village road and its maintenance till the entire contract is over. To form these roads, the provider needs to use goods and labour/service. In the contractual terms it is very clear that this service is to be done by the provider only. Then only the so loaded lorries would ply on the so formed roads which needs to be maintained by the provider only Hence the last actions of the provider ends with maintenance of roads formed by him only which too require men and material/ service and labour which again amounts to Works contract. These roads also facilitate the transportation of sand. 12. Important to notice laying ramps and roads and maintenance thereof is not for the provider himself but it is a part of the whole activity. 13. Thus....
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....e is one for the same amongst the worldly. 20. Whether supplies more than one in the ordinary course of business a matter to be gathered from the facts and circumstances of each case depend on the business line of activity and for that matter there is no and can't be a thumb rule/no straight jacket formula. Same as the case in the case of 'naturally bundled together'. Thus each case is to be examined in the back drop of several factors. 21. In the instant case the recipient for whatever may be the reasons, instead of engaging different providers for different supplies engaged one supplier for all the supplies referred to above in detail. This fact only making the instant contract a composite one. In the facts of this case, laying internal ramps and roads excavation of sand, loading to containers, transportation of sand, unloading, stacking, loading to 3rd party containers, making ready the external roads and their maintenance for free flow of transportation of integrally connected to each other and they are bundle of services and it is possible in these types of contracts. 22. The intention behind the contract is to shift the goods viz. sand from one place to other dis....
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....service has not been taken [Please refer to Explanation no. (iv)] (iv) Transport of goods in containers by rail by any person other than Indian Railways. 6 - (v) Goods transport services other than (i), (ii), (iii) and (iv) above. 9 28. The applicant is not engaged in transpiration of goods or passengers by rail, not engaged as a Goods Transport Agency also. 29. The left over tariffs are Transportation of goods by Vessel i.e. 2.5% CGST and 2.5% SGST, or 18% under residuary entry. 30. The applicant stated in the application for ruling and also in his written submissions his contract is not works contract, it is transportation of goods by vessel. 31. The meaning of 'vessel' is not defined under the Act. 32. As per the condition in column 5 in respect of 'Transportation of goods by vessel' the position of input tax credit is as under: 'Provided that credit of input tax charged on goods (other than on ships, vessels including bulk carriers and tankers) used in supplying the service has not been taken. 33. Therefore, the meaning of 'vessel' can be ascertained from the above proviso to the enumeration of 'Transport....