TaxTMI 
TaxTMI 
TaxTMI 
2019 (10) TMI 481
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....ould like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a reference is specifically made to any 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, the expression 'GST Act' would mean CGST Act and MGST Act. 2. FACTS AND CONTENTION - AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus- "A. STATEMENT OF THE RELEVANT FACTS HAVING A BEARING ON THE QUESTION (ON WHICH THE ADVANCE RULING IS SOUGHT) 1. Vertiv Energy Private Limited (hereinafter referred to as "the applicant") having its corporate head office at Mumbai is, inter-alia, engaged in the manufacture of various types of UPS systems, which serve as an alternate source of power for a specific period of time in the event of power failure. The applicant also supplies installation commissioning and maintenance and other services to its customers. 2. An UPS is typically used to protect hardware such as computers, data centers, telecommunication equipment or other electri....
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....alogen FRLS), connectors; * Accessories, earthings necessary for works; * Spares for DLP of 3 years; * Surge protection devices; * Special tools and test equipment; * Remote monitoring equipment and accessories including voltage free contacts for * Alarms; * Spares; * Furniture for C$05 equipment * Any other supply needed to provide a complete UPS system 3.3. Scope of services 3.3.1 The services to Uninterruptible Power Supply (UPS) system shall include, but not be limited to the following: * Design, manufacture, supply, system assurance, installation, testing and commissioning of the UPS System; * Presentations, reviews and audit support as specified in the Specification; Transportation, Handling and Storage of the material; * Insurance Cover for the material supplied till taking over by Employer; User's Certificates and Test Reports as per specifications; * Documentation; (Chapter 1 5) * Provide all information, documents requested by Signaling, Telecommunication and AFC Contractors; * Interface management as specified in the Specification; * System operations and maintenance support services; * Training for operations and maintenance staff; ....
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....sting Commissioning of complete system at interlocking stations/depot with earthing 13 0 10 8 Per station/ Depot 68,250.00 21,15,750.00 2. Documentation, Installation, Testing Commissioning of complete system at secondary stations with earthing 26 1 27 8 Per station 68,250 42,31,500.00 D. Training S.N. Description Quantity (JICA) Unit Unit rate (INR) Price (INR) Part- 1 Part-2 1. Trainer's mandays 60 0 Man-days 8,000.00 4,80,000.00 2. GRAND TOTAL 30,50,00,001.00 9. A copy of the contract entered with DMRC is submitted. 10. A perusal of the above tender document and contract makes it clear that the applicant is required to supply the UPS systems to DMRC. Further, the applicant is also required to undertake the erection, installation and commissioning of the UPS system at the sites designated by DMRC. Further, separate consideration for supply of goods and services have been provided. In other words, it is not a case where the supply of goods and services is for one lump-sum consideration. 11. Further, the UPS system are manufactured from the applicant's factory at Maharashtra. The....
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....goods stands transferred to DMRC prior to the installation/erection of the UPS system. 20. In the pre-GST regime, the applicants were discharging Central Excise Duty and VAT/SaIes tax on the clearance and sale of UPS system. Further, the service of erection, installation and commissioning of UPS system was treated by the applicants as 'works contract service and thus the applicants were paying service tax accordingly. 21. The applicant submits that DMRC also treated the service of erection, installation and commissioning of UPS system undertaken by the applicants as 'works contract in the pre-GST regime and deducted WCT TDS, as applicable. The documents corroborating this factual position regarding the tax treatment in the pre-GST regime are collectively enclosed. STATEMENT CONTAINING APPLICANT'S INTERPRETATION OF LAW AND/OR FACTS AS THE CASE MAY BE IN RESPECT OF THE QUESTIONS (S) ON WHICH ADVANCE RULING IS REQUIRED A. APPLICANT'S ELIGIBILITY TO FILE PRESENT ADVANCE RULING APPLICATION. A.1 Section 95(c) of the CGST Act defines the term applicant as under: "applicant" means any person registered or desirous of obtaining registration under this Act" ...Emphasis Supplied A.2 ....
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....assification of any goods or services or both; (b) applicability of a notification issued under the provisions of this Act; (c) determination of time and value of supply of goods or services or both; (d) admissibility of input tax credit of tax paid or deemed to have been paid; (e) determination of the liability to pay tax on any goods or services or both; (f) whether applicant is required to be registered; (g) whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both, within the meaning of that term." ....Emphasis Supplied A.8 In view of the above, an advance ruling may be sought on the issue of classification of any goods or services and also on the issue as to whether a particular activity/transaction results in a supply of goods or supply of services. Further, a ruling may also be sought regarding the liability to pay tax on any supply of goods or services or both. A.9 The applicant submits that the question for determination in the present application concerns classification of the supply made by the applicant under the contract with DMRC. In other words, the ap....
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....ng lie before the Maharashtra Authority for Advance Ruling. A. 15 In view of the foregoing, the applicant submits that it is eligible to file the present advance ruling application before the Maharashtra Authority for Advance Ruling, Mumbai, appointed vide Notification No. MGST-1017/CR 193/Taxation, dated 24.10.2017 read with Section 96 of Maharashtra Goods and Service Tax Act, 2017. B. QUESTIONS REQUIRING ADVANCE RULING The question on which Advance Ruling is sought by the applicant is as under: * Whether the contract entered into with DMRC for supply, erection, installation, commissioning and testing of UPS system qualifies as a supply of works contract under Section 2(119) of the CGST Act? * If yes, whether such supply made to DMRC would be taxable at the rate of 12% in terms of Sr.No. 3(v) of Notification No. 11/2017 - C.T. (Rate), as amended w.e.f. 25.1.2018? APPLICANT'S INTERPRETATION C.1 Under the contract entered with DMRC, the applicant is supplying UPS system and also undertakes erection, installation, commissioning and testing etc., of the UPS system at the sites designated by DMRC. The applicant's understanding is that the applicant is making two supplies to DM....
