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TMI Blog2018 (7) TMI 755X X X X Extracts X X X X X X X X Extracts X X X X ..... , installation of soft ware and other allied accessories, site preparation, maintenance of equipment and provision of computer education services for 5 years in 3409 Govt, and Govt. aided high schools of Odisha under ICT@school project in the state of Odisha. The total contract value is ₹ 617,18,63,000/-. Thus, the contract is clearly for supply of goods and services including training. It is a composite supply having distinctly identifiable components with distinct value attributable to each of the components. No doubt, the applicant has provided computer training service as part of the contract, but the said service is not pre-dominant or principal supply. In fact the contracted supply has three distinct supply components out of which training is a small component. It is not a case of transfer of goods without consideration but rather a case of supply of goods on consideration payable in installments agreed between the contracting parties. Besides, as per para 1(c) of Schedule II of the OGST/CGST Act ,any transfer of title in goods under an agreement which stipulates that property in goods shall pass at a future date upon payment of full consideration as agreed, is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) (2) (3) (4) (5) 72 Heading 9992 Services provided to the Central Government, State Government, Union territory administration under any training programme for which total expenditure is borne by the Central Government, State Government, Union territory administration. Nil Nil * Entry No. 72 of Notification SRO No. 306/2017-Finance Department is identical to the Entry No. 72 of Notification No. 12/2017-Central Tax Notification bearing SRO No. 306/2017- of Finance Department, Government of Odisha and Notification No.12/2017-Central Tax of Government of India have been issued u/s 11 of the OGST Act and CGST Act respectively exempting the notified services from levy of GST. Entry SI No. 72 of the said two Notifications exempts services provided to the Central Government or any State Government or any Union Territory Administration under any training program for which the total expenditure is borne by the Central Government or State Government or Union Territory Administration. By seeking an adva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nance of equipment and provision of computer training services for 5 years in 4000 schools divided in 6 zones on the BOOT Model basis. The Applicant was the successful bidder and was awarded the tender vide Letter of Award No. OKCL/SME/47/04 dated 12th July, 2013 to execute the contract in 5 zones. Accordingly, the Applicant entered into an agreement with OKCL on 12th September, 2013. 2.1 The Applicant has further submitted that in terms of the agreement and as per the specifications laid down in the tender document and the decision of the technical committee, all activities i.e. site preparation, installation and commission are to be completed in the time prescribed in the agreement, i.e. 4 months from the date of handing over of the sites by OKCL. Once the labs are ready, the Applicant shall operate the same for imparting computer training. For this, they are required to provide one teacher, having specified qualifications and experience, to each school. The teachers so appointed would utilize the available ICT infrastructure (i.e. the ITC lab so created by the Applicant) for imparting computer training to the students in accordance with the curriculum developed in this regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry practice and the expectation of state governments as recipient of supply, the Applicant is of the understanding that all the activities performed by the private parties under the BOOT model are naturally bundled. 3.2 They further submit that the infrastructure built by the Applicant is used by the teachers appointed by the Applicant to provide computer training to students as we'll teachers of the government id government aided schools. The entire infrastructure is being developed for imparting computer training and that the Applicant is engaged in single supply of computer training services to the state of Odisha. 3.3 Further, they stated that in terms of the agreement, during the period of contract (i.e. 5 years), the operation and maintenance of the entire IT infrastructure, equipment is to be carried out by the Applicant on its own cost. During this period, the ownership of the equipment and infrastructure remains with the Applicant. In fact, the repair and maintenance of the equipment and infrastructure is performed by the Applicant, so that it may continue to provide computer training during the contract period in a smooth manner without any obstruction. 3.4 T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nna, authorised representative of the applicant, appeared for personal hearing on 29.05.2018 and requested for a short adjournment. The request for adjournment was admitted and the next date of P.H. was fixed on 11.06.2018. The applicant through its Advocate and representative were heard on the said date in the matter and the contentions advanced were also examined. During personal hearing, Sri Kapil Sharma, Advocate re-iterated the earlier submissions and also submitted a fresh written submission pursuant to hearing on 03.05.2018 wherein, they inter- alia explained that they are engaged in imparting computer skills to the students as well as teachers. As far as students are concerned, they are taught computer as a subject wherein, various skills viz. operation of computers, using MS-Office, internet, etc. are given to them. The course curriculum of Information Technology subject was provided to students of Class VIII, IX and X under ICT Project. Sri Sharma also stated that the Applicant is also conducting IT exams for the students studying in the schools covered under the ICT Project. Besides the students, the teachers as well as the head of the school are also imparted training t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation No. 12/2017-Central Tax (Rate) dated 28.06.2017. 