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TMI Blog2019 (4) TMI 1622X X X X Extracts X X X X X X X X Extracts X X X X ..... le LED Street lights along with pet feeder basis SCADA system in Pune on a design, build, finance, operate, maintain transfer basis for a period of 12 (twelve) years. Hence the predominant and principal factor is to supply and install LED and fixtures on the existing street light poles and then to perform the activity of day to day management of the same by operating and maintaining such equipment to achieve energy savings - As is evident applicant would be providing bouquet of goods and services and if we remove one of the supply i.e. supply of the Dimmable Street lights/fixtures, the Other supply would be severely affected or may become meaningless. Without such installation of LEDs/ fixtures, there can be no day to day management in the form Of operation and maintenance. Hence in view of the above discussions, we reiterate that the principal supply by the claimant would be a supply of goods. In the present case there is supply of both, goods and services made in conjunction with each other in the ordinary course of business - the supply of services/goods in the present case is naturally bundled, with the supply of services goods being incidental to the supply of goods and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orth for the purposes Of this Advance Ruling, a reference to GST Act would means CGST Act / MGST Act. 02. FACTS AND CONTENTION - AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus- STATEMENT OF FACTS --- Developer : Uijwal Pune Limited ( UPL ), a subsidiary of Tata Projects Limited, is a company incorporated under the provisions of the Companies Act, 2013. Client: The Pune Municipal Corporation (PMC) is the civic body established on 15 February 1950. The executive power of the PMC is vested in the Municipal Commissioner, an Indian Administrative Service (IAS) officer appointed by the Government of Maharashtra. The major responsibility of PMC is to look after the civic and infrastructural needs of the citizens. Project : Pune Municipal Corporation ( PMC ) had invited for bids from eligible parties for installation of Energy Efficient dimmable LED Street lights along with pet feeder basis SCADA system in Pune on a design, build, finance, operate, maintain transfer basis for a period of 12 (twelve) years (hereafter referred to as the Project ). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll start from the date of successful commissioning of the switching points. The duration of the Project shall be 12 (twelve) years which shall be deemed as Contract Period After completion on the Project Life all material/accessories installed by the Developer during the Project will be property of PMC. The Developer shall follow procedure detailed in this Tender document to hand over the site in satisfactory and working condition to PMC at the end of the Contract Period. Before handing over the site, the developer has to seek handing over certificate and no dues certificate from PMC officials. Statement containing the applicant s Interpretation of Law and/or facts - As per the Sl.no.3(vi)(a) of notification no. 11/2017 - Central Tax (Rate) dt.28th June 2017 amended with notification no.24/2017-CentraI Tax (Rate) dt 21.09.2017 and further amended with notification no. 31/2017-CentraI Tax (Rate) dt 13.10.2017, tax rate of 12% applicable in case of Composite supply of Works Contract as defined in clause(119) of section 2 of the Central Goods and Services Tax Act, 2017, provided to the Central Government, State Government, Union Territo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct means a Contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract. Works contract, being composite supply involving both supply of goods and services relating to immovable property would constitute a service and accordingly liable to tax as per the provisions of the Act. Immovable property is not defined in GST Act. Section 3(26) of The General Clauses Act, 1987, defines, Immovable Property shall include land, benefits to arise out of the land, and things attached to earth, or predominantly fastened to anything attached to the earth. Also, as per Section 2(6) of The Registration Act, 1908, immovable property includes land, buildings, hereditary allowances, rights to way, lights, ferries, fisheries or any other benefit to arise out of land, and things attached to the earth or permanently fastened to anything which is attached to earth, but not standing timber, growing crops ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treated as Original Works. 4. Whether Supply involved in the Contract is pre-dominantly meant for use other than for commerce, Industry or any other business or profession? Section 2(17) of CGST Act, defined business to include - (a) any trade, commerce, manufacture, profession, vocation, adventure , wager or any other similar activity, whether or not it is for a pecuniary benefit; (b) to (h) (i) any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities . However, as per the explanation given vide notification no. 17/2018 - Central Tax (Rate), dated 26th July, 2018, For the purposes of item sl.no.3, in column (3), in item (vi) of notification no. 11/2017 - Central Tax (Rate) dated 28.06.17, the term business shall not include any activity or transaction undertaken by the Central Government a State Government or an local authority in which they are engaged as public authorities. Public Authority has not defined in GST Act. Pune Municipal Corporation is Local Authority, established as civic body with ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... JSD001 was previously registered at Secunderabad Commissionerate. Accordingly, no information i.r.o. assesse are available. This is for your kind information. 04. HEARING The Preliminary hearing in the matter was held on 04.12.2018, Sh. Santanu Chakravarti, Asstt Vice President along with Sh. Dinesh Mutha, Asstt. General Manager appeared and requested for admission of application as per contentions made in their application. Jurisdictional Officer was not present. The application was admitted and called for final hearing on 19.12.2018, Sh. Santanu Chakravarti, Asstt. Vice President along with Sh. Dinesh Mutha, Asstt. General Manager appeared made oral and written submissions. Jurisdictional Officer Sh. Mangat Dy. Commr. Div - III, CGST C.EX., Navi Mumbai appeared but did not make any written submissions. 