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2023 (12) TMI 661 - AAAR - GSTClassification of supply - rate of GST - bundled services - composite supply of cattle feed plant under GST regime - contract involving supply of equipment/machinery erection, installation commissioning services without civil work thereof - works contract service or not. Whether the composite supply towards setting up of cattle feed plant, by the appellant without civil work can be treated as 'immovable property and would fall within the ambit of 'works contract'? - HELD THAT - The various equipments assembled by the appellant at their customer's premises arc cither fitted with foundation/structures or fitted on foundation/structures. The cattle feed plant which is set up by the appellant at their customer's premises cannot be shifted from one place to another without dismantling of all the equipments, machine parts and accessories and electrical systems - the cattle feed plant supplied involves supply of goods as well as services like installation, erection and commissioning of the plant. Thus, it is held it fulfills the criteria of an 'immovable property' as cattle feed plant is type of plant and machinery which is attached to earth or permanently fastened to anything attached to the earth. Reference made to Board Circular No. 177/09/2022-TRU dated 03.08.2022, where it was clarified by CBIC that supply, construction, installation and commissioning of a dairy plant on turn-key basis constitutes as works contract and dairy plant which comes into existence is an immovable property. The Cattle Feed Plant is an immovable property and supply of goods and services by the appellant for setting up and running of Cattle Feed Plant amounts to composite supply of works contract as defined in clause (119) of Section 2 of CGST Act, 2017.
Issues Involved:
1. Classification of contract involving supply of equipment/machinery and erection, installation, and commissioning services without civil work under GST regime. 2. Classification of contract involving supply of equipment/machinery and erection, installation, and commissioning services with civil work under GST regime. Summary: Issue 1: Classification of contract involving supply of equipment/machinery and erection, installation, and commissioning services without civil work under GST regime. The appellant sought an advance ruling on whether the contract involving the supply of equipment/machinery and erection, installation, and commissioning services without civil work would be considered a composite supply of cattle feed plant under GST. The appellant argued that their supply qualifies as composite supplies and not as 'works contract service' since the plant is not rooted to the earth but fixed with nuts and bolts for efficient operation. They relied on various rulings and judicial precedents to support their claim that the supply should be classified under heading 8436, attracting GST @12%. The Gujarat Authority for Advance Ruling (GAAR) ruled that the supply of a functional Cattle Feed Plant, inclusive of its erection, installation, and commissioning, is a Works Contract Service Supply, falling at SAC 998732, attracting GST leviability at 18%. The appellant contended that GAAR erred in its ruling and that the plant should not be classified as 'works contract services' since it does not amount to the construction of immovable property. They argued that the 'test of permanency' should not be the sole criterion and that the extent and object of annexation should also be considered. Issue 2: Classification of contract involving supply of equipment/machinery and erection, installation, and commissioning services with civil work under GST regime. The appellant submitted that the supply of cattle feed plant with civil work would result in an immovable property and hence would be classifiable as works contract. They relied on various judicial precedents and argued that the plant supplied along with erection and commissioning services without civil work should not be classified as 'works contract services.' The Appellate Authority examined the definition of 'works contract' under Section 2(119) of the CGST Act, 2017, which includes contracts for erection, installation, and commissioning of immovable property. The term 'immovable property' was also analyzed based on the General Clauses Act and the Transfer of Property Act. The authority found that the cattle feed plant supplied by the appellant involves equipment and machinery that are permanently embedded in the earth, fulfilling the criteria of an 'immovable property.' The authority relied on various judicial precedents, including the case of Duncans Industries Ltd., where the Supreme Court held that machinery permanently fixed to the ground is immovable property. The authority concluded that the cattle feed plant supplied by the appellant is an immovable property and the supply of goods and services for setting up and running the plant amounts to a composite supply of works contract as defined in clause (119) of Section 2 of the CGST Act, 2017. Conclusion: The appeal filed by the appellant was rejected, and the Advance Ruling No. GUJ/GAAR/R/2022/14 dated 14.03.2022 of the Gujarat Authority for Advance Ruling was upheld, classifying the supply of cattle feed plant, inclusive of erection, installation, and commissioning, as a Works Contract Service Supply, attracting GST at 18%.
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