AI Drafter 
TaxTMI 
TaxTMI 
2025 (2) TMI 337
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....der, and the Regulations prescribed by the West Bengal Authority for Advance Ruling Regulations, 2018. 1.1 At the outset, we would like to make it clear that the provisions of the Central Goods and Services Tax Act, 2017 (the CGST Act, for short) and the West Bengal Goods and Services Tax Act, 2017 (the WBGST Act, for short) have the same provisions in like matter except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the WBGST Act. Further to the earlier, henceforth for the purposes of these proceedings, the expression "GST Act" would mean the CGST Act and the WBGST Act both. 1.2 The TCG Urban Infrastructure Holdings Private Limited is a real estate development and investment company engaged in development, construction, leasing and sale of commercial properties and providing the fit-outs and related infrastructure on hire to various tenants of the properties held by Bengal Intelligent Parks Private Limited (BIPPL) and BIP Developers Private Limited (BIPDPL), subsidiaries of the applicant in India and providing related consu....
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....ants of the properties held by BIPPL and BIPDPL were provided by M/s Boulevard Services Private Limited (BSPL), another subsidiary of the applicant. Later on, by way of a scheme of amalgamation BSPL is merged with the applicant. 2.2 The applicant states that by a Deed of Lease, the Governor of the State of West Bengal has granted to West Bengal Electronics Industry Development Corporation Limited (WEBEL) a lease for a period of 999 years of a plot of land in Block EP and GP in Sector V of Bidhannagar in the district of North 24 Parganas. The lease was granted with the object of developing the demised land for setting up of Electronics Industries. WEBEL has divided the demised land into diverse plots and has allotted the same for the purpose of setting up Electronics Industries. 2.3 The applicant states that WEBEL, by issuance of an Allotment Letter and by entering into the Deed of Sub-Lease, granted a sub-lease of Plot Nos. A2, M2 and N2 for a term of 90 years exclusively for the purpose of setting up of an electronics industry. This sub-lease was granted to the Bengal Intelligent Parks Private Limited (BIPPL) with an option to WEBEL to renew the sub-lease before it's expiry ....
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....ons, lighting etc. • Suspended ceiling and floor raceways for common areas only; • Sub mains, cables and distribution systems for common area and building mains up to entry to the tenant's premises; • Low tension system for the building common areas and feeder up to the tenant point • Power back-up/ DG set for essential equipment or as decided by the BIPPL/ occupants; • Electrical fixtures and fittings for common areas only; • Building water system including different pumping system • Building sprinkler firefighting system • Sewerage treatment plant and system for liquid waste • Any other specialized fit out, if needed by BIPPL 2.8 The applicant states that based on the aforesaid agreement, the applicant started entering into the agreements with the licensees for providing the fitted assets on hire basis. In this regard, it is important to note that the applicant after entering into the aforesaid agreement with BIPPL installed the mentioned assets and created the required infrastructure in common areas of 'Bengal Intelligent Park' as well as up to entry point of t....
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....at floor rise along with light fixtures and fittings in as is where is condition. Sprinkler system comprising fire detectors for true ceiling only. Fire detectors, alarm panel, false ceiling, sprinkler pipes will be arranged by the Sub Lessee. Air Conditioning system up to the floor Air Handling unit along with the existing ducting's and diffusers in as is where is condition. DG set emergency power supply on chargeable and availability basis as per agreed terms. Part II (Fully functional assets of standard quality for common areas) Electrical equipment comprising electrical wiring, distribution systems and electrical switchboard and luminaries (including fixtures and fittings excluding lamps). DG set with accessories. Sprinkler system comprising fire detectors, alarm panel, sprinklers pipe and sprinklers. Fit outs as per warm shell provision. 2.12 Current Practice followed by the Applicant The applicant states that since the inception of GST with effect from 01.04.2017, the applicant has been issuing tax invoices to the various tenants for hire of assets at a rate of @28% [Central Tax @14% and St....
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.... of Fitted Assets", it is important to determine the nature of supply i.e., whether the supply of hired assets constitutes a composite supply or a mixed supply. As per Section 2(30) of CGST Act, 2017, 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. In the instant case, the Applicant provides individual supply of assets, and the element of any principal supply is missing. Hence, supply of assets in the instant case cannot be treated as composite supply. The applicant further states that the term mixed supply is defined as per Section 2 (74) of CGST Act, 2017 which is as follows: • that the supply is consisting of two or more individual supplies of goods or services, or any combination thereof; • that such different supplies are made in conjunction with each other by a taxable person for a single price; • that such supply does not constitute a composite supply. As in th....
