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TMI Blog2019 (5) TMI 1133X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 28-06-2017? - HELD THAT:- In this case, the scope of the service involves maintenance work and supply of goods, which falls under the works contract services. The exemption is provided to services involves only supply of services and not for works contract services. On the contract, it is clearly specified that all installed equipments constructed or system installed are transferred to BMC in good condition. Therefore, the activities carried out by the appellant in the instant case will be considered as a supply of goods in terms of the provisions of Schedule II, Para 4-A of CGST Act, 2017 / SGST Act, 2017. The appellant under the grounds of appeal has not put forth any arguments or legal provisions to negate the applicability. Therefore, the contention of the appellant that the transaction doesn t involve any supply of goods is not sustainable. Appeal dismissed. - 04/2018-19/AAAR-Odisha - - - Dated:- 5-3-2019 - SHRI NARESH PENUMAKA, AND SHRI SASWAT MISHRA, MEMBER Present for the Applicant Anand Prakash Rai, Director Yash Dev Arya, C.A. M/s. Super Wealth Financial Enterprises Private Ltd, Plot No-3198/5183, Gauri Vihar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the appellant on the basis of their offer of highest energy saving of approx 80% for a period of 10 years. The Street Lighting Services being provided by the appellant to BMC since Oct. 2013 was covered under service tax until introduction of Goods Services Tax ( GST ) in July-2017. 3.1. Under the GST regime, Notification 12/2017-Central Tax (Rate) dated 28.06.2017 provides exemption from the payment of GST to various services specified therein. Serial no. 3 is reproduced below: Sl.No. Chapter, Section, Heading, Group or service code Description of Service Rate (per cent) Condition 3 Chapter 99 Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local authority or a Governmental authority by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any func ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y them would not qualify as Works Contract under Section 2(119) of the CGST Act, since Works Contract would include a contract for construction, erection, installation, improvement, renovation, repairs, maintenance, etc. of an immovable property, where the property in goods involved in execution of such contract is transferred to the recipient. They are only required to install the energy saving equipment, which can be easily dismantled, removed or replaced without any damage to the existing street-light poles and can be moved to any other location for installation. The appellant has also submitted that the activity of installation of energy saving equipment on the existing street-light poles does not amount to installation of an immovable property . Further, upon installation, the property in the energy saving equipment is not transferred to BMC but remains with them. 3.6. Further the appellant submits that the term pure service has not been defined in the act or rules. However, in serial no. 3 of the aforesaid notification itself, the term pure service has been suffixed with exclusions i.e. excluding works contract service or other composite supplies involving sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chapter, Section, Heading, Group or service code (Tariff) Description of Service Rate (per cent) Condition 3A Chapter 99 Composite supply of goods and services in which the value of supply of goods constitutes not more than 25 per cent. of the value of the said composite supply provided to the Central Government, State Government or Union territory or local authority or a Governmental authority or a Government Entity by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution. NIL NIL The value of goods used (and not supplied) is less than 25% of the value of the said composite supply. Therefore, the use of material although neither supplied nor sold to BMC would be exempted under Sr. No. 3A of the Notification no. 12/2017 -Central Tax (Rates) dated 28.06.2017 as amended. 3.9. The appellant also relied on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g on the business so as no longer to form part of those assets, whether or not for a consideration, such transfer or disposal is a supply of goods by the person. 4.1. The AAR further states that it is not a case of supply of pure service but rather a case of supply with substantial use of goods. At the time of personal hearing, on a query raised by the authority it was explained by the applicant that during the period from 01.07.2012 till the date of hearing, materials such as Street Lights, Control Panel and LED Bulbs etc. of value ₹ 3,89,72,117/- have been moved to Bhubaneswar project from the manufacturing plant. This is a substantial amount and with material movement at this scale, the ultimate supply to BMC cannot be held as a case of supply of pure service. Thus, on this account, the condition is not fulfilled. 