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2025 (11) TMI 1632
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....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, subsidiaries of the Applicant in India and providing related consultancy services. TCG Urban Infrastructure Hol....
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....f the Applicant 2.1. The applicant states that prior to 01 April 2020, the activities of providing fit-outs and related infrastructure support to various tenants of the properties held by BIPPL and BIPD were provided by M/s Boulevard Services Private Limited (BSPL), another subsidiary of the Applicant. The Board of Directors of BSPL at its meeting on 28th May 2020 had approved a scheme of amalgamation whereby BSPL is merged with the Applicant vide the order number 121/KB/2021 dated 16th March 2022. 2.2 The applicant states that by a Deed of Lease dated 19th January, 1987 registered at the office of the Registrar of Assurances, Kolkata on 21st February 1987, 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 87.555621 acres more or less 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 Electronic....
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....ame. J. BSPL has also represented that it will charge reasonable hire charges from the occupants of the said demised space." Further, the assets to be provided by the applicant are mentioned in Schedule II to the agreement which is produced below: * Basement and service area ventilation system; * HVAC systems to tenant premises upto predetermined delivery points; * Hard and soft landscaping including fountains, plantations, lighting etc. * Suspended ceiling and floor raceways for common areas only; * Sub mains, cables and distribution systems for common area and building mains upto 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 appli....
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....y five only) (computed at the rate of Rs. 15/- per sq. ft. for the total super built-up area of 36149 sq. ft.) as Hire Charge in advance plus GST on or before the 10th day of each calendar month, commencing from 1st March 2023 upon receiving bills raised by TCGUIH. 2.11 Second Schedule [Assets] Part I (Fully functional assets of standard quality for sub-leased space) Electrical equipment up to tap off box 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 a....
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.... Air Conditioning System and DG Set. The GST rate for the said goods is tabled below: Particulars Chapter GST Rate Electrical Equipment 8502 18% Sprinkler System 8424 18% Central Air Conditioning System 8415 28% DG Set 8511 18% The applicant submits as the rate of GST in respect of the aforesaid assets involves multiple GST rates against a single supply of "Hiring 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 su....
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....as goods. "1.27 In the light of foregoing discussions, we are of the opinion that in the instant case, rate of tax on supply of hiring services of air conditioning system and fire extinguishing system would not be determined vide serial number 17(iii) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. According to our view, each of the supplies would attract tax @ 18% under 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....
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....ition 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 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 men....
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....ach aims to establish a comprehensive and centralized system to serve the needs of all tenants within the building. While the foundational water line and initial setup are provided by the Applicant, the individual components are managed by the respective tenants. Air conditioning system up to the floor Air Handling Unit along with the existing ducting and diffusers in as is 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 cent....
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....ons themselves but may obtain as services by outsourcing from others for any reason whatsoever and shall include advertisement and promotion, construction or works contract, renting of immovable property, security, testing and analysis; [This definition was omitted vide Finance Act 2015 w.e.f. 01.04.2016] The applicant further states that prior to 01.07.2012, the term 'Support Service' 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 off....
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....ient of the services as per section 13(2) of the IGST Act. 4. Export of Services (Para 5): Such services can be considered as export of services if other conditions mentioned in section 2(6) of the IGST Act are fulfilled. 2.24 Applicability of the Circular to the facts of the present case before the Hon'ble AAR The applicant proposes to draw an analogy from the above clarification 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 infras....
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....d maintains the essential infrastructure and fit outs. Consequently, the provision of air-conditioning systems, fire sprinkler systems, DG sets, and electrical installations to tenants should not be classified merely as the supply of goods. Instead, it constitutes a comprehensive service. This service includes not only the installation but also the ongoing operation, monitoring, and maintenance of the air- conditioning 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. 3. Submission of the Revenue Bidhan Nagar Division, CGST & CX, Kolkata North Commissionerate filed an appeal aggrieved by the ruling given by WBAAR in respect o....
