TaxTMI 
TaxTMI 
2023 (1) TMI 330
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....and Power Ltd. (hereinafter referred to as 'Applicant') is engaged in the business of manufacture, sale and installation of electrical equipments, ranging from LED lightings, industrial and domestic switchgears, metering solutions, wires and cables, etc. The Applicant has its registered office in the state of Haryana, holding GSTIN 06AAACH0165J2ZT, wherein the manufacturing facility of the Applicant is situated. The Applicant also has its branch office in the state of Chhattisgarh, located at Jai Bhole Complex, behind Mata Garage Pandri, Raipur-492001, Chhattisgarh, holding GSTIN 22AAACH0165J1ZO and it falls within the jurisdiction of Division-I, Range-II, Raipur/ Division-2, Circle-7, Raipur. In the instant case, the Applicant has entered into an agreement with M/s. Adani Infra (India) Ltd. (hereinafter referred to as 'AIIL'), vide Service Order No. AIIL/HPL/SO/C/UV/33/20 dated 26.06.2020, as amended by subsequent service orders dated 18.07.2020, 21.08.2021 and 31.10.2021, for providing services for 'design, engineering, supply, testing at site, freight and transit insurance, erection, installation and commissioning and trial run of Highway Lighting System as per IRC-SP-84-2....
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.... fighting pole, luminaries, cable, feeder panels, high mast, DG set and its accessories for complete highway including flyover at 0+000 chainage, major/ minor junctions, cross roads, structures, rest area, truck lay byes, toll plaza, canopy, busboys and bus shelters) and associated civil work for complete lighting solution as per Concession Agreement and IRC-SP-84-2014 for Bilaspur to Pathrapali road project from 0.000 km to 53.300 km in the State of Chhattisgarh. Scope of work covers all activities involved in the Lighting works at various locations including highway and flyover/VUPS/bridges area across the length of the project as indicated in TCS Schedule (Annexure-VI) and as per approved design basis by IE/NHAI. Supply, installation & testing of electrical materials as per BOQ. All the fixtures, panels, wires/ cables, lights, earthing materials, and other items complete in all respect, shall confirm to MoRTH specifications and other relevant codes as a minimum. Entire work shall be carried out in accordance with relevant technical specifications and applicable standards including IRC-SP-84-2014 upto the satisfaction of Employer/NHAI/lE. Appro....
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....es (except GST), inclusive of all cost towards required Manpower, Material, Equipment, Tools & Tackles, Insurance, Safety equipment, PPE, Statutory Compliance, License, Work Permit, Mobilization, Demobilization, Lodging & Boarding, Transportation, Travelling to all the site visit/ Employer/'s office visit/ IE's office visit/ NHAI, Per diem charges, Material shifting, Material inspection charges, Testing charges, all Liaison work, etc. all necessary to complete the scope of work but excluding Goods & Service Tax (GST)." 2.3 The applicant has submitted that the work to be executed by the Applicant is essential for completion of the works in relation to road for which contract has been awarded to the Concessionaire by NHAI and forms part of the contract awarded by NHAI to Concessionaire. The Applicant is bound to follow the standard provided in the MANUAL OF SPECIFICATIONS AND STANDARDS FOR FOUR LANING OF HIGHWAYS THROUGH PUBLIC PRIVATE PARTNERSHIP published as IRC-SP-84-2014 as the same are part of Model Concession Agreement executed for construction and maintenance of Highway. All the works to be executed by the Applicant including approval of design for works, approval of vendor....
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....site supply of works contract; ii) The works contract should be for construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation or alteration, of road or bridge or tunnel or terminal for road transportation; iii) The said road or bridge or tunnel or terminal should be for use by general public. 3.4 The first condition is that there should be a composite supply of works contract, which term has been defined under Sec. 2(119) of CGST Act. As per the said definition, works contract is 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. Thus, under the CGST Act, a contract would qualify as a works contract only if such contract is for construction, erection, installation, commissioning, etc. of an immovable property and property is transferred in the goods involved therein. 3.5 That, it is pertinent to determine whether the contr....
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....ng whether a property is immovable or not. 3.8 Reference is made to the decision of Hon'ble Supreme Court in the case of Triveni Engineering & Industries Limited vs CCE,2000 (120) E.L.T. 273 (S.C.). CCE, Mumbai vs Hutchison Max Telecom Limited, 2008 (224) E.L.T. 191 (Bom.), Josts Engineering Co. Ltd. Vs. CCE, Mumbai -111,1998 (99) E.L.T. 662 (Tribunal), That, the aforesaid decision has been further affirmed by the Supreme Court vide its judgment reported at 2002 (146) ELT 29 (SC). Alfa Laval (India) Ltd. Vs. CCE, Pune,1998 (99) E.L.T. 649 (Tribunal). 3.9 That, it can be derived from above judicial pronouncements that an immovable property would consist of the following characteristic - • It should be permanently attached to or affixed to the earth. • It should come into existence as an immovable property. • It cannot be shifted from one location to other location without dismantling it. In other words, only individual parts can be shifted and property as such cannot be shifted. • The dismantling of the property would cause substantial damage to the said property. • The said property is not attached to earth mere....
