TaxTMI 
TaxTMI 
2025 (1) TMI 663
X X X X Extracts X X X X
X X X X Extracts X X X X
....ecame the starting point of a fresh enquiry, for assessment of tax, for the period 30.11.2017 to 30.09.2018. The Assessing Authority issued a show cause notice, dated 17.09.2019, proposing to assess the turnover of the petitioner @ 18%, on the ground that the transactions undertaken by the petitioner are Works Contract, as defined under Section 2 (119) of the GST Act. The petitioner objected to the same, on the ground that the activities of the petitioner would have to be treated as composite supply, as defined under Section 2 (30) of the GST Act, attracting GST @ 5% on the turnover. This contention of the petitioner was rejected and the Assessing Authority assessed the turnover of the petitioner @18% and raised a tax demand for Rs. 63,00,19,512/- (CGST of Rs. 31,50,09,756/- and SGST of Rs. 31,50,09,756/-) and a penalty of Rs. 63,00,19,512/-. 4. Aggrieved by this order, dated 20.11.2019, the petitioner moved an appeal before the 1st respondent. The 1st respondent, after hearing the petitioner, by her order, dated 20.10.2020, bearing No. ZH371020OD19206, rejected the appeal to the extent of the assessment of tax and interest payable on the said tax. However, the penalty of Rs. 63....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r completion of execution of the project would make it amply clear that the goods in the nature of Solar modules etc., supplied by the petitioner, in the course of the composite supply of goods, results in an immovable structure and consequently it would have to be treated as falling under the heading "works contract", as defined in Section 2 (119) of the CGST Act. 10. The learned counsel for the petitioner, in reply, would contend that projects of solar plants, fall within the ambit of the explanation in Sl.No.234 of Notification No. 01/2017-CT(Rate) dated 28.06.2017 and Sl.No.38 of Notification No.11/2017-CT(Rate) and the same would result in tax being levied @ 5%. 11. The learned counsel for the petitioner would also rely upon the decisions of Hon'ble Apex Court in Sirpur Paper Mills Limited v. The Collector of Central Excise (1998) 1 SCC 400; Commissioner of Central Excise, Ahmedabad v. Solid and Correct Engineering Works (2010) 5 SCC 122; Sri Velayuthaswamy Spinning Mills (P) Ltd v. The Inspector General of Registration and Ors MANU/TN/0164/2013:2013(2) CTC 551; Vodafone Mobile Services Limited v. Commissioner of Service Tax, Delhi (2018) 100 Taxmann.com 245 (Delhi); and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....le composite supplies or as works contract. 16. Note - 6, of the II Schedule, of the Act, states as follows: 6. Composite supply:- The following composite supplies shall be treated as a supply of services, namely:- (a) works contract as defined in clause (119) of section 2; and (b) supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration. 17. Though Section 9 is the main charging provision, the legislature, inserted Section 8, in the Act, for determining tax liability of composite or mixed supply of goods and services in the following manner:- Section-8. Tax liability on composite and mixed supplies.- The tax liability on a composite or a mixed supply shall be determined in the following manner, namely:- (a) a composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply; and (b) a mixed supply comp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Power Generating System is to be treated as a moveable property, it would have to be taxed under Entry 234 of Notification 1/2017-Central tax (Rate), dated 28.06.2017, at the rate of 2.5% CGTST and 2.5% SGST. The rate of tax in such a case is not disputed by either side. 22. If the supply of Solar Power Generating System is to be treated as work contract, the same would be taxable as "General Construction Services of power plants and its related infrastructure with SAC Code 995426 with effect from 28.06.2017. 23. The Hon'ble Supreme Court in T.T.G. Industries Ltd., Madras vs. Collector of Central Excise, Raipur (2004) 4 SCC 751, while considering the question of whether the supply of hydraulic mudguns and tap hole-drilling machines required for blast furnaces would be exigible to tax under the Central Excise Act, after considering the nature of the machinery and its usage, had held that such machinery erected at the site of the purchaser would amount to immoveable property, which could not be shifted without dismantling it and re-erecting it at another site. 24. In a subsequent judgment of Commissioner of Central Excise, Ahmedabad v. Solid and Correct Engineering Works, th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....which it is attached;" 25. It is evident from the above that the expression "attached to the earth" has three distinct dimensions viz. (a) rooted in the earth as in the case of trees and shrubs, (b) imbedded in the earth as in the case of walls or buildings, or (c) attached to what is imbedded for the permanent beneficial enjoyment of that to which it is attached. Attachment of the plant in question with the help of nuts and bolts to a foundation not more than 1½ ft deep intended to provide stability to the working of the plant and prevent vibration/wobble free operation does not qualify for being described as attached to the earth under any one of the three clauses extracted above. That is because attachment of the plant to the foundation is not comparable or synonymous to trees and shrubs rooted in earth. It is also not synonymous to imbedding in 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 onl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 immovable property so as to be immune from the levy of excise duty. Our answer to Question 1 is accordingly in the affirmative. 