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....erty is attached to earth. If the property is so attached that it cannot be removed or relocated without causing damage to it, it is an indication that it is immovable. 2. Object of annexation: If the attachment is for the permanent beneficial enjoyment of the land, the property is to be classified as immovable. Conversely, if the attachment is merely to facilitate the use of the item itself, it is to be treated as movable, even if the attachment is to an immovable property. 3. Intendment of the parties: the intention behind the attachment, which express or implied, can be determinative of the nature of the property. If the parties intend that the property in issue is for permanent addition to the immovable is not meant to be permanent, it indicates that it is movable. 4. Functionality Test: If the article is fixed to the ground to enhance the operational efficacy of the article and for making it stable and wobble free, it is an indication that such fixation is for the benefit of the article, such the property is movable. 5. Permanency test: If the property can be dismantled and relocated without any damage, the attachment cannot be said to be pe....
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....any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration".] which applicant has self-classified from the inception of the GST or SI No. 17(vii)(a)[ Leasing or renting of goods], depending of the contract. Either classification prescribes "the same rate of tax as on supply of like goods involving transfer of title in goods" (vii) Since the nature of activities/services has already been held to be a "mixed supply", the highest rate, i.e. 28%, pertaining to leasing or renting of air conditioners/right to use air conditioners, would have, therefore, been applicable on merits in this case. The WBAAR has apparently misjudged in holding that these goods, when installed, lose their character as goods. It has consequently held that 18% is the applicable rate of tax, which seems to be unreasoned and improper. 4. Observations & Findings of the Authority 4.1 The present case arises out of the order dated 13.05.2025 passed by the West Bengal Appellate Authority for Advance Ruling. Earlier the applicant appeared before this authority with an application for Advance Ruling vide ARN AD1906240090557. This authority p....
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.... grant further sub lease/ license of built up space to intending sub lessees or tenants on the condition that the built up space would be used for setting up of electronic industries exclusively and for no other purpose. BIPPL has decided to sub lease the building units on a bare shell condition to its lessees. The applicant (erstwhile Boulevard Services Private Ltd - BSPL) entered into an agreement dated 16.11.2005 with BIPPL for providing infrastructure support and facilities of a high standard of various spheres for the benefits of the occupants at Bengal Intelligent Park. The applicant is authorized by terms of agreement to charge reasonable hire charges from the occupants at the park. Under the above circumstance the applicant has sought for proper classification and corresponding rate of tax for the services being provided by the applicant by way supplying fitted assets on hire basis as discussed above. 4.4 The applicant believes that the services rendered by it being in the nature of hiring of infrastructure assts to tenants should be classified under serial no. 17(viii) of Notification No. 11/2017-Central Tax (Rate) Dated 28.06.2017 and be chargeable to GST @ 18%, ....
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....t. Such an agreement with Sun Knowledge Private Limited as a tenant has been produced for our consideration. The highlights of the agreement are as under: 1. The agreement has been signed for hire and use of assets and fit outs in the sub leased space of the tenant and in the common areas. 2. The agreement is for nine years. 3. The legal possession of the assets shall always be with the applicant. 4. The hire charges will be calculated at the rate of Rupees Fifteen per sq.ft. for the total super built area. 5. The tenant is bound to deliver the possession of the sub leased space along with the assets of the applicant in the same condition (as it is at the time of execution of the agreement) at the time of expiry of the agreement or termination thereof. 6. The applicant will arrange for insurance of assets installed both at the sub leased space and in the common areas. 7. There are two separate lists of assets in the Second Schedule of the agreement. Part I refers to the assets in the sub leased space. Part II refers to assets in the common areas. Part I enumerates the following assets for the sub leased space: ....
