TaxTMI 
TaxTMI 
TaxTMI 
2019 (11) TMI 1453
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.... RULING, MAHARASHTRA. Brief Facts of the Case A. M/s Nikhil Comforts is a Partnership Firm, registered under the Indian Partnership Act, 1932 and having its registered office at 1003, Sampada, Arunodaya Nagar, Mulund (East) Mumbai 400 081 and sales office at Ground & 15` floor, Mulund Utkarsha CHS Ltd., Sajjan Wadi, Mithagar Road, Mulund (East), Mumbai 400 081. The firm is registered under the GST Act having GSTIN No. 27AAAFN0812H1ZP. B. M/s Nikhil Comforts entered into an agreement with Goa State Infrastructure Development Corporation Ltd. (in short GSIDC) for execution of Additional Air-conditioning work for the New building of Director of Education at Porvorim, Goa." GSIDC desires to get air-conditioning work for new building of Directorate of Education at Goa and Nikhil Comforts has agreed to do the works of supply of goods and services for agreed price. C. Goa State Infrastructure Development Corporation Limited (GSIDC)is a wholly owned Government Company of the Government of Goa registered under the Companies Act, 1956, with the Registrar of Companies, Panaji-Goa. The Registrar of Companies has allotted Certificate of Incorporation No. U75112GA2001SGC002954 (CIN) dated 20....
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....d to form and read and construed as part of this Agreement" 3. Clouse 6 of the Agreement read thus- "The following documents shall be deemed to form and be read and construed as part of this Agreement viz. i) Tender Documents for "Additional Airconditioning work for the new building of Directorate of Education at Porvorim" Goa" Volume I ii) Tender Documents for "Additional Airconditioning work for the new building of Directorate of Education at Porvorim, Goa" Volume II iii) Tender Documents for "Additional Airconditioning work for the new building of Directorate of Education at Porvorim Goa" Volume Ill 4. Clause GCC 16 of tender document Volume - I speaks about PART OF PERMANENT WORK DESIGNED BY THE CONTRACTOR (pg. 29 -30 of VOL -I) The Contractor shall design part of permanent work, wherever Contract provides, and submit to the Engineer for approval. The cover drawings, calculations, Specifications, operation and maintenance manuals and other information as shall be necessary to satisfy the Engineer as to the suitability and the adequacy of the design. Approval by the Engineer under this clause shall not relieve the Contractor of any responsibilities under this Contract.....
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....e deemed to have been carried out in the presence of the Contractor and the results of such tests shall be accepted as accurate. 7. Clause 2.2.2 of vol. I of tender document (page-16) defines SCOPE OF THE WORK The Scope of the Work is defined as "The scope of a "Additional Air Conditioning work for the new building of Directorate of Education at Porvorim, Goa." as defined in BOQ. (page no 16 of the tender document Vol. I) 8. The scope of work as per Bill of Quantity (BOQ) is as below: Item 1. EQUIPMENTS Supply, Installation, Testing and Commissioning (SITC) of the following Indoor and Outdoor units of the VRF/VRV System consisting of Inverter/Fixed scroll compressor. The outdoor unit shall have minimum two scroll compressors with at least One Inverter scroll compressor out of the mand shall be with environment friendly R410 A refrigerant. It should include anti-vibration pads, mounting arrangement, freight, lifting, shifting and positioning of Indoor and Outdoor units at respective locations. Item 2 COPPER REFRIGERANT PIPING Supply, Installation, Testing and Commissioning of Hard Copper Refrigerant Piping including insulation. The insulation for all suction pipes shall be ....
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....g provided by the Engineer-In charge. The scope of work includes the following: a) Excavation of pit of size 1.0x1.0x3.0 mtrs(min) and disposal of excavated soil. c) Watering GI pipe, 20 mm Class B, with funnel as per specs. d) Charcoal/salt as per specs(paid separately). e) Refilling the pit of size 1.0x1.0x3.0 mtrs (min) with soft black agriculture soil of minimum resistivity/transportation. e) Masonary chamber with proper foundation, cover plate and locking arrangement. f) Testing of earth value with earth megger and certifications of its value. g) watering arrangement(plumbing will be paid separately). (a) in soil strata Item 6.1 MISCELLANEOUS Supplying and erecting Iron, sheet metal work consisting of CR CA Sheets, Various sections of iron, Plates, Chequered Plates, Rods, Bars, MS pipes, etc. for panel board or any other purposes complete with bending, cutting, drilling and welding complete erected at the position with necessary materials duly painted with one coat of red oxide and two coats of enamel paint to match the switchgears or as per directions by the authority. The summery and the cost of above items as per the BOQ is as under: Name of Project: ....
