TaxTMI 
TaxTMI 
2019 (3) TMI 539
X X X X Extracts X X X X
X X X X Extracts X X X X
....at the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth 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- Statement of relevant facts having a bearing on the question(s) on which advance ruling is required. 1. The Government of Maharashtra (for short "GOM") has envisaged to setup a comprehensive CCTV based City Surveillance System for the city of Pune and Pimpri-Chinchwad (hereinafter referred to as the "Surveillance Project"). 2. The GOM published the Request for proposal (for sort' RFP') to seek services of a reputed IT firm as a System Integrator for Design, Development, Implementation & Maintenance of CCTV based Surveillance System For Pune and Pimpri-Chinchwad areas. Accordingly the Appl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e execution of this Contract are Rs. 2,24,31,50,105.50. GOM shall pay the Systems Integrator the total fees in following manner : (a) 20% of the total fees against Project Go Live (i.e. successful FAT) and (b) Remaining 80% of total fees in 20 equal installments (Rs. 8,97,26,004.22 /per quarter). The fees shall be inclusive of Value Added Tax or Sales Tax, Service Tax, Income Tax, duties, fees, levies, charges, and commissions as applicable under the relevant Laws of India. Should there be a change in applicable taxes, the actual taxes on the date of billing would prevail. The payment shall be made at the end of every three months starting from the date of Successful Go Live and shall be subject to strict adherence of the respective SLAS. If the Systems Integrator is liable for any penalty/liquidated damages as per the SLAs (refer to the clause no. 7 of this agreement), the same shall be adjusted from quarterly payments due to the System Integrator. GOM will release the payment within 30 days of submission of valid invoice subject to the condition that invoice and ail supporting documents produced are in order and work is performed to the satisfaction of GOM. GOM shall ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing Police Stations T + 26 weeks 18 Establishing connectivity for Phase II Cameras, viewing Center, Police Stations T + 33 weeks 19 Training and Capacity Building for the Police Personnel for Phase II T + 35 weeks 20 FAT for phase II Cameras, Viewing Center Setup, Police Station T + 37 weeks 21 Go Live for the 2nd, 3rd & 4th Zones T + 40 weeks 22 System Documents, User Documents as per ITIL (Information Technology Infrastructure Library) standards T +41 weeks 23 formal Go Live for the Entire Project T + 42 weeks 24 Operations and Maintenance post Go-live 5 years Time is the essence of the agreement 7) Service Level Agreement (SLA) GoM is looking at a very professional approach in the project implementation and its operations. System Integrator is expected to match these expectations of the service levels given in Annexure III of this agreement. Any non-adherence to the SLAS would lead to the penalty, to be calculated as per the details given in Annexure III to this agreement. 8) Use & Acquisition of Assets during the term System Integrator shall:- a) Take all reasonable & proper care of the entire hard....
X X X X Extracts X X X X
X X X X Extracts X X X X
....project. Ownership of any asset, created during the contractual period after go live, shall also vest with GOM upon creation of such asset p) Ensure the integration of the software with hardware to be installed and the current Assets in order to ensure the smooth operations of the entire solution architecture to provide efficient services to GOM of this project in an efficient and speedy manner. q) Obtain a sign off from GOM or its nominated agencies at each stage as is essential to close each of the above considerations. r) Ensure that the Mobile Vans mentioned in RFP shall be registered under the provisions contained u/s 39 of Motor Vehicle Act, 1988 in the name of GoM. s) Follow/observe the conditions laid down under the provisions contained u/sub Section 2 of Section 149 of Motor Vehicle Act, 1988. 19) Date Ownership All the data created as the part of the project shall be owned by GOM. The SI shall take utmost care maintaining security, confidentiality and backup of this data. Access to the data / systems shall be given by the SI only to the personnel working on the projects and their names & contact details shall be shared with GOM in advance. GOM / its auth....