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....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;" C.8 Schedule II of the CGST Act specifies the activities to be treated as supply of goods or supply of services. Entry 6(a) of Schedule Il is reproduced as under: "6. Composite supply The following composite supplies shall be treated as a supply of services, namely (a) Works contract as defined in clause (1 19) of section 2; and" C.9 Entry 6(a) of Schedule II of the CGST Act has deemed a 'works contract under Section 2(119) as a 'supply of service'. C.10 Section 2(119) of the CGST Act provides that a contract for construction, erection, installation, maintenance, etc. of an 'immovable property' which involves transfer of property in goods during the execution of such contract would qualify as a 'works contract'. C.11 In the present case, the applicant first supplies the UPS system to DMRC. Thereafter, the applicant also undertakes erection, installation, commissioning and testing etc., of the UPS sy....
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....expression "attached to the earth" has three distinct dimensions, viz. (a) rooted in the earth as in the case of trees and shrubs (b) imbedded in the earth as in the case of walls or buildings or (c) attached to what is imbedded for the permanent beneficial enjoyment of that to which it is attached. Attachment of the plant in question with the help of nuts and bolts to a foundation not more than 1½ feet deep intended to provide stability to the working of the plant and prevent vibration/wobble free operation does not qualify for being described as attached to the earth under any one of the three clauses extracted above. That is because attachment of the plant to the foundation is not comparable or synonymous to trees and shrubs rooted in earth. It is also not synonymous to imbedding in earth of the plant as in the case of walls and buildings, for the obvious reason that a building imbedded in the earth is permanent and cannot be detached without demolition. Imbedding of a wall in the earth is also in no way comparable to attachment of a plant to a foundation meant only to provide stability to the plant especially because the attachment is not permanent and what is attached c....
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....be uninstalled without causing any significant damage to its parts and can be shifted to another location, if required. C.18 Th applicant further submits that though certain foundation/civil work is required in the installation/commissioning of the UPS system to make it operational, this very fact does not mean the UPS system becomes an immovable property. C.19. Thus, the applicant submit that the contract for supply of UPS system to DMRC does not qualify as a 'works contract' under Section 2(119) of the CGST Act since the installed UPS system cannot be said to result in the emergence of an immovable property. C.20 Once the contract does not qualify as a 'works contract under Section 2(119) of the CGST Act, the applicant is of the view that the concessional rate of tax under the amended Sr. no. 3(v) of Notification no. 11/2017-C.T. (Rate) dated 28.6.2017 will not be available in respect of the supply made by the applicant to DMRC. C.21 However, since certain foundation/ civil works is required for making the UPS system operational, a doubt may arise that the UPS system supplied by the applicant results in the emergence of an immovable property and therefore the entire contract ....
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....property and the services rendered by them is not related to immovable property. Further, even if the contract with DMRC is treated as works contract the rate of duty will be as metro is not included. The rate of GST for Works Contract Service has been prescribed in serial number 3 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 as amended by Notification No. 20/2017-Central Tax (Rate) dated 22.08.2017 & notification no.24/2017-Central Tax (Rate) dated 21.09.2017 and is as under. Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act 2017, supplied by way of construction, erection, commissioning, or installation of original works pertaining to - 6% CGST + 6%. SGST (a) Railways, excluding monorail and metro; (b) a single residential unit otherwise than as a part of a residential complex; (c) low-cost houses up to a carpet area of 60 square metres per house in a housing project approved by competent authority empowered under the Scheme of Affordable Housing in Partnership' framed by the Ministry of Housing and Urban Poverty Alleviation, Government of India; (d) low cost houses up to a carpet area of 60....
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....activity was, construction and erection of UPS system for DMRC, Delhi. Their Maharashtra office manufactures UPS and supplies to the DMRC and their Delhi office performs the commissioning and erection of part. They raised the question, whether the whole supply could be treated as works contract. 05. OBSERVATIONS AND FINDINGS: We have gone through the facts of the case, documents on record and submissions made by the applicant. Applicant's corporate head office at Mumbai manufactures various types of UPS systems. Applicant, formerly known as Emerson Network Power (India) Pvt. Ltd also supplies installation, commissioning, maintenance & other services to its customers. The applicant has submitted that they have entered into a contract with Delhi Metro Railway Corporation ("DMRC") for Supply, installation, testing, and commissioning of UPS systems and the scope of the works includes but not limited to supply, manufacture, inspection, packing, shipping, transportation, storage, delivery, handling, insurance, installation, interfacing, integration, testing & commissioning, maintenance support, spares, special tools, test equipment, training, software, documentation and providing DLP....
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....and the applicable rate of tax on the supply made to DMRC. On perusing the submissions of the applicant & the documents submitted by them, jurisdictional office, we find that the basic issue before us is whether in the subject case there is supply of Works Contract or Composite Supply. In the subject case we find that the applicant first despatches the goods to DMRC under an Invoice and E-Way Bill. Thus the title in property of the said goods are transferred as soon as the delivery is completed. It is only thereafter that installation, etc takes place. We agree with the applicant's contention that the contract for supply of UPS system to DMRC does not qualify as a 'works contract' under Section 2(119) of the CGST Act since the installed UPS system cannot be said to result in the emergence of an immovable property. We shall now discuss the provisions relating to Works Contract and Composite Supply. GST Sch.-Il clearly mentions that the following are supply of services:- a. construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, b. works contract including transfer of property in goo....