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TMI Blog2018 (9) TMI 1333X X X X Extracts X X X X X X X X Extracts X X X X ..... lar energy. Such plant would therefore have an inherent element of permanency - The output of the project i.e. water, using solar energy would be available to an identifiable consumer. Thus this output supply would involve an element of permanency for which it would not be possible and prudent to shift base from time to time or locate the plant elsewhere at frequent intervals - The Solar Photovoltaic (SPV) water pumping system cannot be shifted to any other place without dismantling the same. Further it is tailored made system which cannot be sold “as it is” to the other person. Contract also includes civil work such as development of site, structure foundation for mounting PV modules on metallic structures and fencing of the system to ensure security and safety and such other civil structure related activities as set out in Scope of work and in the Technical Specifications. Civil structure cannot be dismantled and moved away. The applicant has to supply a “Functional Solar Photovoltaic (SPV) water pumping system” as a whole which includes supply, installation and commissioning, maintenance for 10 years, hence instant transaction is neither a supply of i) “Solar Power Gene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Solar Water Pumping Systems” falls under the ambit of “Works Contract Services” which comes under the purview of Works Contract as per Section 2(119) of CGST Act and attracts 18% rate of tax under IGST Act, or 9% each under the CGST and SGST Acts, aggregating to 18%. - AAR No. RAJ/AAR/2018-19/11 - - - Dated:- 18-8-2018 - NITIN WAPA AND SUDHIR SHARMA MEMBER Present for the applicant: Shri Pankaj Ghiya (Authorised Representative). Note : Under Section 100 of the RGST Act 2017, an appeal against this ruling lies before the Appellate Authority for Advance Ruling constituted under section 99 of RGST Act 2017, within a period of30 days from the date of service of this order. The Issues raised by the applicant are fit to pronounce advance ruling as they fall under ambit of the Section 97(2) (e), it is as given under: (e) Determination of the liability to pay tax on any goods or services or both Further, the applicant being a registered person, GSTIN: 08AAKFT3688D1ZT, as per the declaration given by him in Form ARA-01 , the issue raised by the applicant is neither pending for proceedings nor proceedings was passed by any authority. Based on the above observat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g) Ocean waves/tidal waves energy devices / plants h) Photo voltaic cells, whether or not assembled in modules or made up into panels As per the above Entry in the Rate Schedule, the supply of item under consideration i.e. Solar Water Pumping System falls squarely under the definition of Solar power generating System and such supply should be taxable at the rate of 5% as they are systems which absorb sunlight and convert it into electricity which can be put to further use. The above mentioned Entry Solar Power Based Devices under Chapter heading 84 or 85 or 95, the item in question i.e. Solar Water Pumping System can also be covered under this category as it is a device run by solar power. Solar Water Pumping System is an apparatus used for pumping water which runs on solar energy. The dictionary meaning of device is reproduced as under: a thing made or adapted for a particular purpose, especially a piece of mechanical or electronic equipment Solar Water Pumping System is an equipment which harnesses solar energy in order to pump water. Therefore, it can also be alternatively classified as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orks Ors. = 2010 (4) TMI 15 - SUPREME COURT , as under: 23. The courts in this country have applied the test whether the annexation is with the object of permanent beneficial enjoyment of the land or building. Machinery for metal-shaping and electro-plating which was attached by bolts to special concrete bases and could not be easily removed, was not treated to be a part of structure or the soil beneath it, as the attachment was not for more beneficial enjoyment of either the soil or concrete. Attachment in order to qualify the expression attached to the earth, must be for the beneficial attachment of that to which it is attached. Doors, windows and shutters of a house are attached to the house, which is imbedded in the earth. They are attached to the house which is imbedded in the earth for the beneficial enjoyment of the house. They have no separate existence from the house. Articles attached that do not form part of the house such as window blinds, and sashes, and ornamental articles such as glasses and tapestry fixed by tenant, are not affixtures. 24. Applying the above tests to the case at hand, we have no difficulty in holding that the manufacture of the plants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Water Pumping Sets. Since, the scope of Supply of the applicant involves provision of both goods and services, where the entire Supply is one transaction; it would qualify as a composite supply. The principal Supply in the present scenario would be provision of Solar Water Pumping System and so the entire contract should be taxable at the rate of 5%. As the service element forms only about in the whole provision of Supply. 3. Question(s) on which Advance Ruling is required: 1. Whether Supply, commissioning, installation and maintenance of Solar Water Pumping System would be taxable at the rate of 5% considering it as a composite supply where the principle supply being that of goods i.e. supply of Solar Power generating system having HSN Code 84 or 85? 