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....th the advent of new technology, Chiller plant is being replaced by VRF system / plant. H. FOLLOWING IS THE SEQUENCE OF ACTIVITIES IN A CHRONOLOGICAL ORDER DURING EXECUTION OR COMPLETION OF AN AIR-CONDITIONING PROJECT * STUDY OF TENDER DOCUMENTS AND SITE SURVEY - Tender documents and drawings are thoroughly studied by HVAC design and planning engineer. The physical site survey is done by the design engineer and draftsman team and taking all the site details like area to be air conditioned, Orientation of building, exposed glasses, walls and its area, beam locations and its height beam, drain locations, outdoor unit locations etc. * HEAT LOAD ESTIMATION - Based on tender Design Basis Report and actual site survey, a fresh Heat-Load estimation is prepared and submitted to consultant for their further approvals. These heat-load calculations is different for different sites and depends upon application, building orientation, exposed glass area, wall thickness, number of people in the building, lighting and equipment heat generation. * PREPERATION AND APPROVAL OF SHOP DRAWINGS - As per approved heat-load estimation, type and capacities of VRF Air-conditioning equipment are selected.....
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....ntly fastened to the slab by means of female anchor fasteners, full threaded rod and angles. The supporting activity involves the drilling work in slabs / walls, fabrication works like cutting, welding angles/ full threaded rods. Since supports vary in sizes as well as the entity to be supported. * The back plate of hi-wall unit is properly / rigidly fixed to the wall. Similarly, cassette units are fixed from slab with the help of female anchor fastener and full threaded rod. * Outdoor units are installed on MS Platform / stand which permanently fastened to Concrete foundation with the use Male Anchor Fastners. * IN VRF systems multiple indoor units are connected to bank of outdoor units. The interconnection pipe size and Y-Branch sizes are software generated. The output containing main header copper pipes, branching pipes and Y-branch sizes differ for different combination of indoor units, their sequence. These software outputs are project specific to the project. The change in pipe sizing will affect the working as well as performance of the entire VRF system. Hence it is highly important to follow the shop drawing and software output while installation of copper pipes. The ha....
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.... * Vacuumization of entire VRF Refrigeration system. * Start Commissioning procedure for VRF unit as per OEM guidelines * Check for visual damage to the external casing of the unit or damage to the internal parts. * Confirm room is in a condition fit for commissioning to commence. Room cleaned and free of dust, secure with doors installed. * Start Commissioning procedure for VRF unit as per OEM guidelines * Release Refrigerant gas from outdoor unit. Charge additional refrigerant gas as per the copper pipe sizes and overall length. * Room wise temperature reading is prepared on hourly basis. J. It is summarized that supply/installation/erection and assembly of complete Air Conditioning plants were procured by the company and various equipment/components/material/parts and accessories were brought to the site of the customers GSIDC. The plant is installed /assembled mainly comprising of VRF 4-way Cassette units, VRF Hi wall units, VRF Outdoor units, electrical work, drain pump, interconnecting soft & hard copper pipes, cable tray, sheet metal ducts are fabricated at site and installed along with grills and diffusers. The ducts and piping are insulated at site and the pl....
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....immovable item. Totality of the plant cannot be shifted from one place to another, once it is installed at a particular place. It can be shifted only after dismantling the plant, which cannot be called "Air-conditioning plant" after it, is dismantled. 5. The Authority has erred making following statement that "we find their submission and agreement that the contract is considering clear demarcation of goods & services to be provided by the applicant" without considering conjoint reading of the all clauses of agreement, Tender document, Bill of quantity and also over looked the drawings and photographs submitted before the proceedings. 6. Your appellant craves to add, to amend, to alter, to delete any ground or grounds of appeal PRAYER Appellant prays to modify the impugned order suitably to cover under the definition of 'works contact' under sub section 119 of section 2 of the Maharashtra Goods and Service Tax Act liable to CGST/SGST/IGST covered under Sr. no 3 item no 3 of notification No 20/2017 (Central tax rate) dated 22/08/2017 SUBMISSION 7. The applicant- Company pursuant to the acceptance of its tender, entered into an agreement with M/s Goa State Infrastructure Develo....