05. OBSERVATIONS We have gone through the facts of the case, documents on record and written submission made by the applicant. Based on the same we discuss the issue put before us by the applicant. The first question raised by the applicant is whether their activity, under the subject contract entered in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 1. Chapter 99 All Services 2. Section 5 Construction Services 3. Heading 9954 (Construction Services) (i) ) 9 - (ii) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017 9 - (iii) Composite supply of works contract 6 Provided that where the services are supplied to a Government Entity, they should have been procured by the said entity in relation to a work entrusted to it by the Central Government, State Government, Union territory or local authority, as the case may be (iv) Composite supply of works contract . 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old fixtures are to be taken by Developer and to be disposed off in scientifically and environmentally safe condition and such certificate from the competent authority shall be submitted to PMC within 3 (three) months after installation. The design and specification of LED Lights will be given by the Developer as compared with old Fittings along with necessary documentation. The Developer will have full responsibility of labelling of information which shall be distinctly and indelibly make on the housing like to include year of manufacturing, batch no, serial no.name of manufacturer, rated wattage and voltage (Input) rated Limen. The fixture must carry the embossed name of the manufacturer and stickers shall not be allowed. The Developer shall maintain the defined minimum storage space within Pune for storage of standby LED Lighting Fixtures ofa minimum 3% of the installed of fittings each type Based on all types of installations. Developers shall be invited to offer suitable fixtures to achieve the defined Lux Levels boards on the lines of National Lighting Code. From the detailed scrutiny of the terms of the contract aforesaid, f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orming part of that composite supply is ancillary; In the subject case it is seen that, even though the contract covers both, supply of goods and service, the bid and subsequent tender is for installation of Energy Efficient dimmable LED Street lights along with pet feeder basis SCADA system in Pune on a design, build, finance, operate, maintain transfer basis for a period of 12 (twelve) years. Hence the predominant and principal factor is to supply and install LED and fixtures on the existing street light poles and then to perform the activity of day to day management of the same by operating and maintaining such equipment to achieve energy savings, The activities of day to day management by operating and maintaining such Energy Efficient dimmable LED Street lights along with pet feeder basis SCADA system to achieve energy savings can only take effect after the LEDs/fixtures are installed. As is evident applicant would be providing bouquet of goods and services and if we remove one of the supply i.e. supply of the Dimmable Street lights/fixtures, the Other supply would be severely affected or may become meaningless. Without such installation of LEDs/ fixtures, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re installed on Electric poles which is attached to earth and removal of such LED fixtures lead to damage and does not have any commercial value due to it s not usefulness for any other purpose, it should be treated as immovable property and hence their activity will be covered under the definition of Works Contract. We find that the electric poles are attached to the earth, however the LEDs and fixtures which are installed can be removed without damaging the poles. Even in normal cases electric poles are fitted with fixtures using nuts and bolts which are easily removable. In facts their contract mentions that there will be responsibility on the part of applicant concerning warranty of LED s/ fixture for Contract Period which will start from the date of successful commissioning of the switching points. This would imply that if the LEDs/fixtures malfunction or do not function at any time then it would be the responsibility of the applicant to change the same. These appear to be regular screwdriver technologies where the fixtures are attached to the electric poles and can be replaced as and when required without damage to the poles. An example can be given of light fixture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. To sum up, in the present case there is supply of both, goods and services made in conjunction with each other in the ordinary course of business and as discussed above considering the provisions of the GST Laws we find that supply of services/goods in the present case is naturally bundled, with the supply of services goods being incidental to the supply of goods and therefore such contract are to be considered as a composite supply of service where the principal supply is of goods and the supply of services is incidental/ancillary to such supply of goods. Thus we find that their activity of supply will not be covered under Sl.no. 3(vi)(a) of Notification No. 11/2017 - Central Tax (Rate) dt.28th June 2017 amended by Notification No.24/2017-Central Tax (Rate) dt 21.09.2017 and further amended by notification no. 31/2017 Central Tax (Rate) dt 13.10.2017 and notification no. 17/2018 dt.26.07.2018 because the said Notification as amended cover supply of services and does not cover supply of goods. Now that we have found that the present supply is a composite supply where the principal supply is supply of goods, we address the next question which is as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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