2. Whether separate bills can be raised by the Applicant with respect to Supply and Goods and Supply of Services Purely in respect of the contract of the Applicant with RHDS enclosed herewith? 3. Will the said transaction be classified as a Works Contract and taxable at the rate of 18% being Supply of Services? 4.1 Personal Hearing (PH): In the matter personal hearing was given to the applicant Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Contract (IV) in clause IV.2 of EOI all risk and liabilities (insurance charges) accruing in relation of works (temporary or permanent), and of all equipments, machinery, materials, shall be with applicant until occurrence of the Final Acceptance. e) Schedule IV -(Scope of works) of EOI clearly spells out the terms and conditions where contractor has to undertake works of supply installation and commissioning of Solar Photovoltaic (SPV) water pumping system as per specific demands of the owner. So it is not the something sold out of shelf. f) There is a single lump sum price for the entire work undertaken by the applicant. g) After completing installation and commissioning of system, final payment shall only be made on basis of satisfactory inspection and verification report. h) The applicant has laid claim under notification No 01/2017-CT (Rate) dated 28.06.2017, at S.No. 234, under HSN Classification 84, 85 and 94, for description: Following renewable energy devices parts for their manufacture (c) Solar Power Generating System The rate of CGST has been mentioned as 2.5%. According to assessee, the correct classification of given supply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sting and commissioning of the system and further has a obligation of maintenance for a certain period. The transaction is a work contract but it is for us to decide whether it is a work contract in terms of GST Act. So, we come to the crux of the issue and which is as to whether the transaction results into any immovable property. The term immovable property has not been defined under the GST Act. However, there are a plethora of judgments of the Hon. Supreme Court and the Hon. High Courts which have helped understand the term immovable property . 1. In decision of Allahabad High Court in Official Liquidator v. Sri Krishna Deo and Ors. [AIR 1959 All. 247] = 1958 (5) TMI 35 - HIGH COURT OF ALLAHABAD , wherein, the Court held that a machinery fixed to their bases with bolts and nuts although easily removable are not movable property when they have been set up with definite object of running an oil mill and not with intention of being removed after a temporary use. 2. In decision of M/s. T.T.G. Industries Ltd vs Collector of Central Excise, (2004) 4 SCC 751 on 7 May, 2004 = 2004 (5) TMI 77 - SUPREME COURT OF INDIA . The facts of the case are as follows: Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion intended for housing drilling machine and mudgun are erected. The concrete foundation itself is 5 feet high and it is grouted to earth by concrete foundation. The first step is to secure the base plate on the said concrete platform by means of foundation bolts. The base plate is 80 mm mild sheet of about 5 feet diameter. It is welded to the columns which are similar to huge pillars. This fabrication activity takes place in the cast house floor at 25 feet above ground level. After welding the columns, the base plate has to be secured to the concrete platform. This is achieved by getting up a trolley way with high beams in an inclined posture so that base plate could be moved to the concrete platform and secured. The same trolley helps in the movement of various components to their determined position. The various components of the mudgun and drilling machine are mounted piece by piece on a metal frame, which is welded to the base plate. The components are stored in a store-house away from the blast furnace and are brought to site and physically lifted by a crane and landed on the cast house floor 25 feet high near the concrete platform where drilling machine and mudgun has to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of this case. She concluded :- The test laid down by the Supreme Court is that if the chattel is movable to another place as such for use, it is movable but if it has to be dismantled and reassembled or re-erected at another place for such use, such chattel would be immovable. In the present appeal, even according to the finding of the Collector, mudguns and drill tap hole machines have to be dismantled and disassembled from the cast floor before being erected or assembled elsewhere. We have also arrived at the same conclusion independently, in para 10 above. Accordingly applying the test laid down by the Supreme Court we hold that the erection and installation of mudguns and drill tap hole machines result in immovable property. In the light of the ratio of the above case law, we hold that the mudguns and tap hole drilling machines do not admit of the definition of goods and, therefore, excise duty is not leviable thereon . The core question that still survives for consideration is whether the processes undertaken by the appellant at Bhilai for the erection of mudguns and drilling machines resulted in the emergence of goods leviable to excise duty or whether it r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has first to be dismantled and then re-erected at another place. This factual position was also accepted by the Adjudicating Authority. The technical member, however, held that the aforesaid decision was of no help to the appellant inasmuch as a leading international manufacturing firm had offered such machines for export to different parts of the world. He further observed that though on account of their size and weight, it may be necessary to shift or transport them