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....n only the contracts in relation to immovable property i.e. in a contract of supply, where the property in goods passes in immovable, the nature of transaction would be "Works Contract". Similarly, under the Central Excise Act where the property in goods passes in immovable there would be no excisablity. Considering the similarity in both the statutes it would be safe to refer to the decisions and authorities under the excise statute for determining the nature of activity whether property passes in immovable or not. To have the attributes of excisable goods as understood in the Excise Law. They are mobility and marketability. The article in question should be capable of being brought and sold in the market a test which is too well established by series of decisions of the Court. There can be no doubt that if an article is an immovable property, it cannot be termed as excisable goods for purposes of that Act. From a combined reading of the definition of immovable property in Section 3 of the Transfer of Property Act, Section 3 (25) of the General Clauses Act, it is evident that in an immovable property there is neither mobility nor marketability as understood in the Excise Law. Whet....
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....ght to market. Goods which are attached to the earth and thus become immoveable do not satisfy the test of being goods within the meaning of the Act nor it can be said to be capable of being brought to the market for being bought and sold. Therefore, both the tests, as explained by this Court, were not satisfied in the case of appellant as the tube mill or welding head having been erected and installed in the premises and embedded to earth they ceased to be goods within meaning of Section 3 of the Act". In Mittal Engineering Works Pvt. Ltd. Vs. CCE 1996 (88) ELT 622 (SC) = 1996 (11) TMI 66 - SUPREME COURT; the Court was concerned with the exigibility to duty of mono vertical crystallizers which are used in sugar factories to exhaust molasses of sugar. After considering the material placed on the record it was held that the mono vertical crystallizer has to be assembled, erected and attached to the earth by a foundation at the site of the sugar factory. It is not capable of being sold as it is, without anything more. This Court, therefore, concluded that mono vertical crystallizers are not "goods" within the meaning of the Act and, therefore, not exigible to excise duty. In Triven....
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....terial/parts and accessories that have gone into the manufacture of CAPs. This is identifiable as CAPs in the market and is bought and sold as CAPs as is evident from the contract entered into between the appellant and the customers. This distinct product is not embedded in the ground like a tree or building, at the most some of its equipment/components are fixed by bolting, using nuts and bolts, to secure maximum operational efficiency and safety of the plant as a whole. 13. The case is decided by majority holding that it is immovable by saying that I am unable to accept this logic for holding the CAPs to be movables capable of being marketed. It is the independent function of the department, as held by the Apex Court in the case of Triveni Engineering and Industries Ltd. v. CCE [2000 (120) E.L.T. 273 (S.C.) = 2000 (8) TMI 86 - SUPREME COURT, to establish the marketability of any goods before subjecting them to levy of duty of excise and the same has got to be discharged by placing on record independent cogent evidence. In the instant case, the department has not been able to establish that the CAPs were capable of being taken as such to the market for being sold. Thus, the major....
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....assembly of the Air conditioning plant. If at all any dismantled Air conditioning plant could be taken to the market for sale that would be only an assortment of some components viz. VRF 4 -way Cassette units, VRF Hi wall units, VRF Outdoor units etc. but never the Air conditioning plant as a whole. Therefore, it is submitted that since the Air conditioning plant as a whole is not capable of being taken to the market for sale, it was not a marketable item. If the items assembled or erected at site and attached to earth/wall cannot be dismantled without substantial damage to its components and thus cannot be reassembled, then the items would not be considered as movable. 17. It is also pertinent to refer to the order of Government of India Ministry of Finance Department of Revenue Central Board of Excise & Customs through its order no 37B Order 58/1/2002-Cx dated 15th January 2002 has issued instructions at para 5 (iii) that- "Refrigeration/Air conditioning plants - These are basically systems comprising of compressors, ducting, pipings, insulators and sometimes cooling towers etc. They are in the nature of systems and are not machines as a whole. They come into existence only by....
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....Unabridged Dictionary of the English Language, the word 'air-condition' means (1) to furnish with an air-Page 1979 conditioning system; (2) to treat (air) with such a system; the word 'air-conditioner' means an air-conditioning device and the word 'air-conditioning' means (1) a system or process for controlling the temperature, humidity and sometimes the purity of the air in an interior, as of an office, theatre, laboratory, house, or the like; (2) an air-conditioning system or unit. As per The New Shorter oxford English Dictionary on Historical Principles, edited by Lesley Brown, Volume 1 A-M, 1993, the word 'air-conditioned' means having air-conditioning. The word 'air-conditioner' means an apparatus for air-conditioning. The word 'air-conditioning' means the process of cleaning air and controlling its temperature and humidity before it enters a room, building, etc. 9.3 Again, as per The Free Encyclopedia Wikipedia, the 'air-conditioner' is an appliance, system or mechanism designed to extract heat from an area using a refrigeration cycle. The construction of a complete system of heating, ventilation, and air conditioning' is referred to as HVAC. Some refer to air conditioner ....
