TaxTMI 
TaxTMI 
2020 (12) TMI 837
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....h Entry No. 72 of Notification bearing SRO No. 306/2017-Finance Department, Government of Odisha to the services provided by them under the category of Information and Communication Technology)ICT @ School Project. 1.2. The Appellant is a Public Sector undertaking working under the administrative control of the Department of Telecommunications, Ministry of Communications and Information Technology, Government of India and is duly registered under the Central Goods and Service Tax Act, 2017 as well as Odisha Goods and Service Tax Act, 2017 in the State of Odisha having registration No. 21AAACT0061H1ZO. The Appellant is engaged in consultancy and engineering services pertaining cellular technology, information technology and other allied areas.. 1.3. The present appeal concerns, one such ICT project being implemented by the Appellant in the State of Odisha. The Odisha Madhyamik Shiksha Mission (herein after referred to as "OMSM"), Government of Odisha, has mandated the Odisha Knowledge Corporation Limited (hereinafter referred to as "OKCL") to implement ICT project in 4000 Government schools and Government aided higher secondary schools across the State of Odisha. Accordingly, ....
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....three pre-requisites are to be satisfied for the supply of services to qualify for the notified exemption; a. the supply has to be a supply of Service provided to the Central Government, State Government or Union Territory administration; b. such Service must be 'under any training program; c. the total expenditure of such Service is borne by the Central Government, State Government or Union Territory administration. 1.8. After thoroughly examining the contract details, the service details as said to be rendered, mode of payment details etc., the AAR Odisha vide its Ruling vide Order No. 03/ODISHA-AAR/18-19, dated 09.10.2018 = 2018 (11) TMI 712 - AUTHORITY FOR ADVANCE RULING, ODISHA, held that the Appellant is not entitled to the benefit of exemption under Entry No.72 of Notification No.12/2017-Central Tax(Rate). Dated 28.06.2017, and has given ruling as under:- "RULING" a. Recipient of the service OKCL is a body corporate which cannot be regarded as Government. b. The supply undertaken by the Appellant is in the nature of composite supply. It includes supply of goods and services which are not naturally bundled. Each of the co....
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....ppellant relies on the following points with a view to establish that the services provided by them are under training programme: i. All the activities undertaken under the ICT Project are naturally bundled, principal supply being that of provision of computer training; ii. The basic infrastructure under ICT Project is being developed to provide computer training to the students and teachers; iii. The ICT in Schools scheme has been introduced with an aim to promote computer literacy among the students and teachers; iv. BOOT Model achieves the object of imparting computer training and therefore, is preferred over outright purchase of assets; v. The Appellant is not providing operation or maintenance services; vi. There is no supply of goods during the period of contract. The Appellant has stressed upon the facts mentioned under point Nos. (v) & (vi) above which are detailed below: Point No.(v) The Appellant is not providing operation or maintenance services: The Appellant has contended that in terms of the agreement, during the period of contract (i.e. 5 years), the operation and maintenance of the entire IT infrastructu....
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....ears). This is also clearly provided in the agreement that the ownership of the entire hardware, software, other equipment, etc. will be transferred at zero value at the end of the contract period. In view of the above, it can be concluded that during the entire period of contract, the Appellant is not engaged in the supply of goods in as much as supply of goods is taking place only after the expiry of contract period of 5 years. It is to be noted that the Appellant is claiming depreciation of the IT equipment in its books of accounts and as per the accounting policy, the normal life span of IT equipment is 5 years. Thus, after 5 years, the net realizable value of IT equipment in the books of account of the Appellant reduces to zero. As the IT equipment does not have any realizable value in the books of accounts of the Appellant, the same are being transferred to SMED at zero value. Without prejudice to the above discussion regarding supply of goods, it is humbly submitted that even if some value is to be attributed towards supply of goods (equipment/infrastructure), the supply of goods here is ancillary to the principal supply of computer training service. As stated above....
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.... of goods. Conversely, in the application as well as in the additional submissions submitted by the Appellant before the Ld. AAR, the Appellant has emphasized on the fact that supply under the ICT Project involves supply of goods as well as supply of services, and while supply of services is the principal supply, supply of goods is merely an ancillary supply taking place at the end of the contract period, at zero value. The Appellant would like to highlight that as per the contract entered into between the Appellant and OKCL, title in the goods/infrastructure is transferred to SMED and not to OKCL. In such a case, even by applying Para 1(c) of Schedule II, it cannot be said that the Appellant is supplying goods to OKCL. (e) With respect to services provided to Government of State of Odisha, the Appellant submitted that OKCL is a corporation established under Companies Act, 1956, which has been mandated by OMSM, Government of Odisha to act as an implementing agency to implement the ICT Project, on its behalf. Further, admittedly, the funds for implementation of this project are being provided by OMSM to OKCL, for further release to the Appellant, in accord....