in parts for assembly and erection at the site in the steel plant, they must nevertheless be deemed as individual machines having specialized functions. We are not impressed by this reasoning, because it ignores the evidence brought on record as to the nature of processes employed in the erection of the machine, the manner in which it is installed and rendered functional, and other relevant facts which may lead one to conclude that what emerged as a result was not merely a machine but something which is in the nature of being immovable, and if required to be moved, cannot be moved without first dismantling it, and then re-erecting it at some other place. Some of the other decisions which we shall hereafter noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, tanks, coils, drive frames, supports, plates etc. The aforesaid parts were cleared from the premises of the appellants and the mono vertical crystalliser was assembled and erected at site. The process involved welding and gas cutting. The mono vertical crystalliser is a tall structure, rather like a tower with a platform at its summit. This Court noticed that marketability was a decisive test for dutiability. It meant that the goods were saleable or suitable for sale, that is to say, they should be capable of being sold to consumers in the market, as it is, without anything more. The Court then referred to the decision in Quality Steel Tubes (supra) and distinguished the judgment in Narne Tulaman (supra) holding that the contention that the weigh bridges were not goods within the meaning of the Act was neither raised nor decided in that case. After considering the material placed on the record it was held that the mono vertical crystalliser has to be assembled, erected and attached to the earth by a foundation at the site of the sugar factory. It is not capable of being sold as it is, without anything more. This Court, therefore, concluded that mono vertical crystallisers are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and having regard to the facts of this case, we have no doubt in our mind that the mudguns and the drilling machines erected at site by the appellant on a specially made concrete platform at a level of 25 feet above the ground on a base plate secured to the concrete platform, brought into existence not excisable goods but immovable property which could not be shifted without first dismantling it and then re-erecting it at another site. We have earlier noticed the processes involved and the manner in which the equipments were assembled and erected. We have also noticed the volume of the machines concerned and their weight. Taking all these facts into consideration and having regard to the nature of structure erected for basing these machines, we are satisfied that the judicial member of the CEGAT was right in reaching the conclusion that what ultimately emerged as a result of processes undertaken and erections done cannot be described as goods within the meaning of the Excise Act and exigible to excise duty. We find considerable similarity of facts of the case in hand and the facts in Mittal Engineering and Quality Steel Tubes (supra) and the principles underlying those decisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is to the other person. 4. Contract also includes civil work such as development of site, structure foundation for mounting PV modules on metallic structures and fencing of the system to ensure security and safety and such other civil structure related activities as set out in Scope of work and in the Technical Specifications. Civil structure cannot be dismantled and moved away. 5. Schedule IV Scope of work, clearly states Commissioning of solar pumping infrastructural facility and its maintenance and after sales services for 10 years (It includes 5 years guarantee period). The applicant has himself agreed to be bound by this clause which reflects permanency of the installed Solar Photovoltaic (SPV) water pumping system. Contract between applicant and the counter-party is entered into on the premise that the system would continue to be situated at the place of construction; 6. Case laws citied by applicant has to be understood in terms of the facts as available therein. As in the case of M/S Solid and correct Engineering Works (citied Supra) the plant was not intended to be permanent and was to be shifted after completion of road repair and Construction work hence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rk includes procurement, supply, development, testing, commissioning and providing maintenance service for 10 years in respect of supply of a Solar Photovoltaic (SPV) water pumping system. Accordingly it is not getting covered under supply of Solar Power Generating System under Entry 234 of Schedule I of the Notification no. 1/2017 - Central Tax (Rate), dated 28th of June, 2017 under HSN code 84 or 85. Supply, installation, commissioning and maintenance of Solar Water Pumping Systems falls under the purview of Works Contract as per Section 2(119) of GST Act. 2 The applicant has sought a clarification on division of contract in two, one for supply of material and other for installation, commissioning and maintenance of Solar Water Pumping Systems. In this regard it is opined that in instant case as per terms and conditions of agreement, it is a single contract of supply, installation, commissioning and maintenance of Solar Water Pumping Systems and hence cannot be split in two separate contracts. Hence in instant case separate bills for supply of goods and supply of services cannot be raised. 3 The contract for supply, installation, commissioning and maintenance of Sola ..... X X X X Extracts X X X X X X X X Extracts X X X X
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