TaxTMI 
TaxTMI 
2025 (10) TMI 784
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....ing shall be binding unless the law, facts or circumstances supporting the original advance ruling have changed. 4. Advance Ruling obtained by the applicant by fraud or suppression of material facts or misrepresentation of facts, shall render such ruling to be void ab initio in accordance with Section 104 of the Act. 5. The provisions of CGST Act, 2017 and DGST Act, 2017 are pari-materia and have the same provisions in like matter and differ from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the DGST. Act and vice-versa. 1. M/s. NEC Corporation India Private Limited. A-31, 1st Floor, Lajpat Nagar, Part-II, New Delhi. 110024. (hereinafter referred to as 'The applicant'), having GSTIN 07AACCN3496J124 have filed an application for Advance Ruling under clauses (a) & (b) of Section 97(2) of CGST Act 2017 read with Rule 104 of CGST Rules. 2. Statement of Facts: (i). The Applicant is engaged in providing solutions and services in multiple areas including public safety. private network, retail. IT. en....
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....nd restoration; and (f) Integration of current Government databases into the surveillance system (v). The Applicant has furnished the functional architecture of surveillance system and various components (on page 20-24 of the application) as follows: Functional Architecture of Surveillance System under Delhi Safe City Project (vi). As indicated in the diagram above, surveillance system shall have below components: (a) Cameras - Under the project approximately 10,000 CCTV cameras are to be installed on designated poles which will be permanently fixed to the ground. CCTV will be sharing real time feeds with the field units involved in redressing women's safety-related situation of distress (such as police patrol vans like Prakhar vans. emergency police station officers, beat patrolling personnel, emergency response vehicles, etc.). (b) Other field devices - Other field devices to be setup as a part of overall surveillance system includes: • Poles with cantilevers/ arms which will act as permanent structures to house cameras and other devices etc. and will be affixed to the ground: • industrial grade switches; ....
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..... Upon setting up, the surveillance system shall attain a degree of permanence as the equipment forming part of the said system are not intended to be moved from the structures they are installed upon in ordinary course, therefore the same qualifies to be an immovable property. It is submitted by the Applicant that the service of setting up of surveillance system will qualify as works contract services as per Section 2(119) of Central Goods and Service Tax Act, 2017and that the said project has been awarded to the Applicant with an intent to establish surveyance system which will help Delhi Police in providing security to general public and it is expected that once installed. the surveillance system shall function for distant future. (viii). The scope of work of the Applicant under the contract entered into with CDAC comprises of the following two activities to be carried out by the Applicant for CDAC: (i) Implementation of surveillance system; and (ii) Operation and maintenance of the surveillance system. (ix). As regards the implementation of surveillance System. the contract entered by the Applicant with CDAC specifies that it is for implementation, opera....
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....visions for a scalable system. (b) Commissioning of surveillance system: • Imparting training to police officials: • Helpdesk setup, procurement of equipment, edge devices, COTS software (if any), licenses. Physical Security and Housekeeping setup; • User Acceptance testing (UAT) and phase wise go-live; • Final acceptance test and go-live etc. (x). Further, in respect of the operation and maintenance of the surveillance system, the Applicant is required to maintain and manage all hardware and software forming part of the surveillance system during the contract period (3 years as mentioned in the application). This would typically include repair and maintenance of hardware and software and ensuring that the surveillance system continues to function as per the agreed parameters. Functions to be performed by NEC under operations and maintenance phase include rendering following activities: • Preventive, repair maintenance and replacement of surveillance system; • Provide a centralized help desk and Incident Management Support till the end of contractual period recurring refresher trainings for th....
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....2017-Central Tax (Rate) dated 28 June 2017 chargeable to GST at the rate 12% till 31 December 2021. (c). The term "original works" is defined under Clause 2(zs) of Notification 12/2017 Central Tax (Rate) dated 28 June 2017, as follows: "original works" means- all new constructions; (i) all types of additions and alterations to abandoned or damaged structures on land that are required to make them workable; (ii) erection, commissioning or installation of plant, machinery or equipment or structures, whether pre-fabricated or otherwise; (d). The specific inclusion of composite supply of works contract, including original works (which means erection, commissioning or installation of plant, machinery or equipment or structures) under Clause 3(vi) of Notification 11/2017-Central Tax Rate, rendered the eligibility to avail the rate of 12% in respect of works to be executed under the project. (e). The clause 3(vi) of the mentioned notification was amended by notification number 22/2021-Central Tax (Rate) dated 31 December 2021, wherein the words "Governmental Authority and Government Entity' were removed from SI. no.3(vi) of the notification. Subsequent ....
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....y functions to be performed by NEC while operating and maintaining the surveillance system are as under: • Providing manpower for operation and management activities: • Facility Management Services at Command & Control Centre: • Maintenance of infrastructure such as cameras, OFC network, Poles with cantilevers/ arms. junction boxes, other devices installed in data centres, ICCC, police stations etc. • Operation and management planning and monitoring; • Assistance in Integration with other integrations as and when required by adding more use-cases: • Replacement of defective parts with spare parts to ensure smooth functioning of the Surveillance system; • SLA reporting etc. (c). Composite Supply has been defined as 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 present case. NEC is providing more than two supplies involving goods and service....