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....nnot be said to be completed and capable for use by the general public unless the lighting system is installed and start functioning. 3.13 Highway lighting system is important for safety of road users. It enables the road users, mainly cyclists, pedestrians, bullock cart drivers, motorists, etc. to see more accurately and easily the carriageway and its surrounding areas at night. Though, on a highway, all the vehicles have their own headlight, but it is not possible to fully depend on headlights for night driving, as in case all the vehicles are to drive with the full headlight on, the glare problem can cause severe accidents. Thus, highway lighting is required to illuminate the carriageway and its surrounding. The lighting on highway improves traffic flow conditions as the speed of traffic improves due to better lighting. Presence of light helps in reduction of number of accidents and reduction in highway crimes at night. 3.14 Further, the importance of lighting has been emphasized even in 'Manual of specifications and standards for four laning of highways through public private partnership': IRC-SP-84-2014 published by Indian Roads Congress. Para12.3 of the said manual prov....
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.... the National Highway-111, which involves design services, supply of equipment, installation of equipments/ system, operation and maintenance to facilitate its long term use; • Highway lighting system is part and parcel of the construction of road transportation provided for use by general public and highway opens up for general public only when the highway lighting system is installed and starts functioning. 3.20 Hence, in view of the aforesaid ruling it was applicants contention that the project to be executed by them is classifiable under Entry 3(iv)(a) of Not. No. 11/2017-CT (R) and thus, exigible to GST @ 12% (CGST 6% and SGST 6%). 3.21 That, a doubt may arise as to whether the Entry 3(iv)(a) of Not. No. 11/2017-CT (Rate) is applicable in case of services provided by the sub-contractor to the main contractor. 3.22 that the entry 3(iv) (a) neither prescribes the identity of the service provider nor the identity of the service recipient. It merely requires that the supply of works contract should be towards road, bridge, tunnel or terminal for road transportation for use by general public. Accordingly, it is submitted that the said entry is qua the service ....
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....cant appeared before us for hearing on 11.03.2022 and reiterated their contention. He also furnished a written submission along with sample copies of work order which has been taken on record. 5. The legal position, analysis and discussion: - At the very outset, we would like to make it clear that the provisions for implementing the CGST Act and the Chhattisgarh GST Act, 2017 [hereinafter referred to as "the CGST Act and the CGGST Act"] are similar and thus, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the CGGST Act, 2017. Now we sequentially proceed to discuss the issues involved in the ruling so sought by the applicant and the law as applicable in the present case. 6. Section 96 of CGST Act, 2017, Authority for advance ruling, stipulates as under: - Subject to the provisions of this Chapter, for the purposes of this Act, the Authority for advance ruling constituted under the provisions of a State Goods and Services Tax Act or Union Territory Goods and Services Tax Act shall be deemed to be the Authority for advance ruling in respect of that State or Union terri....
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....produced hereunder. 7.1 Rate of GST on intro-State supply of specific services with Service Code Tariff (SAC) Government of India Ministry of Finance (Department of Revenue) Notification No. 11/2017-Central Tax (Rate) New Delhi, the 28^th June, 2017 G.S.R......(E).- In exercise of the powers conferred by sub-section (1) of section 9, subsection (1) of section 11, sub-section (5) of section 15 and sub-section (1) of section 16 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, and on being satisfied that it is necessary in the public interest so to do, hereby notifies that the central tax, on the intra-State supply of services of description as specified in column (3) of the Table below, falling under Chapter, Section or Heading of scheme of classification of services as specified in column (2), shall be levied at the rate as specified in the corresponding entry in column (4), subject to the conditions as specified in the corresponding entry in column (5) of the said Table:- Table S.No. Chapter, Section or Heading Description of Service Rate (per cent.) Co....
