TaxTMI 
TaxTMI 
2022 (7) TMI 641
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....ilding, water supply arrangement, drainage, sewerage, road works, track works, power supply and general electrical works, OHE works, signal & telecommunication works and supply, installation and commissioning of machinery and plant in connection with setting up of Electric Loco Shed at Saiyedpur Bhitri, Uttar Pradesh (India). (3) The JV had made a bid for the tender and the said tender was allotted to the JV, and the Letter of acceptance (hereinafter referred to as LOA) bearing No. RVNL/BSB/SYH/1/1416 dated 24.09.2018 was issued to the JV. The JV has duly accepted the same and signed. (4) JV had awarded the contract to the JV partners on a back to back basis vide the JV agreement dated 10.10.2018 with the specific execution of the works contract between the partners. Applicant was allocated with the work of supply, installation and commissioning of the plant and machinery, mechanical engineering works, electrical works etc (5) The Applicant being one of the partners in the JV is engaged in providing works contract service as sub-contractor to JV for original works pertaining to RVNL. They execute and undertake composite supply of works contract as defined in clause (119) o....
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....CT(R), following conditions has to be fulfilled: a. The works should be a composite supply; b. It should be falling within the definition of works contract as defined in Section 2(119) of the Central Goods and Services Tax Act, 2017; c. Such works should be original works; d. Such original work supply should be by way of construction, erection, commissioning, or installation; e. Such original works should be pertaining to railways including monorail and metro (3) The term "Composite Supply" is defined in Section 2(10) as "composite supply means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply" (4) In case of Bharat Sanchar Nigam Limited vs UOI 2006 (002) STR 0161 (SC), it was held that if there is an instrument of contract which may be composite in form in any case other than the exceptions in Article 366(29-A), then unless the transaction in truth represents two distinct and separate contract....
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....nical work etc. Therefore, it can be very well said to be the contract covering various elements of works as stated within the meaning of the term works contract as per the definition given in section 2(119) of the GST act (9) JV has been allocated with the project by RVNL and further parts of the project are being divided between the partners of the JV in order to execute the complete project. Therefore, the main contract is allocated to the JV only responsibilities got divided between the partners. Merely dividing the responsibilities or work between the partners does not change the colour of the original contract which is the setting up of the electric loco shed which is immovable in the nature. (10) in order to execute the entire project, part of the work is allotted to the Applicant which is in relation to supply, installation and commissioning of the plant and machinery, mechanical engineering works and electrical works etc. thereby the work awarded to the Applicant in order to execute the complete contract has to be construed to be "works contract". (11) The Applicant carries out all the mechanical, electrical and machine related work in order to execute the entire ....
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....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 the meaning of Section 3 of the Act. Erection and installation of a plant cannot be held to be excisable goods (16) The above case has been distinguished in Commr. Of C. Ex., Ahmedabad Vs. Solid & Correct Engineering Works civil appeal nos.960-966 of 2003 where the assessee has attached the plant with nuts and bolts intended to provide stability and prevent vibration not covered as attached to earth. The Hon'ble Supreme Court in this case has held that "all that has been said by assessee is that the machine is fixed by nuts and bolts to a foundation not because the intention was to permanently attach it to the earth but because a foundation was necessary to provide a wobble free operation to the machine. At attachment of this kind without the necessary intent of making the same permanent, in our opinion, constitute permanent fixing, embedding or attachment in the sense that would make the machine a part and parcel of the earth permanently. In that view of the matter we see no difficulty in holding that the plants in question were not immova....
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....o specific definition given under notification No. 11/2017-CT(R) dated 28th June 2017. • The definition read as follows: "original works" means- all new constructions; * all types of additions and alterations to abandoned or damaged structures on land that are required to make them workable; * erection, commissioning or installation of plant, machinery or equipment or structures, whether pre-fabricated or otherwise; * In the instant case as per the contract, it clearly involves erection, commissioning or installation of plant, machinery, equipment and structures as well. * Thereby it can be construed to be original works. (25) As it is clear from the scope of work, it involves construction, erection, commissioning, as well as installation. Therefore, this condition is fulfilled. (26) The term 'railway' is not defined in the notification. The definition given for it under Section 2(31) of Railways Act, 1989 is as follows: "(31) "railway" means a railway, or any portion of a railway, for the public carriage of passengers or goods, and includes- (a)... ... (d) all rolling stock, stations....
