TaxTMI 
TaxTMI 
2019 (11) TMI 1145
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....ions:- (a) Whether the proposed activity of setting-up of the data centre facilities as explained proposed to be undertaken by the Applicant would qualify as 'works contract' as per Section 2(119) of the Central Goods and Service Tax Act, 2017 and Section 2 (119) of the Karnataka Goods and Service Tax Act. 2017? (b) What is the rate of GST applicable on the proposed activities? 4. The applicant furnishes some facts relevant to the stated activity: 4.1 The Applicant is inter alia engaged in sale of IT products and services in relation thereof. The Applicant proposes to undertake projects for setting-up of data center facilities for its clients including government agencies/ bodies. Draft agreement along with scope of work ("hereinafter referred to as SOW") proposed to be executed by the Applicant for one such project has been submitted by the applicant. 4.2 A brief write up on the activities proposed to be undertaken by the Applicant in setting up of data centre is explained in detailed manner in the table below: Activities undertaken under various stages as per the draft SOW entered with the clients Nature of the activity explained 1. Civil, interior and exterior architec....
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....ct is basically a composite supply of both services and goods relating to immovable property. In this regard the applicant places reliance on decision in the case of State of Madras v. Gannon Dunkerley & Co. (Madras) Ltd = 1958 (4) TMI 42 - SUPREME COURT. and the Apex Court in the case of Gannon Daunkerley & Co. & Ors. Vs. State Of Rajasthan & Ors = 1992 (11) TMI 254 - SUPREME COURT. 5.2 The applicant then states that under the GST regime Section 2(119) of the CGST Act, 2017 defines the term 'works contract' as under:- "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;" 5.3 The Applicant submits that from the above definition, it is clear that to determine whether an activity falls under the definition of works contract, the following factors needs to be satisfied namely:- a. The contract is for building, construction, fabrication, completion, erection, installation, fi....
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....wiring, testing and installation of the same. Further, they were also contractually bound in the maintenance and operations of the elevators supplied to the clients. The question to be determined before the Hon'ble Apex Court was whether the same involved "sale of goods" or "Works Contract services". The Hon'ble Apex Court has provided a detailed analysis of the term Works Contract' and it was held that the term 'Works contract' as per Article 366(29A)(b) of the Constitution of India, 1949 encompasses a wide range and varieties of a contract. The applicant has given a detailed tabular presentation of the issue before the Apex Court, the analysis therein and the same elements being present in their case under consideration. We have taken note of the presentation made in Para A. 15. In the view of the above discussed Supreme Court Judgment, the Applicant submits that the term "works contract" is wider enough to include all the elements proposed to be undertaken by the Applicant. 5.8 The applicant further places reliance of the decision in the case of Ram Singh & Sons Engineering Works V. Commissioner of Sales Tax = 1978 (12) TMI 147 - SUPREME COURT where the Apex Court held that the....
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....uality Steel Tubes (P) Ltd. v. Collector of Central Excise, U.P. = 1994 (12) TMI 75 - SUPREME COURT, where the question involved was whether tube mill and welding heads erected and installed by the Appellant for manufacture of tubes and pipes was excisable. The Hon'ble Apex Court relied on the landmark judgements in the case of Union of India & Another v Delhi Cloth and General Mills Co. Ltd = 1962 (10) TMI 1 - SUPREME COURT, and Indian Cable Co. Ltd. V Collector of Central Excise, Calcutta = 1994 (9) TMI 72 - SUPREME COURT, and held that plant and machinery embedded to earth, structures, erections and installations are to be considered as immovable property. 5.13 In view of the above, the Applicant submits that activities proposed to be undertaken in setting up the data centre qualify as immovable property as the same is imbedded in earth as provided under the definition of 'attached to the earth'. This is substantiated by the following reasons namely:- 1. That the fixtures proposed to be set up are immovable property; 2. That they are attached to earth; 3. That such fixations to the foundation is only meant to give stability; 4. That the setting up is to be permanent at ....
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....works etc. The applicant has extensively explained and concluded that in both the situations the supply made by them qualifies to be treated as works contract. We proceed to examine the applicants arguments. 9. Section 2(119) of the CGST Act, 2017 defines the term 'works contract' as below:- "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; 9.1 The aforementioned definition of Works Contract requires that the contract or the supply shall be in relation to the various activities of building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning. Further the definition provides that these activities are required to be in relation to an immovable property. 9.2 The various activities undertaken by the applicant in relation to setting up of data centres are recapitu....
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....se works, especially the Civil works have a sense of permanence and cannot be dismantled and taken away. Moreover other works like electrical works are also such that they cannot be removed and relocated without substantial damage. Furthermore once the entire work has been completed, then the building acquires a new look and an identity in terms of its functionality. In other words once the contracted activities are carried out on the building then it acquires the identity of the desired data centres. Thus the contracted activities and the supply of the required material are in relation to an immovable property. 9.6 On the basis of the aforesaid facts its evident that the applicant has entered into a contract for carrying out the various listed activities leading to erection, fitting out, renovation and commissioning of data centres. The contract also involves transfer of property in goods. It is therefore opined that the proposed activities of the applicant are covered under the definition of Works Contract. 9.7 The applicant further states that the scope of the activity of works contract cannot be restricted in relation to immovable property alone, the same can be extended to a....