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2023 (1) TMI 330 - AAR - GSTClassification of supply - composite supply or not - manufacture, sale and installation of electrical equipments, ranging from LED lightings, industrial and domestic switchgears, metering solutions, wires and cables, etc. - applicability of Entry 3(iv)(a) of Notification no. 11/2017-C.T. (Rate) dated 28.06.2017 - benefit of concessional rate of duty - whether the contract undertaken by the Applicant for design, supply, installation and commissioning, etc. of Highway lighting system for the project of development, maintenance and management of National Highway-111 qualifies as Works contract under the GST regime? - HELD THAT - In the instant case under consideration, as is forthcoming from the documents furnished before us by the applicant, M/s Bilaspur Pathrapali Road Private Limited, Ahmedabad (Concessionaire) was awarded a contract dated 14.05.2018 by National Highways Authority of India (NHAI), Ministry of Road Transport and Highway (MoRTH), Government of India (GoI) relating to development, maintenance and management of 4 laning of Bilaspur to Pathrapali section of NH-111 (NH-130) from 0.000 km to 53.300 km in the State of Chhattisgarh under Bharatmala on Hybrid Annuity Mode. Subsequently, Concessionaire entered into an agreement with AIIL for Engineering, Procurement and Construction (EPC) works of development, maintenance and management of 4 laning of Bilaspur to Pathrapali Section of NH-111 (NH-130) from 0.000 km to 53.300 km in the State of Chhattisgarh. ln background of the aforesaid facts i.e. award of contract for development, maintenance and management of NH-111 by NHAI to Concessionaire and award of contract for EPC works relating to said project by Concessionaire to AIIL. The scope of work awarded to the applicant covers only the activities involved in the Lighting works at various locations including highway and flyover/VUPS/bridges area across the length of the project as indicated in TCS Schedule and as per approved design basis by IE/NHAI. In addition to the above work of electrification or lighting works the applicant is responsible for Supply, installation testing of electrical materials as per BOQ with the pre-condition that all the fixtures, panels, wires/ cables, lights, earthing materials, and other items complete in all respect, shall confirm to established specifications - In the instant case in hand, it is only that the civil works involved for completion of such electrical installation services have been included in the scope of work entrusted upon the applicant. The instant supply of the applicant of the work of Highway Lighting System / Lighting works at various locations including highway and flyover/VUPS/bridges gets aptly covered under Installation services , being special trade installation services involving the installation of basic electrical wiring circuits or fittings in buildings and other construction projects, as also being electrical installation services of illumination and signalling systems for roads - The work undertaken by the applicant in entirety, as elaborately discussed herein is nothing but electrical Installation services of illumination for roads and by no stretch of imagination can be termed as civil engineering works. The benefit of aforesaid Notification as provided under S.no. 3(iv)(a) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended is available only to Construction services of Heading no. 9954, supplied by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of a road, bridge, tunnel, or terminal for road transportation for use by general public and not to the instant work of Highway Lighting System which is nothing but electrical installation services of illumination for roads - in the instant case the basic requirement, for eligibility to the said exemption as provided under S.no. 3(iv)(a) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended, of getting covered under Heading 9954 under Construction service supplied by way of construction of a road stares unfulfilled, as the instant supply pertains to electrical Installation services of illumination for roads. Whether the instant supply of installation of highway lighting system undertaken by the applicant is a Composite supply? - HELD THAT - From the perusal of the service order read with Bill of Quantities (BOQ), it is clear that the Applicant is supplying all the goods required for highway lighting system as well is responsible for installation of such goods, such as lighting pole, lights, earthing work, etc. On the basis of evidences furnished by the applicant there exist all reasonable grounds to hold that natural bundle of supply of goods and services is prevalent in the instant supply of installation services of highway lighting system and these are supplied in conjunction with each other in the ordinary course of business by the applicant. Besides this, the impugned supply of installation services in entirety thereof can only be construed to be made, once whole of the supplies are made by the applicant. Thus, we come to the considered conclusion that the second criterion of composite supply stands fulfilled in the instant supply of installation services of highway lighting system made by the applicant. Whether the work of installation of highway lighting system, rendered by the applicant qualifies being Works Contract, much essential for availing the claimed exemption as provided under S.no. 3(v)(a) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended, vide Notification 01/2018 Central Tax (Rate) doted 25.01.2018? - HELD