27. It may also be noticed that the Hon'ble Supreme Court also considered the judgment in T.T.G. Industries Ltd., Madras vs. Collector of Central Excise, Raipur, and held that the said judgment had come to be passed, on the basis of the facts in that case and had distinguished it on facts. 28. The learned Government Pleader had also relied upon the judgment of the Hon'ble Supreme Court in Duncan Industries Limited vs. State of Uttar Pradesh and Ors. In this case, there was a transfer of the Fertilizer business of the vendor, as an on going concern. For the purpose of completing the transaction a conveyance deed was executed for transferring the factory premises. The stamp duty authorities sought to include the cost of the plant and machinery, for the purpose of fixing the stamp duty. The vendor and the purchaser contended that the said machinery was moveable property, whic....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ishna Deo [AIR 1959 All 247 : (1959) 29 Comp Cas 476]. We are inclined to agree with the above finding of the High Court that the plant and machinery in the instant case are immovable properties. The question whether a machinery, which is embedded in the earth is moveable property or an immovable property, depends upon the facts and circumstances of each case. Primarily, the court will have to take into consideration the intention of the parties (sic party) when it decided to embed the machinery, whether such embedment was intended to be temporary or permanent. A careful perusal of the agreement of sale and the conveyance deed along with the attendant circumstances and taking into consideration the nature of machineries involved clearly shows that the machineries which have been embedded in the earth to constitute a fertilizer plant in the instant case, are definitely embedded permanently with a view to utilise the same as a fertilizer plant. The description of the machines as seen in the schedule attached to the deed of conveyance also shows without any doubt that they were set up permanently in the land in question with a view to operate a fertilizer plant and the same was not em....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... iii. Solar modules are arranged in panels and for optimum utilization, these panels are mounted on top of trackers. These trackers move the panels along the direction of the sun to capture maximum solar energy. These trackers are placed on a civil foundation, which is required to give a steady platform to the modules and the trackers. iv. Other than supply and installation of the generator, the appellant generally also undertakes a few civil works for the customers which are an integral part for making the system operational and form a part of the entire contract value. Sample copy of agreement between the appellant and FRV Andhra Pradesh Solar Farm-I Pvt. Ltd., (referred to as 'Developer' in the agreement) is attached as Annexure 7. Appellant has been referred to as "Contractor' in the said contract. 31. The description of Solar Power Generating System, by the appellate authority, is as follows: "It is evident from the said activities that the project has an element of permanence. But the appellant had taken a different stance by furnishing certain photographs of the project and stating that the solar modules/panels are merely fitted with nuts and bol....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t as defined at Section 2 (119) of CGST Act 2017 and is treated as supply of service in terms of serial No.6, Schedule II of GST Act, 2017. It falls under heading 9954, entry No.(ii) of S.No.3 of the table of notification No.11/2017 - Central Tax (Rate), dated - 28th June 2017 as amended from time to time and the applicable rate of tax is 18% (9% under Central tax and 9% State tax). 32. The description of the Solar Power Generating System, set out by the petitioner, is not disputed by the appellate authority. However, the appellate authority went on to hold that the Solar Power Generating System would be immoveable property on the following grounds, which can be extracted from the passage from the order of the appellant authority, as set out above: 1. Though the power generating system is fitted with nuts and bolts on the mounting structure, it would be immoveable as the very mounting structure is embedded in the earth. 2. The solar modules are fixed with a character of permanence and immovability and cannot be treated as moveable property. 3. The fixation of the solar modules on the civil foundation is for the permanent beneficial and enjoyment of the....