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....serial number 17 (viii) of the said notification as leasing or rental services and therefore, the supply received by the applicant from TCGUIH, being a mixed supply, would also be taxable @ 18% i.e., supply which attracts the highest rate of tax." (emphasis supplied) 2.15 In conclusion, the authority for advance ruling provided that supply on account of hiring of electrical equipment, sprinkler system comprising fire detectors for true ceiling, air conditioning system up to the floor Air Handling Unit with existing ducting's and diffusers, DG set emergency power supply would attract tax @18% under serial number 17 (viii) of the Notification No. 11/2017-Central Tax (Rate) dated 28.06,2017. ITC shall also be available on the tax charged by the supplier subject to the fulfilment of all the conditions under Section 16 of the CGST Act, 2017. 2.16 Divergent Approach/ Alternative View After obtaining the ruling of WBAAR as mentioned above, the applicant decided to relook into this matter and discussed the same with various experts. As a result, an alternative view has been formed in respect of the nature of services provided by the applicant to the tenants. The view is e....
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....s as per agreed terms. Part II (Fully functional assets of standard quality for common areas) Electrical equipment comprising electrical wiring, distribution systems and electrical switchboard and luminaries (including fixtures and fittings excluding lamps). DG set with accessories. Sprinkler system comprising fire detectors, alarm panel, sprinklers pipe and sprinklers. Fit-outs as per warm shell condition. 2.17 From the above, it is apparent that the applicant is providing assets for two areas - for sub-leased space and for common areas. The applicant submits that it is clear beyond doubt that the assets provided in common areas is for the use of all tenants and visitors. Therefore, it can be inferred that the assets provided in common areas as mentioned in Part II of the Second Schedule to the Agreement as mentioned above does not mean that the individual assets are provided to the Sun Knowledge Private Limited. Rather, the applicant provides the facilities for all its tenants by installing various assets in common areas and recovers hire charges for the same from each tenant including Sun Knowledge Private Limited. 2.18....
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....where is condition - The applicant clarifies that in a central air-conditioning system, all the components of the system are grouped together centrally, and conditioned air is distributed from that system to the required places through extensive duct work. The whole system can be divided into three parts: (i) Central Air Conditioning Plant Room (ii) Air Handling Unit (AHU room) (iii) Air Distribution system (Ducting) The plant room is located away from the room to be air conditioned. Other components are grouped together in an AHU and conditioned air is circulated through air distribution system i.e., ducting with the help of fan or blower to the room to be air conditioned. In the instant case, the applicant provides that inside the building, there is a central air conditioning plant in order to provide air conditioning facilities and supply of cooling air to each floor through AHU Duct systems, catering to the needs of individual tenants. The AHU is located in each floor wherefrom the tenants are responsible for installing the ducting's, diffusers etc. to its premise. Consequently, no individual assets are provided to tenants, instead, ....
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....ice' was defined under Section 65(104C) of the Finance Act 1994 which is as follows: "support services of business or commerce" means services provided in relation to business or commerce and includes evaluation of prospective customers, telemarketing, processing of purchase orders and fulfillment services, information and tracking of delivery schedules, managing distribution and logistics, customer relationship management services, accounting and processing of transactions, operational or administrative assistance in any manner, formulation of customer service and pricing policies, infrastructural support services and other transaction processing. Explanation. - For the purposes of this clause, the expression "infrastructural support services" includes providing office along with office utilities, lounge, reception with competent personnel to handle messages, secretarial services, internet and telecom facilities, pantry and security 2.22 The applicant submits that from the definition of 'Support Services' during the erstwhile service tax regime as mentioned above, it is apparent that support service includes any infrastructural or operational support that may ....
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....larification to argue that the services provided by TCGUIHPL should be classified as support services rather than leasing or renting services. The key points to present are: (i) Comprehensive Nature of Services: • Similar to data hosting services, TCGUIHPL provides a comprehensive range of services that include installation and maintenance of air-conditioning systems, fire sprinkler systems, DG sets, electrical installations, etc. • These services are essential for the proper functioning of the building and are not limited to mere leasing or renting of individual assets. • Services provided by TCGUIHPL are not passive supply of a service directly in respect of immovable property but are regarding supply of a comprehensive service related to infrastructure. Accordingly, infrastructure services cannot be considered as the services provided directly in relation to immovable property or physical premises. (ii) Not Directly Related to Immovable Property: • The assets provided by TCGUIHPL are integral to the infrastructure of the building and are not standalone movable properties. • The services involve....
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....ning systems, fire sprinkler systems, DG sets, and electrical installations. Given the scope of activities performed by TCGUIH, the nature of the provision is considered a comprehensive service rather than a simple supply of goods. 2.27 Based on the analogy drawn from the recent circular on data hosting services, applicant submits that the services provided by TCGUIHPL should be classified as support services under SAC 998599 with an applicable GST rate of 18%. This classification more accurately reflects the comprehensive nature of the services provided and ensures proper compliance with GST regulations. Submission of the Revenue 3.1 The concerned officer from the revenue refrains from expressing any view on the issue raised by the applicant. 4. Observations & Findings of the Authority 4.1 We have gone through the records of the issue as well as submissions made by the authorized representatives of the applicant during personal hearing. 4.2 According to the submission, the applicant is a real estate development and investment company engaged in development, construction, leasing and sale of commercial properties and providing the fit-outs and related infrastructu....