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....re charge that is charged by the applicant is calculated at an agreed rate per sq. ft. for the total super built area of the tenant. 4.8 First of all, we have to decide whether the services provided by the applicant qualify as leasing or renting. Leasing as such has not been defined in the GST Act. However, 'Scope of supply' as enumerated in Section 7(1) of the CGST Act includes 'all forms of supply of goods or services or both as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business'. In common parlance leasing is a contractual agreement between the lessor (or owner) and the lessee (or user) for use of an asset by the lessee for certain period against regular rental payment. Here the lessor is the legal owner of the asset and the lessee obtains the right to use the asset subject to fulfilling certain conditions as agreed upon by the two. The legal possession of the asset always lies with the lessor. On the other hand, renting is also not defined under the GST Act. For understanding the concept we may refer to the erstwhile Finance Act, 1994 which governs the S....
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....es provided by the applicant can best be described as supply of two or more services made in conjunction with each other. As we have already mentioned, the consideration for the supply is a single one. Thus the supply, in our considered view, should be regarded as a mixed supply. 4.10 What we find from the agreements in our hand and the description and images of the relevant assets is that they are actually certain integrated systems that are attached to different parts of building. Let us take the example of HVAC systems to tenant premises up to pre- determined delivery points. An HVAC system as such is not a normal air conditioning machine only that we find for residential use. It stands for Heating, Ventilation, and Air Conditioning and it represents a technology designed to control the temperature, humidity, and air quality within an enclosed space. It aims to create comfortable and healthy indoor environments. It is actually a well integrated system of different machines and equipments that performs the specific purpose in an integrated manner. The system can provide heat to warm a space, typically through a furnace or heat pump that distributes warm air or heated ....
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.... Act, 1882. It is in this light that we have to determine whether the assets described in the schedules of the agreement are immovable or not. Under Section 3(26) of the General Clauses Act, 1897, "immovable property" includes land, benefits arising out of land, and things attached to the earth or permanently fastened to anything attached to the earth. The concept of 'things attached to the earth or permanently fastened to anything attached to the earth' has not been defined in the General Clauses Act, 1897. Here the Transfer of Property Act, 1882 comes to our help. The Transfer of Property Act, 1882 has defined 'attached to the earth' as * rooted in the earth, as in the case of trees and shrubs. * imbedded in the earth, as in the case of walls or buildings. * attached to what is so imbedded for the permanent beneficial enjoyment of that to which it is attached. All the assets described in the schedules are attached either to the walls or to the floor of the civil structure. This civil structure being a building is embedded in the earth. The installation of the assets requires enormous amount of survey, testing, designing, earthwork, concrete wor....
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....sets are attached with the building in such a way that they cannot be removed without causing any kind of damage to them. * Marketability test: The assets are integrated in such a manner that they cannot be removed and sold separately in the market. The fixtures and fittings are building specific so that they may not be used in another building with different specification. In this respect we can refer to the observations of the Apex Court in the case of Globus Stores (P) Ltd. vs Commissioner Of Central Excise And Others where the Hon'ble Court observed in respect of air conditioning plant that 'prima facie the question to be considered is not whether the air-conditioning parts is immovable or movable; on the face of it, it does not appear to be immovable. The question however is whether it is goods i.e. whether the plant can be taken to the market for being sold as a plant. The department stores, we have been told, is spread over four floors. Various components of the complete plant would be scattered throughout this area. It would be extremely difficult to say that without disturbing the connection between the various components the plant itself can be removed and refitt....
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....ther it is calculated on the basis of the specified super built area that a tenant is enjoying. In our considered view the above supply will qualify for leasing or rental services without operator under heading no. 9973. This heading finds entry under serial no. 17 of the Notification No. 11/2017- Central Tax (Rate) Dated 28.06.2017 (corresponding West Bengal State tax Notification No. 1135 F.T. Dated 28.06.2017 as amended. The relevant portion is reproduced as under: Sl.No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (per cent.) Condition 17 Heading 9973 (Leasing or rental services, without operator) (i) omitted (ii) Temporary or permanent transfer or permitting the use or enjoyment of Intellectual Property (IP) right. 9 (iii) Transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration. § (iv) Any transfer of right in goods or of undivided share in goods without the transfer of title thereof. § § Same rate of State tax as on supply of ....