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....perty wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract." (d). Relevant extracts of Serial No. 3 of Notification number 11/2017-Central Tax (Rate) dated 28 June 2017 provides as follows: SL.No. Chapter. Section or Heading Description of Service Rate (per cent.) Condition 3 9954 Heading (Construction services) (vi) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, other than that covered by items (i), (ia), (ib), (ic), (id), (ie) and (if) above provided to the Central Government, State Government, Union territory or a local authority or a Government authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of - (a) a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession; (THIS ENTRY WAS AMENDED TO REMOVE "A GOVERNMENTAL AUTHORITY OR GOVERNMENT ENTITY" WITH EFFECT FROM 01 JANUARY 2022 AND THEREAFTER THIS ....
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....ing 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. (ii). Further, 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. Illustration: where goods are packed and transported with insurance, the supply of goods, packing materials. transport and insurance is a composite supply and supply of goods is a principal supply; (iii). Wherein. as per section 2(90) of CGST Act. 2017 the term "principal supply" means the supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary. (iv). As per the Annexure 1: Bill of materials, the NEC corporation has submitted the item wise unit rate of each of the major nature of supplies such as: 1. Integrated command. control....
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....). The issue involved is to decide whether the supply is treated as "Works Contract" as defined in clause 119 of Section 2 of the CGST Act, 2017. Works contract is essentially a contract of services which may involve supply of goods in the execution of the said contract. However, under GST "Works Contract' has been restricted to any work undertaken for an immovable property. (viii). Thus, it is essential to find out whether the applicant in the case is dealing in any immovable property which is transferred in the execution of the contract. (ix). Based on the review of scope of work, it can be said that the contract involve the provisions of services and goods, but it is to analyse whether the supply will qualify as works contract as defined under GST Act. (x). Section 3(26) of the General Clauses Act, 1897 defines: Immovable property as follows "Immovable property" shall include land, benefits to arise out of land and things attached to the earth, or permanently fastened to anything attached to the earth" (xi). With respect to second question: Whether the operation and maintenance services post implementation would qualify as composite supply of works contract? (xii)....
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....orks Contract" as defined in clause 119 of Section 2 of the CGST Act, 2017. Works contract is essentially a contract of services which may involve supply of goods in the execution of the said contract. However, under GST "Works Contract' has been restricted to any work undertaken for an immovable property. (viii). Thus, it is essential to find out whether the applicant in the case is dealing in any immovable property which is transferred in the execution of the contract. (ix). Based on the review of scope of work, it can be said that the contract involve the provisions of services and goods. but it is to analyse whether the supply will qualify as works contract as defined under GST Act. (x). Section 3(26) of the General Clauses Act, 1897 defines: Immovable property as follows "Immovable property" shall include land, benefits to arise out of land and things attached to the earth. or permanently fastened to anything attached to the earth" (xi). With respect to second question: Whether the operation and maintenance services post implementation would qualify as composite supply of works contract? (xii). The Taxability of operation and maintenance services post implementa....
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....ject RFP bid submission last date was 20 August 2021. The contract was awarded on 01 June 2022. Post the bid submission, notification no. 11/2017-Central Tax (Rate) dated 28June 2017 was amended vide notification no. 22/2021-Central Tax (Rate) dated 31December 2021 and notification no. 03/2022-Central Tax (Rate) dated 13 July 2022,whereby firstly the term "Government entity" was removed from serial no. 3(vi) of the notification w.e.f. 01 January 2022 and thereafter the serial no. 3(vi) of the notification was omitted w.e.f. 18 July 2022. In view of the abovementioned notifications, what is the rate of GST applicable on the project scope of work before and after the said amendment in the notification? (ii). Question No. 2 - Whether the operation and maintenance services post implementation would qualify as composite supply of works contract? (b). In respect of Question No. 1, it is imperative to mention here brief of the issue: (i). The Applicant, engaged in public safety, private networks, retail, IT, and engineering services. has been appointed as the Master System Integrator (MSI) by CDAC for the supply, implementation. operation, and maintenance of a surveil....
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....tion: Project planning, civil and electrical infrastructure setup, network configuration, installation of hardware and software including field devices. SOP preparation and approval, integration with ICCC platform, training. and commissioning. (b) Operation and Maintenance (3 years): Regular preventive and corrective maintenance, helpdesk and incident support, network monitoring as per SLAs. refresher training, and quarterly reporting. (c). The subject RFP bid submission last date was 20 August 2021. The contract was awarded on 01 June 2022. At the time of RFP Bid submission, the Contract was awarded to the Applicant by CDAC on the basis of GST rate being interpreted by the Applicant to be 12% in terms of Serial No. 3(vi) of notification number 11/2017-Central Tax (Rate). Thereafter, notification no. 11/2017-Central Tax (Rate) dated 28June 2017 was amended vide notification no. 22/2021-Central Tax (Rate) dated 31December 2021 whereby firstly the term for the words "Union territory, a local authority, a Governmental Authority or a Government Entity" the words "Union territory or a local authority" was substituted; and further notification no. 03/2022-Central Tax (Rate) d....