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....t pumping systems • Building sprinkler fire-fighting system • Sewerage Treatment Plant and system for liquid waste • Any other specialized fits out, if needed by BIPPL 4.4 The applicant used to pay tax @ 28% vide serial no 17 (iii) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 considering its supply of service of providing fitted assets to lessees under SAC 997314 from commencement of GST regime. It may be mentioned that one of the lessees of BIPPL namely Sun Knowledge Pvt Ltd approached to WBAAR with the following question: "Rate at which CGST &SGST is to be charged under SAC Code 997314 as appeared in the invoices submitted by the service provider TCG Urban Infrastructure Holdings Private Limited having GSTIN No. 19AADCS8821M1ZS" In the aforesaid case, Sun Knowledge Pvt Ltd had entered into an agreement with TCGUIH to avail facilities and services installed in the building as well as sub-leased space. It has been informed that inside the building, there is a central air conditioning plant in order to provide air conditioning facilities and supply of cooling air to each floor through installed Air Handling Uni....
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....hat predominant element. Even the intention of the applicant and the supplier both do not appear to be so. We are therefore on the same page of the applicant that the instant supply cannot be treated as a composite supply. 1.20 Now to determine whether the instant supply may be treated as a mixed supply, we need to examine whether the supply involves following characteristics: (1) that the supply is consisting of two or more individual supplies of goods or services, or any combination thereof; (2) that such different supplies are made in conjunction with each other for a single price; (3) that the supply does not constitute a composite supply. We have already expressed our view that the instant supply does not constitute a composite supply. Further, the supplies are made for a single price. Furthermore, in the instant case, we find that two or more individual supplies, independent of each other, are supplied in conjunction with each other out of which any particular supply does not bear the predominant element. In other way, the supply is a combination of two or more individual supplies without any principal supply against a single price....
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....pression "machine" means any machine, machinery, plant, equipment, apparatus or appliance cited in the headings of Chapter 84 or 85. 1.23 It thus appears that hiring of air conditioning machine and fire extinguisher would attract tax @ 28% and @ 18% respectively being the same rate applicable for supply of such items and when such are supplied in conjunction with each other for a single price, the supply being a mixed supply would attract tax @ 28%. However, in the instant case, we are of the view that air conditioning system and the fire extinguishing systems which have been installed in the building have lost its character of a movable property and thereby cannot be regarded as goods." 4.6 The applicant has submitted that central air conditioning systems along with components are grouped and process of circulation of air are performed through ducting to individual plots/tenants. We find that the applicant's scope of supply is restricted up to tap off points and applicant is not responsible for quality of input power supply. It is clear that the applicant gives leasing services of benefit of those machineries for smooth functioning of lessees. The individual machinery ....
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....9. The applicant contends that he operates as an independent entity that provides comprehensive support services to the BIPPL. This includes a range of infrastructure and fit outs such as air-conditioning systems, fire sprinkler systems, DG sets, and electrical installations to tenants. The applicant advocates that he is responsible for creating proper infrastructure and a facility in the building and therefore hiring of asset can be classified as other support system (998599). In regard to this submission, we like to draw attention to the explanatory note on the scheme of classification of service as available in the website of the GST Council where SAC 998599 "Other support service n.e.c" falls under SAC 99859 (Other support service) reads as follows: "998599 This service code includes business brokerage and appraisal services other than for real estate; business services of intermediaries and brokers; specialist advice other than for real estate, insurance and engineering (specialist services in art, specialist services for courts of law, etc.); services by agencies and agents on behalf of individuals seeking engagements in motion pictures, theatrical productions, model....
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.... applicant allows granting access to utilities of those scheduled fits outs sans transfer of possessions or control of the said immovable property against periodic rental payment from lessees of that demised plot. 4.11 The applicant has referred to Circular No. 232/26/2024 dated 10.09.2024 issued by the Central Board of Indirect Taxes and Customs, GST Policy Wing to pave the way of his argument that applicant's nature of service is a comprehensive pattern spanning of services that include installation and maintenance of air-conditioning systems, fire sprinkler systems, DG sets, electrical installations, with data hosting services involves a range of activities including operating data centers, ensuring uninterrupted power supplies, backup generators, network connectivity, firewall services, and monitoring and surveillance services as stated in circular [supra] in respect of data hosting service. The applicant advocates that services provided by him are essential for the proper functioning of the building and are not limited to mere leasing or renting of individual assets. 4.12 We have duly considered the argument made by the applicant. We find that the above-referred circular....