TaxTMI 
TaxTMI 
TaxTMI 
2025 (8) TMI 547
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.... sought advance ruling in respect of the following questions: a) What is the HSN Code and GST rate applicable, in case of our proposed pure supply of Artificial Turf/ Artificial Grass and other sports flooring? b) What is the HSN Code and GST rate applicable, in case of our proposed supply and installation of Artificial Turf/Artificial Grass and other sports flooring which will be in the nature of works contract? 4. Admissibility of the application: The applicant sought advance rulings on classification of "Artificial Turf/Artificial Grass" and also classification of "Artificial Turf/Artificial Grass along with installation" and the GST rate applicable thereon. The applicant claims that the questions are covered under "Classification of goods and/or services or both" and "determination of the liability to pay tax on any goods or services or both" and hence the application is admissible under Section 97(2)(a) and 97(2)(e) of the CGST Act 2017. 5. Brief Facts of The Case: The applicant has furnished the following facts relevant to the issue: 5.1 The Applicant proposes to commence a business with a wide range of artificial turf products for different sporting uses. The proposed....
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....eir proposed business operations contain both i) Pure supply of the proposed products and ii) Supply and installation of the proposed products. 6. Applicant's Interpretation of law: The applicant submitted their interpretation of law in respect of the questions, at para 3 above, on which the advance rulings have been sought for, inter alia stating as under: 6.1. The supply of Artificial Turf is a supply of goods which is chargeable to tax @ 12%. The details of Entry as per Notification 1/ 2017 dated 28th June 2017 is as under. Schedule II - 6% S. No. Chapter/Heading/Sub-heading/Tariff item Description of Goods 144. 5703 Carpets and other textile floor coverings (including Turf), tufted, whether or not made up 6.2. Supply and installation of Artificial Turf/Artificial Grass and other sports flooring is in the nature of Composite supply of works contract. 6.3. Reusability of the Artificial Turf/Artificial Grass installed on basis of the specific requirement of the Customer; a) The installation of Artificial Turf/Grass are reusable subject to loss of adhesive material and negligible damage to the main item. b) The Artificial Turf/Grass are installed on the specific Desi....
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....eration of a Civil structure or any other original works meant predominantly for use other than for commerce, industry or any other business or profession and therefore liable to tax rate of 18% under Entry no. 3(xii) of notification no. 11/2017-Central Tax (Rate) dated 28th June 2017 as amended. The relevant notification is reproduced as below: S. No. Chapter, Section, Heading or Group Service Code (Tariff) Service Description 1. Chapter 99 All Services 2. Section 5 Construction Services ... 3. Heading 9954 (Construction Services) i ...................... ... ii ...................... ... iv. ...................... ... v ...................... ... vi. ...................... ... vii....................... ... viii. ...................... ... ix...................... ... x ...................... ... xi ...................... ... xii. Construction services other than (i), (ia), (ib), (ic), (id), (ie), (if), (iii), (iv), (v), (va), (vi), (vii), (viii), (ix), (x) and (xi) above. Explanation.-For the removal of doubt, it is hereby clarified that, supply by way of services specified at items (i), (ia), (ib), (ic), (id), (ie) and (if) in column (....
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.... Pvt. Ltd. 2019 (26) GSTL 280 (AAR-GST). v. Further, reliance is placed on the settled principle of law that 'A contract must be read as a whole', In M.O.H. Uduman and Ors. v. M.O.H. Aslum, AIR 1991 SC 1020, the Apex Court held that it is settled canon of construction that a contract of partnership must be read as a whole and the intention of the parties must be gathered from the language used in the contract by adopting harmonious construction of all the clauses contained therein. The cardinal principle is to ascertain the intention of the parties to the contract through the words they have used, which are key to open the mind of the makers. Similar observations were reiterated in the case of Novartis Vaccines and Diagnostics Inc. vs. Aventis Pharma Limited, 2010 (2) Bom CR 317. vi. Further the supply and installation of Artificial Turf/Artificial Grass and other sports flooring, qualifies to be composite supply of works contract as per section 7 (1)(d) of the CGST Act, 2017 which creates a deeming fiction for the service stipulated under Schedule II appended to the CGST Act. Entry No. 6(a) of the Schedule II states that 'composite supply of works contract' as defined in claus....
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....be for permanent beneficial enjoyment of land to which it is attached. iii. In the case of Virgo Industries (Eng.) Pvt Ltd vs CCE, Chennai, 2015 (4) TMI 247 (Mad.), the Madras High Court observed that an item fixed to the earth can continue to be movable if the same is capable of being shifted to another place without having to dismantle the same into constituent components and without causing substantial damaging to such individual components. iv. In the case of T.T.G. Industries Ltd. v. Collector of Central Excise 2004 (5) TMI 77 SC, the Supreme Court treated a machine as immovable owing to permanency in its installation. 6.9 Further we submit that any item qualifies as an immovable should satisfy the following parameters. i. Equipment / machinery / plant must be permanently fastened or embedded to earth, mere attachment for operational purposes do not give such goods a color of immovable property; ii. Such goods cannot be brought to and sold in the market; and iii. Such goods cannot be shifted from one place to another without substantial dismantling and causing damage to individual components. 6.10 In the light of the above relevant provision and notifications of th....
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.... 01/2017-Central Tax (Rate), dated 28.06.2017, which are relevant to determination of Classification of a product & are as under: (iii) "Tariff item", "sub-heading" "heading" and "Chapter" shall mean respectively a tariff item, sub-heading, heading and chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975). (iv) The rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of this notification. Accordingly we make a reference to the Section Notes and Chapter Notes of the relevant Chapters of the Customs Tariff and also the corresponding Harmonised Commodity Description and Coding System Explanatory Notes of World Customs Organisation (WCO). 12. It is observed that Chapter 57 of the Customs Tariff Act 1975 deals with Carpets and other textile floor coverings and Note 1 to Chapter 57 specifies, for the purpose of this chapter, that the term "Carpets and other textile floor coverings" means floor coverings in which textile materials serve as the exposed surface o....
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....hapter heading 5703 and attract 12% GST in terms of entry number 144 of Notification 1/2017-Central Tax (Rate) dated 28.06.2017, as amended. 14. Now we proceed to consider the second question which is about classification of the supply when the impugned product is supplied and installed, which will be in the nature of works contract. It is observed that the applicant intend to classify the supply of the impugned product and its installation as works contract, under SAC code 995427. The issue involves classification of the service and thus, we invite reference to Explanation (ii) at para 4, of the Notification No. 11/2017-Central Tax (Rate), dated 28.06.2017, which is relevant to determination of Classification of a service & is as under: (ii) Reference to "Chapter", "Section" or "Heading", wherever they occur, unless the context otherwise requires, shall mean respectively as "Chapter, "Section" and "Heading" in the annexed scheme of classification of services (Annexure). (iii) The rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far a....
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....ve. In the instant case, it is an admitted fact that the artificial Turf/Grass installed is reusable subject to loss of adhesive material and negligible damage to the main item i.e. Turf/Grass, as it is installed on the specific design and dimension requirement of the customer. Thus the reusability of the artificial Turf/Grass is subject to losses. Therefore the impugned service is covered under SAC 995428. 16. Now we proceed to examine whether the impugned services amounts to works contract or not. In this regard we invite reference to Section 2(119) of the CGST Act 2017, wherein "Works Contract" has been defined to mean 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. "Immovable Property" is not defined under CGST Act 2017. As per Section 3(26) of General Clauses Act 1897, "immovable property" shall include land, benefits to arise out of land, and things attached to the earth, or permanentl....