5.2 For deciding the issue i.e. applicability of Entry at SI No.72 of the Notification No. 12/2017 dated 28.06.2017 and similar Notification issued by Government of Odisha, it is necessary to examine the nature of supply made by the applicant. On plain reading of the entry, it is clear that following three pre-requisites are to be satisfied in order for the supply to qualify for the notified exemption. a. The supply has to be a supply of Service provided to the Central Government, State Government or Union Territory administration; b. Such Service must be 'under any training program'; c. The total expenditure of such Service is borne by the Central Government, State Government or Union territory administration. 5.3 As regards the first pre-requisite as stated above, the state jurisdictional officer i.e Deputy Commissioner of State Tax, CT GST, Bhubaneswar-III stated that OKCL was promoted by the Higher Technical Education Department, Govt of Odisha and was incorporated under the Company Act, 1956 on September, 2012 as a public limited company under CIN. U 72200OR 2011 PLC 014185 to create n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (the Central Officers) were of the view that the supply is to OKCL which is a body corporate promoted by Government but not Government by itself. 5.4 Before taking a final view on whether Supply has been provided by the Applicant to the State Government, we examined the relevant documents and found that work order has been issued by the Odisha Knowledge Corporation Limited (OKCL) in their own capacity and the Applicant has signed agreement with OKCL on 12.09.2013 for implementation of the ICT @ school project in Government and Government aided higher secondary schools across the State of Odisha. When the contract is made between OKCL and M/s IL FS, it is also necessary for us to see the legal status of OKCL. From the contract/agreement deed, it is obvious that OKCL is a public limited company incorporated and registered under the Companies Act, 1956 and having its registered office at Jaydev Vihar, Bhubaneswar-751013, Odisha. Thus OKCL is a company and not State Government/Central Government or Union Territory. The status of OKCL is not disputed. 5.5 Further, we also see that OKCL had invited a tender for supply of goods and various services and M/s IL FS had been select ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of rendering service under any training programme, but to create necessary infrastructure in schools for implementation of ICT project to help teachers in using smart boards and e-contents and promote e-literacy among students. The averment of the State Jurisdictional Officer is found to be logical and convincing. As forthcoming from the terms of the Contract, the intended Supplies are not just supply of Service but rather a composite supply of Goods i.e. hardware and network equipments, power equipments, maintenance of the computer hardware and network equipments and also imparting training on use of such equipments as per the syllabus prescribed by the Board of Secondary Education of Odisha. Thus, it will be incorrect to dub the entire project as a training programme. It is rather a composite supply of goods and services, not naturally but artificially bundled having distinctly separate components with distinct value attributable to each of the components. 5.7 Now we intend to examine as to whether the service component provided by the Applicant was under any training programme . In this regard the applicant was asked to furnish the course content, course duration and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lt by the Applicant remains property of the Applicant and in no case, the ownership of the infrastructure is transferred to the school or OMSM during the period of the contract. Even after the expiry of contract period, ownership of the entire infrastructure (supplied and installed) will be transferred to the School and Mass Education Department (SMED) but at zero transfer value. In the absence of consideration such transfer will not be a taxable supply. Thus, there was no supply of goods either during or after the contract period. The aforesaid contention of the applicant lacks credence and acceptability for the reason that, as per the payment schedule agreed upon between the contracting parties, the applicant will receive the entire consideration for supply and installation of goods in installments before expiry of the contract period. Thus, it is not a case of transfer of goods without consideration but rather a case of supply of goods on consideration payable in installments agreed between the contracting parties. Besides, as per para 1(c) of Schedule II of the OGST/CGST Act ,any transfer of title in goods under an agreement which stipulates that property in goods shall pass at ..... X X X X Extracts X X X X X X X X Extracts X X X X
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