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....bject. 99541 General Construction services of buildings. 99542 General construction services of civil engineering works 995421 General construction services of highways, streets, roads, railways, airfield runways, bridges and tunnels This service code includes construction services i. for formations of highways, including elevated highways, roads, streets, other vehicular and pedestrian ways and open car parks; ii. footpaths, traffic-calming structures, cycle tracks, etc.; iii. vehicular and pedestrian underpasses and overpasses; iv. construction or restoration of road surface and parking lots with asphalt, concrete, etc.; v. installation services of crash barriers, low separating walls, traffic signs, etc.; vi. creation, maintenance and signposting of tracks and paths; vii. painting services of markings on roads, parking lots and similar surfaces; viii. railway roadbeds for long-line and commuter rails, street tramways and underground or elevated urban rapid transit systems; ix. railway electrification structures including laying services of ballast and rails; ....
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....clinics, religious establishments, courts, prisons, museums and other similar buildings 10 995416 Construction services of other buildings nowhere else classified 11 995419 Services involving repair, alterations, additions, replacements, renovation, maintenance or remodeling of the buildings covered above 12 Group 99542 General construction services of civil engineering works 13 995421 General construction services of highways, streets, roads, railways and airfield runways, bridges and tunnels 14 995422 General construction services of harbours, waterways, dams, water mains and lines, irrigation and other waterworks Further, the 'Explanatory Notes to the Scheme of Classification of Service', indicates the scope and coverage of the Scheme of classification of service and is a guiding tool for classification of services, the Explanatory notes to SAC 995421 read as under: EXPLANATORY NOTES TO SCHEME OF CLASSIFICATION OF SERVICES UNDER GST Preface The Scheme of Classification of Services adopted for the purposes of GST is a modified version of the United....
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.... xiii. construction services for airfield runways, including taxiways, aprons and related airport structures other than buildings; xiv. construction of bridges, highway, road and railway tunnels and tunnels for underground railway traffic. 99546 Installation services 995461 Electrical installation services including electrical wiring & fitting services, fire alarm installation services, burglar alarm installation services This service code includes i. special trade installation services involving the installation of basic electrical wiring circuits or fittings in buildings and other construction projects; ii. electrical wiring and fitting services for emergency power supply systems; iii. electrical services arising from the installation of appliances; iv. installation services of meters; installation services of fire alarm systems; v. installation services of burglar alarm systems at the construction site; vi. installation services of all types of residential antenna including satellite antenna; vii. installation services of cable television lines within a building; installati....
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....way (for short 'MoRTH'), Government of India (`GoI') relating to development, maintenance and management of 4 laning of Bilaspur to Pathrapali section of NH-111 (NH-130) from 0.000 km to 53.300 km in the State of Chhattisgarh under Bharatmala on 'Hybrid Annuity Mode'. Subsequently, Concessionaire entered into an agreement with AIIL for Engineering, Procurement and Construction (EPC) works of development, maintenance and management of 4 laning of Bilaspur to Pathrapali Section of NH-111 (NH-130) from 0.000 km to 53.300 km in the State of Chhattisgarh. ln background of the aforesaid facts i.e. award of contract for development, maintenance and management of NH-111 by NHAI to Concessionaire and award of contract for EPC works relating to said project by Concessionaire to AIIL. Thereafter, AIIL in turn has sub-contracted the work of Highway Lighting System for the project which reads as under: - 'Design, engineering, supply, testing at site, freight and transit insurance, erection, installation and commissioning and trial run of Highway Lighting System as per IRC-SP-84-2014 for the project of development, maintenance and management of 4 laning of Bilaspur to Pathrapali Sect....
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....vor to liaise with all the concerned departments and officials to ensure timely execution of the work. Extra claims of whatsoever nature shall not be entertained. For any delays or non-clearance of the site hurdles, the Contractor is only eligible for the time extension as decided by the Employer's representative. .... 1.11 All civil works including excavation, wall and road cutting as applicable shall be in the scope of work including layer wise back filling, RMC & steel for foundation work shall be inclusive in scope of work. Horizontal direct drilling, pipes for cable protection, brackets required to fix poles on crash barriers, concrete drilling, restoring to its original condition, etc. also included in the scope of contractor including overhead or underground crossing required, if any, as per the rile conditions. Any exclusion from scope of contractor shall be Nil. 1.26 Contractor shall procure materials from approved vendor list (Annexure-V) only. Contractor shall get approval of sources and materials to be procures, within this approved vendor list, from IE/NHAI before procurement. 1.27 ...... 1.28 Contractor shall carry out the ....
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....usted upon the applicant. 7.4.3 It is further seen that SAC entry no. 99546/ 995461 pertains to "Installation services" and very specifically to Electrical installation services including electrical wiring & fitting services, fire alarm installation services, burglar alarm installation services. It can also be seen that this SAC entry no. 995461 includes "special trade installation services involving the installation of basic electrical wiring circuits or fittings in buildings and other construction projects". Besides this the said SAC entry no. 995461 also encompasses in its ambit electrical installation services of illumination and signaling systems for roads. Similarly, SAC entry no. 995423 pertains to general construction services of long-distance underground/overland/submarine pipelines, communication and electric power lines (cables); pumping stations and related works; transformer stations and related works and similarly. Besides, these 998736 Installation services of electrical machinery and apparatus n.e.c. This service code includes installation of electric motors, generators and transformers and electrical machinery not elsewhere classified. Further, SAC entry no. ....