THAT - There exists a clear demarcation of a works contract as a supply of service under GST. Besides this, as per section 17(5) (c) of the CGST Act, 2017, input tax credit shall not be available in respect of the works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service. Thus, ITC for works contract also stands restricted and can be availed only by one who is in the same line of business and is using such services received for further supply of works contract service. From the definition, a work shall be treated as Works Contract if that work is done for land or earth or for immovable property and there is transfer of property in goods involved in the execution of such contract. Immovable property, by its very definition means that it cannot be moved and cannot be detached or dismantled from the land or earth and further that dismantling of the same would render it defunct / redundant. Immovable property would include in its ambit land and the things which are attached to or embedded in the lard such as buildings, bridges etc. However not everything that is attached to the land would automatically constitute an immovable property - In the case present case under consideration, as is forthcoming from the various clauses of the service order issued by M/s AIIL in favor of the applicant, the work of installation services of highway lighting system to be installed by the applicant on the National Highway comes into existence in an immovable condition and there appears no intention to move the same in future to any other place. The benefit of the entry at Sl.no. 3(iv)(a) is not eligible to M/s HPL Electric and Power Limited, behind Mata Garage, Jai Bhole Complex, Pandri, Raipur,Chhattisgarh, 492001 GSTIN-22AAACH0165J1ZO, as the basic requirement for eligibility to the said exemption as provided under S.no. 3(iv)(a) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended, of getting covered under Construction service under Heading 9954 stands unfulfilled, whereas the instant supply pertains to electrical Installation services . The work undertaken by the applicant is electrical installation services of illumination for roads - As regards the issue of applicability of Entry 3(iv) (a) of Not. No. 11/2017-CT (Rate) as applicable in case of sees provided by the sub-contractor raised by the applicant, hem sae has no relevance as the applicant eligible to be benefit of the claimed exemption.
Issues Involved:
1. Classification of the supply made by the applicant. 2. Applicability of concessional GST rate under Entry 3(iv)(a) of Notification No. 11/2017-C.T. (Rate). Issue-wise Detailed Analysis: 1. Classification of the Supply: The applicant, HPL Electric and Power Ltd., engaged in the manufacture, sale, and installation of electrical equipment, sought a ruling on whether their supply to AIIL could be classified under Entry 3(iv)(a) of Notification No. 11/2017-C.T. (Rate) dated 28.06.2017, which would allow them to avail a concessional GST rate of 12%. The applicant entered into an agreement with AIIL for the design, engineering, supply, testing, erection, installation, commissioning, and trial run of a Highway Lighting System for the Bilaspur to Pathrapali section of NH-111 (NH-130) under the Bharatmala project. The scope of work included various activities related to lighting works at different locations along the highway, including the supply and installation of electrical materials as per BOQ, and ensuring all fixtures and materials conformed to MoRTH specifications. The applicant contended that their work was essential for the completion of the road project and thus should be classified under Entry 3(iv)(a) of Notification No. 11/2017-C.T. (Rate), attracting a GST rate of 12%. 2. Applicability of Concessional GST Rate: The Authority for Advance Ruling (AAR) examined the relevant provisions and definitions under the CGST Act and the classification of services. The AAR noted that for the benefit of the concessional GST rate under Entry 3(iv)(a) of Notification No. 11/2017-C.T. (Rate) to apply, the service must fall under "Construction services" under Heading 9954, and it must be a composite supply of works contract involving construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of a road for use by the general public. The AAR analyzed the scope of work awarded to the applicant and determined that the work involved in the Highway Lighting System was classified as "Installation services" under SAC 995461, which includes electrical installation services of illumination and signaling systems for roads. The AAR found that the applicant's work did not fall under "General construction services of civil engineering works" but rather under "Installation services." The AAR further noted that the scope of work included civil works necessary for the completion of the electrical installation services, but these were ancillary to the primary service of electrical installation. The AAR concluded that the applicant's supply did not qualify as "Construction services" under Heading 9954, and thus, the benefit of the concessional GST rate under Entry 3(iv)(a) was not applicable. Conclusion: The AAR ruled that the supply made by HPL Electric and Power Ltd. to AIIL is classified as "Installation services," specifically electrical installation services of illumination for roads. Consequently, the applicant is not eligible for the concessional GST rate of 12% under Entry 3(iv)(a) of Notification No. 11/2017-C.T. (Rate), as the supply does not fall under "Construction services" under Heading 9954.
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