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.... of M/s Lanco infratech Ltd Vs. Commissioner of Customs, Central Excise and Service Tax 2015-TIOL-768- CESTAT-BANG-LB, wherein it was stated that "we conclude, on the basis of the judgment in Larsen and Toubro Ltd. (SC-2008) that where under an agreement (whether termed as a works contract, turnkey or EN.' project contract), the principal contractor, in terms of the agreement with the employer/ contractee assigns the works to a sub-contractor and the transfer of property in goods involved in the execution of such contract passes from the sub contractor by accretion to or incorporation into the works, the principal contractor cannot be considered as having provided the taxable (works contract) service, enumerated and defined in Section 65 (105)(zzzza) ofthe Act.'' (34) Hence, it can be said that the sub-contractor is only an agent of the contractor and the work undertaken by him passes directly from the sub-contractor to the employer. As the work get transferred directly to the employer by the subcontractor the works contract remains the same and therefore leads to the conclusion that there is only one contract which is undertaken by the contractor as well as subcontr....
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....t on the matter. The Deputy Commissioner, CGST & Central Excise Division-II, Allahabad vide C.No. VI(30)16/Advance Ruling/Audit/Lko/2021/84 dated 12.01.2022 submitted his report wherein following comments were made- (i) the applicant is providing sub contract services to a JV who has been allotted work by RVNL for entire loco shed. (ii) construction of electric loco shed seems to be akin to an immovable property and with transfer of this property after works of building construction, fabrication, it may be considered as a work contract service. (iii) from available documents, the exact nature of works to be given by applicant to JV can not be ascertained. So, the nature of supply whether composite or not, can not be ascertained by his office. (iv) Benefit as per any notification should only be given as per due process of GST laws & relevant rules. It may not be proper to extend benefit, as per Notification No. 11/2017, unless it is proven to be composite supply. (v) there is no proceedings pending against the applicant at present. 7. The applicant was granted a personal hearing on 17.01.2022 which was attended by Shri Ravi Kumar Soman....
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....4B P. Way supply (steel items) 5A P. Way Linking (installation works) 5B P. Way Linking (supply and installation works) 6 Buildings 7A Miscellaneous works (other than steel items) 7B Miscellaneous works (steel items) 8 Supply of cement 9 Site Facility 10 Miscellaneous items of NER's US SOR 2012 S & T Engineering Works 11 Signal and Telecommunication items Mechanical Engineering Works 13A Supply, installation, testing and commissioning of major M&P items 13B Supply, installation, testing and commissioning of other M&P items 13C Supply and commissioning of tools, gauges, instruments and plants 13D Supply and commissioning of office equipment and furniture Electrical Engineering Works 16 to 30 Electrical works other than general services electrical work 33 General services Electrical works 12. As per the Joint Venture Agreement dated 10.10.2018, the distribution of share and responsibilities between the JV partners are as under- (a) Lead Partner M/s Indwell Constructions Pvt. Ltd- Share 60% (Approx) Responsibilities - (i) Key Activities -Fabr....
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....16 to 30 Electrical works other than general services electrical work 33 General services Electrical works 14.3 We find that the major part of the contract is supply of goods i.e. Machinery and Plant, tools, gauges, instruments, office equipment & furniture and electrical goods. These goods are delivered to the client (JV) by the applicant and such goods are used by the applicant to provide services of installation, testing, commissioning and electrical works. Without supply of these goods, the services cannot be supplied by the applicant and therefore we find that the goods and services are supplied as a combination and in conjunction and in the course of their business where the principal supply is supply of goods. Thus we find that there is a composite supply with supply of goods being the principal supply. 14.4 As per Section 2(119) of the CGST Act, 2017, "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 fo....
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....Company, which is formed by two or more entities, has a separate existence than that of the said entities. The applicant has himself submitted that they are providing sub-contract services in relation to supply and commissioning of machinery and plants, mechanical engineering, electrical works etc. to `JV'. The supply of goods/services by the applicant can't be bundled with the JV which is separate entity, both having their separate GSTINs. As such, the goods/services supplied by the applicant to JV are to be examined for the purpose of their coverage in works contract. 16.1 We find that the applicant has not claimed that the mechanical engineering work and electrical engineering work for installation of plant and machinery in the railway sites is immovable property and have submitted that it is the part of electric loco shed which is immovable property. The applicant has been entrusted the work of supply, installation, testing and commissioning of M& P items. 16.2 In case of M/s Sirpur Paper Mills Ltd. Vs. Collector of Central Excise, Hyderabad (1998 (97) ELT 3 (SC)), CEGAT recorded finding that whole purpose behind attaching machine to a concrete base was to prevent....
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....imbedding in the 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 can easily be detached from the foundation. So also the attachment of the plant to the foundation at which it rests does not fall in the third category, for an attachment to fall in that category it must be for permanent beneficial enjoyment of that to which the plant is attached. It is nobody's case that the attachment of the plant to the foundation is made for permanent beneficial enjoyment of either the foundation or the land in which the same is embedded. 16.5 For the goods/services supplied by the applicant to be covered in the works contract, it is necessary that the contracts enumerated therein should relate to immovable property. If the contract is otherwise or if the same results in movables, then it may be a composite supply but-not the works contract. 16.6 ....