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....r eligibility of the benefit of as provided under S.no. 3(iv) (a) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended is that the services should fall under "Construction services" under 9954, which is not the case here. Accordingly, we come to the considered conclusion that in the instant case the basic requirement, for eligibility to the said exemption as provided under S.no. 3(iv)(a) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended, of getting covered under Heading 9954 under "Construction service" supplied by way of construction of a road stares unfulfilled, as the instant supply pertains to electrical "Installation services" of illumination for roads, as discussed above. 7.5 Now coming to the second criteria as to whether the instant supply of installation of highway lighting system undertaken by the applicant is a "Composite supply", we would first like to go through the definition of Composite supply which stands defined under Section 2 (30) of the CGST Act as under: "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....
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....ure materials from approved vendor list (Annexure-V) only. Contractor shall get approval of sources and materials to be procured, within this approved vendor list, from IE/NHAl before procurement'. Clause 6.2 provides that 'The Basic Price shall be inclusive of applicable Taxes (except GST), inclusive of all cost towards required Manpower, Material, Equipment, Tools & Tackles, Insurance, Safety equipment, PPE, Statutory Compliance, License, Work Permit, Mobilization, Demobilization, Lodging & Boarding, Transportation, Travelling to all the site visit/ Employers office visit/ lE's office visit/ NHAI, Per diem charges, Material shifting, Material inspection charges, Testing charges, all Liaison work, etc. all necessary to complete the scope of work but excluding Goods & Service Tax (GST)'. Clause 8.3 provides that 'Contractor shall be paid 50% Basic amount of milestone mentioned at clause 8.2 as secured material advance on receipt of material at site after approval of Employer, within 30 days from the date of Proforma invoice after supply of material at site. The same shall be adjusted in RA bill on prorate consumption basis. For the purposes of secured material adv....
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....cond criterion of "composite supply" stands fulfilled in the instant supply of "installation services" of "highway lighting system" made by the applicant. 7.6 Now we move on to the third criterion as to whether the work of installation of highway lighting system supra, rendered by the applicant qualifies being "Works Contract", much essential for availing the claimed exemption as provided under S.no. 3(v)(a) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended, vide Notification 01/2018 Central Tax (Rate) doted 25.01.2018. 7.6.1 We find that under the scheme of things as envisaged under GST law, the definition of "Works Contract" has been restricted to any work undertaken for an "Immovable Property" unlike the erstwhile VAT and Service Tax provisions where works contracts for movable properties were also considered. The Works Contracts has been defined in Section 2(119) of the CGST Act, 2017 as "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 proper....
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....vable property would include in its ambit land and the things which are attached to or embedded in the lard such as buildings, bridges etc. However not everything that is attached to the land would automatically constitute an immovable property. Whether the particular property is an immovable property or not is subject to the peculiar facts of each case. Hon'ble courts have pronounced various judicial pronouncements laying down certain criteria for determining whether a property is immovable or not. From these decisions, it can be derived that an immovable property would consist of the following characteristic - • It should be permanently attached to or affixed to the earth. • It should come into existence as an immovable property. • It cannot be shifted from one location to other location without dismantling it. In other words, only individual parts can be shifted and property as such cannot be shifted. • The dismantling of the property would cause substantial damage to the said property. • The said property is not attached to earth merely for operational efficiency of the said property such as to prevent it from wob....
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....ing lighting pole, luminaries, cable, feeder panels, high mast, etc.) depending on the nature of road, to make it functional and operational for public use. 7.7.1 This stand by the applicant is not tenable and is unsustainable under law in as much as, there remains no ambiguity as regards the fact that the instant work entrusted upon the applicant is electrical "Installation services" of high way lighting system as elaborately discussed in the preceding para, therefore arbitrarily and artificially extending and expanding the ambit of said independent services of "installation services" of highway lighting system to "construction services" of roads appears to be an afterthought to avail be benefit of exemption as provided under S.no. 3(v)(a) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended, vide Notification 01/2018 Central Tax (Rate) dated 25.01.2018, which otherwise stands ineligible. The claimed benefit of Notification supra, is available to construction services of road per se and cannot be artificially expanded to the instant subject matter of electrical "installation services" of high way lighting system for illumination of roads. Thus, citing refe....