4.2. In addition, the contract between the applicant and BMC is essentially a works contract since the terms of the contract clearly fits into the definition in Section 2 (119) of the CGST/OGST Act. To elaborate, the contract envisages, survey and identification of the street light posts, replacing the existing lighting system with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly of services made by the Appellants as not a pure service as in terms of serial no. 3 of Notification no. 12/2017- (Central Tax) dated 28.07.2017 read with corresponding notification issued under Odisha GST Act. The supply of pure service implies supply of service only and not making any supply of goods, which comes out very clearly from the wordings of the entry 3 Pure service (excluding works contract service or other composite supplies Involving supply of any goods) which is the case of the appellants. The AAR has stated in Para 7.2 (page 8) that Pure service has not been defined in the said Notification for which it has to be understood by applying the common parlance test and general understanding. As per dictionary, pure means unadulterated and unmixed . Accordingly, pure service should mean unadulterated service not mixed with any other element (in this case without any mixture of goods). 5.2 The AAR, State of Madhya Pradesh while hearing of application of advance ruling made by EGIS India Consultants Engineers Private Limited reported in 2018 (16) G.S.T.L. 171 (A.A.R.-GST) = 2018 (8) TMI 283 - AUTHORITY FOR ADVANCE RULINGS, MADHYA P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the Ld. AAR. In other words, the AAR has considered the submissions (not sure or written) without affording the appellants any opportunity to place counter arguments. 5.7 The appellants have not made any supply of goods either under a works contract or under a contract for composite service involving supply of goods. There is no transfer of property or effective control or possession in the goods during the execution of the contract for BMC. Therefore, the appellants have made supply of pure service in terms of FAQ issued by CBIC on Government service and are entitled to claim exemption vide serial no. 3 of notification no. 12/2017-CentraI Tax (Rate) and corresponding notification issued under the provisions of Odisha GST. 6.0. The appellant was given opportunity of personal hearing and on 28.02.2019, Anand Prakash Rai, Director and Yash Dev Arya, C.A appeared before the authority and during the hearing they reiterated the written submissions. 6.1. The appellant sought the rulings seeking their eligibility to exemption in terms of entry sl no 3 of Notification no 12/2017-Central Tax (Rate) dated 28-06-2017, which has been extended to Pure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal has stretched the interpretation that they are not supplying any goods in the instant service. Therefore, as per the FAQ clarification, the service would be treated as supply of pure service. But admittedly, the appellant has mentioned that they are bound by the contract to replacement of the non-fixable fixtures at their own cost during the contract period and they are also installing the LED lights which are under their contract service. The above facts are clear from the Agreement of Para 6.1, Phase 4 and Para 7.2.1 to substantiate the facts which is reproduced below:- Para 6.1. Phase 4 Operation Maintenance Phase O M of switching points and street lighting fixtures covered under the Project, including put not limited to) the replacement of non-functional fixtures at the Contractor s own cost. Para 7.2.1 The Contractor shall remain the owner of the equipment and systems installed by the Contractor during the Term. The Contractor shall undertake all the procurement of equipment and service necessary for the Project. The Contractor shall hand over any replaced equipment, fittings or other Items to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant in the instant case will be considered as a supply of goods in terms of the provisions of Schedule II, Para 4-A of CGST Act, 2017 / SGST Act, 2017. The appellant under the grounds of appeal has not put forth any arguments or legal provisions to negate the applicability. Therefore, the contention of the appellant that the transaction doesn t involve any supply of goods is not sustainable. 6.3. The appellant in their grounds of appeal has also relied upon the decision in the case of EGIS India Consultants Engineers Private Limited reported in 2018 (16) G.S.T.L. 171 (A.A.R.-GST) = 2018 (8) TMI 283 - AUTHORITY FOR ADVANCE RULINGS, MADHYA PRADESH . However, we are of the considered view that the said decision is distinguishable in the facts and circumstances of the case in as much as relied upon case does not involve operation and maintenance of street light but related to consultancy services. 6.4. The Meghalaya High Court s decision in the case of Tata Consultancy Services Versus The State of Meghalaya [2014 (69) VST 230 (Megh)] = 2014 (7) TMI 659 - MEGHALAYA HIGH COURT as relied upon by the appellant is also of no assistance to the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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