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....t para 23 Customs and Central excise Tribunal Delhi has given distinction between "Air Conditioner Plant" and "window Air condition machine or Split Air conditioner. "23 Before we come to any conclusion, we would like to refer to McGraw-Hill Encyclopaedia of Science and Technology Vol. I, 5th Division. Relevant extracts from pages 201 and 202 are reproduced below: - "Air conditioning systems. - A complete air-conditioning system is capable of adding and removing heat and moisture and of filtering dust and odorants from the space or spaces it serves. Systems that heat, humidify, and filter only, for control of comfort in winter, are called winter air-conditioning systems; those that cool, dehumidify, and filter only are called summer air-conditioning systems, provided they are fitted with proper controls to maintain design levels of temperature, relative humidity, and air purity. "Design conditions may be maintained by multiple independent subsystems tied together by a single control system. Such arrangements, called split systems, might consist, for example, of hot-water baseboard heating convectors around a perimeter wall to offset window and wall heat losses when required, ....
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....ace is withdrawn, processed, and returned to the space to mix with the remaining air. In the language of the engineer, a portion of the room air is returned (to an air-handling unit) and, after being conditioned, is supplied to the space. A portion of the return air is spilled (exhausted to the outdoors) while an equal quantity (of outdoor air) is brought into the system and mixed with the remaining return air before entering the air handler. "Typically, the air-handling unit contains a filter, a cooling coil, a heating coil, and a fan in a suitable casing (Fig. 3). The filter removes dust from both return and outside air. The cooling coil, either containing re-circulating chilled water or boiling refrigerant, lowers air temperature sufficiently to dehumidify it to the required degree. The heating coil, in winter, serves a straightforward heating function, but when the cooling coil is functioning, it serves to raise the temperature of the dehumidified air (to reheat it) to the exact temperature required to perform its function, in micro-cosm, in room units in each space, as part of a self-contained, unitary air-conditioner, or it may be a huge unit handling return air from an ent....
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.... systems, heating systems and air ventilation systems etc. These grills bought from the petitioner are fixed in the immovable properties like various rooms, industrial sheds, car parking, toilets, kitchens, etc. for ventilation or for covering the opening of ducts of the air-conditioning systems. After fixing the grills on the buildings they become a part of the building. Many grills are fixed on the walls as dummy grills for beautification and interior decoration of the rooms, which are not used even for passing of the air either in the ventilation system or in the air-conditioning system. It is alleged that air-conditioning systems/projects are different from the air-conditioning machines. The grills manufactured by the petitioner are not part of air-conditioning machines but are accessories of the air-conditioning systems/projects as these are fixed on the ceilings or walls of the building. Hence they are not classifiable under Chapter 8415 of the Central Excise Tariff Act, as they are not attached with any machine nor do they form integral and inseparable part of air-conditioning machine nor change any temperature or humidity." 24. Keeping in view the principles laid down in....
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....tion of telecom tower as immoveable property: - * The 'permanency test', as established by the Supreme Court in the case of Commissioner of Central Excise, Ahmedabad v Solid and correct Engineering Works & Ors (2010 (5) SCC 122.) = 2010 (4) TMI 15 - SUPREME COURT (Solid and Engineering Works), is to be used to determine whether the equipment qualifies as immoveable property or not. If the machinery or equipment is permanently fastened or embedded to the earth, it qualifies as immoveable property. However, if the machine is fastened merely to provide a 'wobble free operation', it would not qualify as immoveable property. * In the present case, the entire tower and shelter is fabricated in the factory of the manufacturer and is supplied in a Completely Knocked Down (CKD) form. The equipment is fastened to the civil foundation for a 'wobble free operation' and to provide greater stability. A fixation which does not involve assimilation of the property and is necessary for a 'wobble free operation' cannot be considered as an immovable property by applying 'permanency test'. * The tower/shelter may be unbolted and reassembled without any damage to any other location. There is no i....