X X X X Extracts X X X X
X X X X Extracts X X X X
....utually agreed upon schedule & upon clearance of the personnel based on profile review & upon schedule & upon clearance of the personnel based on profile review & personal interview by GOM or its nominated agencies, within not later than 30 working days. System Integrator shall depute quality team for the project & as per requirements, GoM shall have the right to ask System Integrator to change the team. m) Entire Agreement This MSA, the SLAs & all schedules appended thereto & the contents & specifications of the volumes 1, II, III & IV of the RFP subsequent corrigenda issued thereon & clarification (undertakings) accepted by the GOM constitute the entire agreement between the parties with respect to their subject matter." 7. From the schedule forming part of the contract it is clear that the entire project cost, as per the contract is at Rs. 224,31,50, 106/-- The goods used in the project that is capital cost of the project is at Rs.,90,35,70,545/-; and the balance operation cost for 5 years of the entire project which is a 133,95,79,561/ 8. As per the contract the project went "Go Live" on 27th October 2015. This shows that the project was operational in all respect o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... question No. 1 is in affirmative then what is the rate of tax under SGST/CGST? The Appellant prays to decide the above questions. 03. CONTENTION - AS PER THE CONCERNED OFFICE Please find required information of Advance Ruling Application No.90 in the case of M/s. Allied Digital Services Ltd. as under The dealer has entered into agreement between Government of Maharashtra to set up comprehensive CCTV based surveillance system on dt.28.10.2013 for desing, development, implementation and Maintenance of CCTV based surveillance system for Pune and Pimpri -Chinchwad area. The total fees paid to the applicants as per the agreement for the execution of this contract are at Rs. 2,243,150,105.50/- which includes all the cost components as per ""scheduled A to S , for a period of 5 years and 10 months of the execution. The Government of Maharashtra released 20% amount of entire project cost. As per agreement after project "GO LIVE" on or about 27 October 2015. The balance amount i.e. 80% of the total contract value is being, released in 20 quarterly equal installments for the further period of five years from 27 October, 2015 onwards. The Government of Maharashtra has issued lett....
X X X X Extracts X X X X
X X X X Extracts X X X X
....earing in the matter. They requested to take decision on records submitted. Jurisdictional Officer Sh. S. V. Sawant, Dy. Commr. of S.T.(E-806), Nodal I, Mumbai appeared and made oral and written submissions. We were heard from both the sides. 05. OBSERVATIONS We have carefully gone through the facts of the case, oral and written submissions made by the applicant as well as the jurisdictional officer and the relevant provisions of the GST law In this regard. The Government of Maharashtra has awarded contract to the applicant to render services of system integrating design, development, implementation and maintenance of CCTV based surveillance system for the use by the Police in the jurisdiction of cities of Pune and Pimpri-Chinchwad. The agreement was entered between the Home Department of GOM and the Applicant on the 28th day of October, 2013, which falls in the period prior to implementation of GST. We refer this contract as "Surveillance Project". The issues before us are: Question 1: whether there is liability to pay tax under the GST law on the amount received post GST for supply of services as per the contract executed prior to the implementation of GST and Questio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n conjunction with each other in the ordinary course of business, one of which is a principal supply; Illustration: Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply" As a corollary of above finding, the next issue to be decided by us is whether this composite supply is 'Works Contract' as defined in clause (119) of section 2 of the SGST/CGST Act. Section 2(119) reads: "works contract means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract;" Works contract is essentially a contract of service which may involve supply of goods in the execution of the said contract. However, under the GST Act 'Works Contract' has been restricted to any work undertaken for an immovable property which is a complete departure from the erstwhile VAT and Service ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 to earth by concrete foundation. The first step is to secure the base plate on the said concrete platform by means of foundation bolts. The base plate is 80 mm mild sheet of about 5 feet diameter. It is welded to the columns which are similar to huge pillars. This fabrication activity takes place in the cast house floor at 25 feet above ground level. After welding the columns, the base plate has to be secured to the concrete platform. This is achieved by getting up a trolley way with high beams in an inclined posture so that base plate could be moved to the concrete platform and secured. The same trolley helps in the movement of various components to their determined position. The various components of the mudgun and drilling machine are mounted piece by piece on a metal frame, which is welded to the base plate. The components are stored in a storehouse away from the blast furnace and are brought to site and physically lifted by a crane and landed on the cast house floor 25-feet high ne....
X X X X Extracts X X X X
X X X X Extracts X X X X
....endently, in para 10 above. Accordingly applying the test laid down by the Supreme Court we hold that the erection and installation of mudguns and tap hole-drilling machines result in immovable property. In the light of the ratio of the above case-law, we hold that the mudguns and tap hole-drilling machines do not admit of the definition of goods and, therefore, excise duty is not leviable thereon." 25. In Mittal Engg. Works (P) Ltd. v. CCE [(1997) 1 SCC 203 : (1996) 88 ELT 622] =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 crystalliser is fixed on a solid RCC slab having a load-bearing capacity of about 30 tons per square metre. 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 crystalliser was assembled and erected at site. The process involved welding and gas-cutting. Afte....