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....or scheduled PH due to pandemic COVID19. The Appellant requested in their letter to conduct the PH online through Video Conference(VC) as per the instruction issued by CBIC dated 27.04.2020. Taking into consideration of the Appellant's request, the opportunity of the Personal Hearing was offered through Video Conference on 09.09.2020 at 4.00 P.M.. Shri Raju Malhotra, GM(F&A), M/s.TCIL & Shri Sandeep Chilana, Advocate, on behalf of the Appellant attended the PH through Video Conference on 09.09.2020 at 4.00 PM. The authorised advocate Shri Sandeep Chilana during the PH, told that all their grounds are already mentioned in the written submission. During the PH, the Members of AAAR asked some questions and the authorised advocate complied as mentioned below:- Q1: Whether the agreement made with OKCL includes tax or excludes tax? Ans: The advocate replied that the agreement made for Rs. 107,14,83,000/- includes tax. It clarified that under Para 3.2 of the agreement, it is clearly mentioned that the price and total value of goods and services shall be firm for the contract period and shall be inclusive of all the taxes, duties, levies and all other charges includin....
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....n SRO No.306/2017, dated 29.06.2017, issued by the Finance Department, government of Odisha, which is reproduced below for ready reference:- To elaborate, Entry No. 72 of Notification No.12/2017-Central Tax being relevant is quoted below: SL.No. Chapter, Heading, Group or Service Code Description of Services Rate (per cent) Condition (1) (2) (3) (4) (5) 72 Heading 9992 Services provided to the Central Government, State Government, Union territory administration under any training programme for which total expenditure is borne by the Central Government, State Government, Union territory administration. Nil Nil * Entry No. 72 of Notification SRO No. 306/2017-Finance Department is identical to the Entry No. 72 of Notification No.12/2017-Central Tax. 4.3. On going through the aforesaid notification, it is noticed that the following three pre-requisite are to be satisfied in order for the supply to qualify for the notified exemption, under Entry No.72 of Notification No.12/2017-Central Tax(Rate).. (a) The supply has to be a supply of Service provided to the Central Government, State Government or Union Territory Administrati....
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....n of India. Article 300 of the Constitution of India is applicable to Government and does not apply to OKCL. OKCL being a registered entity under the Companies Act 1956 can execute all contracts in its own name and capacity. The Union or State Government , can also execute contracts made in the exercise of the executive power of the Union or of a State, and shall be expressed to be made by the President, or by the Governor of the State under Article 299 of the Constitution of India. Article 299 of the Constitution of India does not apply to OKCL. Article 300 of the Constitution of India provides that State can sue or be sued as juristic personality in the name of Union of India and Government of a State. Therefore, OKCL is neither the State Government nor a part of the State Government of Odisha or the Central Government and therefore the supplies by the Appellant to OKCL should not be held to be a supply to Government. 4.8. No counter argument was put forth by the Appellant to substantiate their claim that the supplies were made to the Government. Therefore, we fully agree with the findings arrived at in the Advance Ruling given by the Authority for Advance Ruling(AAR), Odisha ....
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...., taxability of which has been discussed in the foregoing paragraphs. Moreover, under Schedule-II (1) (c) of the CGST Act, 2017/SGST Act, 2017, it is clearly defined that any transfer of title in goods under an agreement which stipulates that property in goods shall pass at a future date upon payment of full consideration as agreed, is a supply of goods. 4.10.1. On perusal of Para 1.1.1 of the agreement between OKCL & TCIL, the tender is for supply, installation and commissioning of Computer Hardware, Connected Accessories, Software provided by OKCL, Maintenance of Equipment and Provision of Computer Education Services in 4000 Government and Government Aided High Schools of Odisha on BOOT model under ICT@School Project.. The Appellant also has affirmed in their appeal under Para 1.16 to 1.21 to carry out the above jobs for a total consideration of Rs. 107,14,83,000/- which is payable by instalments by OKCL. On plain reading of the job carried out by the appellant includes supply of goods, installation & commissioning of hardware, repair maintenance equipment and computer education service. Under 4.1 of the agreement, it is clearly mentioned that the payment is for goods and serv....