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....ABLE, against serial number 3, (1) in column (3). in the heading "Description of Service", in items (iii), (vi), (ix) and (x). for the words "Union territory, a local authority, a Governmental Authority or a Government Entity" the words "Union territory or a local authority" shall be substituted; (2) in column (3), in the heading "Description of Service", in item (vii), for the words "Union Territory, local authority, a Governmental Authority or a Government Entity" the words "Union territory or a local authority" shall be substituted; (3) in column (5), in the heading "Condition", the entries against items (iii), (vi).(vii),(ix) and (x), shall be omitted. 2. This notification shall come into force with effect from the 1st day of January, 2022. With the substitution of the words "Union territory, a local authority, a Governmental Authority or a Government Entity" with the words "Union territory or a local authority" from the said Entry with effect from 01 January 2022, Composite supply of works contract provided to the Union territory or a local authority by way of construction, erection, commissioning, installation. completion, fitting out, r....
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....T Act. We would now look at relevant clauses of the agreement to understand the exact nature of the transaction envisaged by the said agreement which we have already reproduced in para 2 pertaining to the facts and contention of the applicant. The perusal of clauses of the agreement leads us to the following inferences: The service of setting up of surveillance system which involves installation of poles with cantilevers/ arms, junction boxes and other structures to install video and networking equipment, commissioning and transfer of property of goods. Surveillance system includes setting up of data centres, ICCC, installation of server racks, raised flooring. poles/ posts on which cameras and other equipment are installed and firmly attached to the ground and attains a level of permanency. As mentioned above, permanent facilities will be established for long term use to command and control at Police Station (C21), District Offices (C31) and Police Headquarter (C41) will be used for monitoring and surveillance throughout the city. A sum of above inferences would mean that applicant supplies more than two taxable supplies of goods or services or combination thereof a....
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.... Such assets - being fixed. embedded. or permanently attached to the ground-demonstrate a high degree of permanence. They are designed to support long-term public safety objectives by enabling citywide surveillance and monitoring functions, coordinated through permanent control centres established at various administrative levels: Police Stations (C21), District Offices (C31), and the Police Headquarters (C41). (ii). It is clear that Applicant is undertaking an extensive set of activities, involving supply of goods as well as supply of services, for the purpose of setting a complete end to end system which would be instrumental in surveillance of Delhi. Such system is meant to enable Delhi Police for a long term for better and efficient surveillance of Delhi which would result in better law and order situation. It is a settled principle that for qualifying as "immovable property", permanence in terms of affixation / attachment to earth is to ascertain whether the item is permanently attached to earth. Courts have consistently used two determinative factors i.e. (i) the extent of annexation and (ii) the object of annexation. In the case of Municipal Corporation of Greater B....
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....levant provisions are as below: (8) "Union territory" means the territory of,- (i) the Andaman and Nicobar Islands; (ii) Lakshadweep; (iii) Dadra and Nagar Haveli; (iv) Daman and Diu: (v) Chandigarh; or (vi) other territory. Explanation. For the purposes of this Act, each of the territories specified in sub-clauses (i) to (vi) shall be considered to be a separate Union territory: As per Section 2(69) of GST Act, 2017, 'local authority' means- (i) a "Panchayat" as defined in clause (d) of article 243 of the Constitution; (ii) a "Municipality" as defined in clause (e) of article 243P of the Constitution; (iii) a Municipal Committee, a Zilla Parishad, a District Board, and any other authority legally entitled to, or entrusted by the Central Government or any State Government with the control or management of a municipal or local fund; (iv) a Cantonment Board as defined in section 3 of the Cantonments Act, 2006 (41 of 2006): (v) a Regional Council or a District Council constituted under the Sixth Schedule to the Constitution; (vi) a Development Board constitu....
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....nt is whether the ongoing maintenance and operation services qualify as part of a composite supply alongside the core services of erection, installation, and commissioning. In the context of the present contract, apart from implementing the surveillance system. NEC (the Applicant) is contractually obliged to operate and maintain the said system for a stipulated period of three years (3) post-commissioning (go-live date). (ii). The scope of these O&M services is apparently comprehensive and includes deployment of skilled manpower for day-to-day management and technical operation of the surveillance setup. facility management services at the central Command & Control Centre to ensure operational readiness and uninterrupted service, upkeep of key infrastructure, which covers the surveillance cameras. optical fibre cable network, permanently installed poles and cantilevers, junction boxes, and all associated devices across the data centres, ICCCs, and police stations, strategic planning and ongoing monitoring for seamless system management and timely response to issues, integration support, facilitating the addition of new functionalities or use-cases as required by the contra....