X X X X Extracts X X X X
X X X X Extracts X X X X
....So also in T.T.G. Industries Ltd. v. CCE[(2004) 4 SCC 751 : (2004) 167 ELT 501] = 2004 (5) TMI 77 - SUPREME COURT OF INDIA, the machinery was erected at the site by the assessee on a specially made concrete platform at a level of 25 ft height. Considering the weight and volume of the machine and the processes involved in its erection and installation, this Court held that the same was immovable property which could not be shifted without dismantling the same. 43. It is noteworthy that in none of the cases relied upon by the assessee referred to above was there any element of installation of the machine for a given period of time as is the position in the instant case. The machines in question were by their very nature intended to be fixed permanently to the structures which were embedded in the earth. The structures were also custom-made for the fixing of such machines without which the same could not become functional. The machines thus becoming a part and parcel of the structures in which they were fitted were no longer movable goods. It was in those peculiar circumstances that the installation and erection of machines at the sites were held to be by this Court to be imm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ision of GST Act. Question No. 2: Having answered the question No.1 in the affirmative, then the rate of tax applicable under GST Act is determined as under: While dealing with Que no. 1 above, we have drawn a conclusion that the applicant is supplying works contract services, we now reproduce the Notification no.11/2017 - Central Tax (Rate) dated 28/06/2017 which is applicable to the present case. SI.No. Chapter, Section or Heading. Description of Service Rate (per cent.) Condition 1 2 3 4 5 Chapter 99 All Services Section 5 Construction Services Heading 9954 (Construction services) (i) ....................................) 9 - (ii) composite supply of works contract as defined in clause 119 of section 2 of Central Goods and Services Tax Act, 2017.' 9 - (iii) construction services other the (i) and (ii) above. 6 - Hence as per the said Notification it is very clear that the composite supply of works contract as in the subject case under (ii) attracting 18% GST. The said Notification was amended 22.08.2017 vide Notification No. 20/2017 - ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e also it is very clear that the composite supply of works contract as in the subject case falls under (ii) attracting 18% GST. The said Notification 11/2017 was further amended on 21.09.2017 vide Notification No. 24/2017 - Cen Tax (Rate) and is reproduced as under:- SI.No. Chapter, Section or Heading. Description of Service Rate (per cent.) Condition 1 2 3 4 5 Chapter 99 All Services Section 5 Construction Services Heading 9954 (Construction services) (i) ....................................) 9 - (ii) composite supply of works contract as defined in clause 119 of section 2 of Central Goods and Services Tax Act, 2017.' 9 - (iii) Composite supply of works contract ...................... 6 - (iv) Composite supply of works contract ................... 6 - (v) Composite supply of works contract as 6 defined in clause. (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied by way of construction, er....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... WORKS pertaining to, (a) railways, excluding monorail and metro.............. 6 (vi)Services provided to the Central 6 Government, State Government, Union Territory, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of - (a) a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession; (b) a structure meant predominantly for use as (i) an educational, (ii) a clinical, or(iii) an art or cultural establishment; or (c) a residential complex predominantly meant for self-use or the use of their employees or other persons specified in paragraph 3 of the Schedule III of the Central Goods and Services Tax Act, 2017 6 Provided that where the services are supplied to a Government Entity, they should have been procured by the said entity in relation to a work entrusted to it by the Central Government, State Government, Union territory or local authority as the case may be Notification 31/2017 Dt.13.10.2017 "(vii) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017 provided by a subcontractor to the main contractor providing services specified in item (vii) above to the Central Government, State Government, Union territory, a local authority, a Governmental Authority or a Government Entity. 2.5 Provided that where the services are supplied to a Government Entity, they should have been procured by the said entity in relation to a work entrusted to it by the Central Government, State Government, Union territory or local authority, as the case may be. (xi) Services by way of housekeeping, such as plumbing, carpentering, etc. where the person supplying such service through electronic commerce operator is not liable for registration under subsection (1) of section 22 of the Central Goods and Services Tax Act, 2017. 2.5 Provided that credit of input tax charged on goods and services has not been taken [Please refer to Explanation no. (iv)]. (xii) Construction services other than (i), (ii), (iii), (iv), (v), (vi), (vii), (viii),(ix), (x)and (xi) above. 9 -"; Even with the amendment aforesaid the applicant's position has remained unc....