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....amental issue which needs to be decided is whether the towers and shelters are movable or immovable property. In this regard, it would be useful to refer to the relevant statutory provisions to examine, what would constitute as moveable or immovable property. The expression "moveable property" has been defined in Section 3 (36) of the General Clauses Act, 1897 as under: "Section 3 (36): "movable property" shall mean property of every description, except immovable property. 31. It is obvious that the answer to the question whether installation of Air conditioners and ducts, pipes in question are movable property, would depend upon whether they are immovable property. That is because anything that is not immovable property is by its definition "moveable" in nature. Section 3 of the Transfer of Property Act, 1882 does not spell out an exhaustive definition of the expression "immovable property". It simply provides that unless there is something repugnant in the subject or context, 'immovable property' under the Transfer of Property Act, 1882 does not include standing timber, growing crops or grass. Section 3 (26) of the General Clauses Act, 1897, similarly does not provide an exhau....
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....upply. PERSONAL HEARING 34. A personal Hearing in the matter was conducted on 04.11.2019, which was attended by Sanjay M. Gadkari, on behalf of the Appellant, wherein they reiterated the written submissions previously filed before us. The aforesaid hearing was also attended by Shri P.P. Sawant in the capacity of the Jurisdictional Officer in the instant appeal matter, who also reiterated the written submissions, filed before us. Discussions and Findings 35. We have gone through the submissions of the appellant and the jurisdictional officer and the records of the appellant. The appellant has submitted that they have entered into an agreement with Goa State Infrastructure Development Corporation Ltd (GSIDC) for execution of Additional Air conditioning work for the New building of Director of Education at Porvorim, Goa. 'The agreement is dated 21 August 2018, is for supply, installation, testing and commissioning of VRF Indoor & Outdoor Units suitable for R-410 Gas, refrigerant piping with insulation, drain piping with insulation, MS stands, cabling, Additional Refrigerant and associated electrical works etc. Thus, we find that they will be supplying various VRF Indoor and Outdoo....
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....conditioner unit in a room where the capacity of the AC depends on the size of the room. Also, much emphasis has been laid by the appellant on the fact that the unit is installed on the basis of shop drawings and a study of site. The markings are done for indoor unit locations, outdoor unit locations, copper pipes, cable trays and cabling. However, we find that the fact that a study of the site done before the installation of the unit does not make any installation a part of the property or an immoveable property. This cannot be a distinguishing factor as such studies are done even before installation of an air conditioner unit which also involves a study of the size of the room, the location of the window, laying down the piping etc. 40. It is argued by the appellant that the contract is for immoveable property because the Air Conditioning plant cannot be taken as such to the market for sale and totality of the plant cannot be shifted from one place to another, once it is installed at a particular site. It can be shifted only after dismantling the plant which cannot be called Air conditioning plant' after it is dismantled. This takes us to the Supreme Court judgement in the case ....
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....inery. It had purchased a large number of components and fabricated a few and manufactured the paper making machine at the site. If it is sold it has to be dismantled and reassembled at another site. We do not find any fault with the reasoning of the Tribunal on this aspect of the matter. Lastly, it was contended that the paper making machine was not really manufactured by the appellant. Various components and parts were purchased and a few of the parts were fabricated at the factory and the assessee ultimately assembled various parts of the machine. We are unable to uphold this argument also because it has to be seen whether a final product is something distinct and apart from the components that have gone into its production. What the appellant has erected in its factory is a paper making machine. It may have purchased various components to make the machine but nonetheless what has been produced is something quite different from the components that had been purchased. A new marketable commodity has emerged as a result of the manufacturing activity of the appellant. Marketability being a question of fact, we are of the view there is no scope for interference with the order pas....
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.... plants cannot be said to be "attached to the earth" within the meaning of that expression as defined in Section 3 of the Transfer of Property Act. (iii) The fixing of the plants to a foundation is meant only to give stability to the plant and keep its operation vibration free. (iv) The setting up of the plant itself is not intended to be permanent at a given place. The plant can be moved and is indeed moved after the road construction or repair project for which it is set up is completed. 44. We find ourselves that the observations, apply to the instant case. In the case before us, the fixation of the air conditioner units along with the pipes, though it is undoubtedly a fixture, is for the beneficial enjoyment of the units and in order to use them for cooling, it has' to be attached to the ceiling. The attachment, in such a case, does not make the air conditioning units a part of the land and as immovable property. The instant judgement prescribes the overarching tests for determining whether an item is movable or immovable, and it is this judgement and the judgement in Sirpur Mills (cited supra) which is required to be followed and applied, as opposed to the reliance placed....