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2021 (4) TMI 981 - AAAR - GSTConcessional rate of duty - Works contract - tender agreement for wet leasing of Robotic spot-welding machine and laser cutting and welding machine - activities under tender agreement for comprehensive Annual Maintenance Contract - benefit under Schedule VI(a) and VI(b) are eligible for serial no. 3 (v)(a) or 3 (vi) of Notification No.11/2017-CT(Rate) dated 20.06.2017 as amended and corresponding entry under state notification. HELD THAT - In the case at hand, all the Supplies in the tender are not supply made by the appellant to ICF in as much as in respect of the disposal of the obsolete M Ps, the supply is by the ICF and the appellant is the recipient. Further, the supplies are not made in conjunction with each other in as much as the Wet-leasing of M Ps is for a period of 10 years; Construction, supply, installation, commissioning, etc is to be completed within 20 months of LOA and Comprehensive AMC is to be supplied for 5 years after the warranty period. Therefore, the supplies under the Tender in Schedule-I to Schedule-VI are not supplies made to a recipient nor done in conjunction with each other and hence the entire supplies based on the Tender is not a Composite Supply - there is no merit in the claim of the appellant that the supplies based on the entire tender is a Composite supply of Works Contract and the benefit of entry S.No.3(v) of notification No.11/2017-C.T.(Rate) dated 28.06.2017 is not available for the entire tender. As per the contract agreement for wet-leasing, it is an activity consisting of leasing of M Ps in working condition, providing skilled and unskilled manpower, spares, consumables for the entire period of leasing during which the leased goods are reflected in the books of the lessor. The lease charges are paid on a quarterly basis to the appellant based on the productivity. The M Ps are transferred to ICF at the, end of the lease period. Just because, there is a transfer of property in goods after the lease period, the activity is not a works contract. The activity of wet-Leasing is squarely classifiable under SAC 9973 Leasing or rental services with or without operator as held by the LA. Therefore the benefit of entry at 3(v)(a) of Notification No.11/2017-C.T.(Rate) dated 28.06.2017 is not applicable in respect of Wet-Leasing of the M Ps. CAMC, the activity being Maintenance - HELD THAT - The same is not covered under entry 3(v) of Notification No. 11/2017-C.T.(Rate) dated 28.06.2017 as amended, which is applicable only to works contract by way of construction, erection, commissioning or installation of original works pertaining to railways. Benefit of entry Sl.No. 3 (vi)(a) of the Notification No. 11/2017-C.T.(Rate) dated 28.06.2017 as amended - HELD THAT - The above entry is applicable in the case of composite supply of works contract of maintenance of a civil structure or any other original works meant predominantly for use other than for commerce, industry or any other business or profession to the class of receivers specified. ICF is a Production unit of Railways and belongs to Central Government and manufacturing steel coaches is not an activity where the Government is engaged as public authorities. As per the Explanation to the said entry, it is evident that when the activity is not in the capacity of Public authority , then the activity is for business only. ICF is putting up the said Plant to manufacture Stainless Steel coaches, which is not an activity undertaken as a Public Authority and therefore, the benefit of the above entry is not applicable to the appellant in respect of CAMC. There are no reason to interfere with the Order of the Advance Ruling Authority in this matter. The subject appeal is disposed of accordingly.
Issues Involved:
1. Whether the activities under the tender agreement for wet leasing of Robotic spot-welding machine and laser cutting and welding machine as per Schedule V(a) & V(b) are eligible for concessional rate under Sl.No 3(v)(a) or 3(vi) of Notification No.11/2017-CT(Rate). 2. Whether the activities under the tender agreement for comprehensive Annual Maintenance Contract under Schedule VI(a) and VI(b) are eligible for serial no. 3(v)(a) or 3(vi) of Notification No.11/2017-CT(Rate). Detailed Analysis: 1. Wet Leasing of Robotic Spot-Welding Machine and Laser Cutting and Welding Machine (Schedule V): The appellant contended that the wet leasing activities are part of the composite supply of works contract and should be eligible for the concessional rate under Sl.No 3(v)(a) of Notification No. 11/2017-CT(Rate). The lower authority had ruled that these activities are not works contracts but are composite supplies of services and thus not eligible for the concessional rate. Upon review, it was found that the wet leasing of machinery does not fit the definition of a works contract, which involves building, construction, erection, installation, etc., of immovable property. The wet leasing agreement involves leasing machinery, providing manpower, spares, and consumables, and does not involve the transfer of property in goods in the execution of a contract. Therefore, the appellate authority upheld the lower authority's decision that the benefit of entry at 3(v)(a) of Notification No.11/2017-CT(Rate) is not applicable to the wet leasing of M&Ps. 2. Comprehensive Annual Maintenance Contract (Schedule VI): The appellant argued that the CAMC should be considered part of the composite supply of works contract and eligible for the concessional rate under Sl.No 3(v)(a) or alternatively under Sl.No 3(vi)(a) of Notification No. 11/2017-CT(Rate). The lower authority had ruled that CAMC is not covered under entry 3(v) as it pertains to maintenance, not original works. The appellate authority examined whether the CAMC could be eligible under Sl.No. 3(vi)(a), which applies to works contracts provided to the government for non-commercial purposes. It was determined that the Integrated Coach Factory (ICF) is engaged in manufacturing, which is an industrial activity and not an activity where the government is acting as a public authority. Therefore, the CAMC does not qualify for the concessional rate under Sl.No 3(vi)(a). Conclusion: The appellate authority upheld the lower authority's decision, ruling that: - The wet leasing of Robotic spot-welding machine and laser cutting and welding machine is not eligible for the concessional rate under Sl.No 3(v)(a) of Notification No. 11/2017-CT(Rate). - The comprehensive Annual Maintenance Contract is not eligible for the concessional rate under Sl.No 3(v)(a) or 3(vi)(a) of Notification No. 11/2017-CT(Rate). Order: The appeal was dismissed, and the original ruling by the Advance Ruling Authority was upheld.
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