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TMI Blog2019 (10) TMI 1013X X X X Extracts X X X X X X X X Extracts X X X X ..... title in goods is happening only at the end of the contract period in all cases, except planetarium where no transfer of property in goods is happening and it is a clear case of lease (hence a service). Even where the contract is terminated within the contract period, a lump-sum amount is charged as severance amount which is related to the cost of infrastructure installed and the transfer of property happens at that time. Hence in all cases, the actual contract is for the lease of infrastructure in the project and usage and hence is a service - What is leased in this case is not individual goods but all the goods involved in the set-up of an e-classroom. The moment the e-classroom comes into existence,- the individual goods lose their exist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration is also inclusive of software updation, training and staff for teaching. The entire solution is a single package and cannot be broken and supplied as there is no piece meal supply. The contract for supply is also a single contract. PERSONAL HEARING: / PROCEEDINGS HELD ON 26.02.2019 4. Sri. Shyama Sagar, Chartered Accountant and the duly authorised representative of the applicant appeared for personal hearing proceedings held on 26.02.2019 and reiterated the facts narrated in their application. 5 FINDINGS DISCUSSION 5.1 We have considered the submissions made by the applicant in their application for advance ruling as well as the submissions made by Shyama Sagar, Chartered Accountant and the duly authorised represe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d) Further, the applicants agreement states new e classroom infrastructure would be delivered from second year onwards by replacing the earlier classroom infrastructure. e) it is also seen that the contractee needs to support the applicant in all civil work and allow the implementation team to implement the project. f) The applicant shall also provide digital content which will match with the syllabus of the Board for which the content is subscribed. g) The applicant also trains the teachers to use the facility. h) The project value as per the contract is charged on per Student basis. 5.5 The exit clauses of the contract shows that the project includes two types of investments a) one time investment of hardware l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ab Solution The contract value is for five years. Language Lab is set up at schools premises to provide services and they also monitor and take care of the maintenance of all supplied hardware throughout the contract period. The applicant bills them in equal instalments of the project value @ 20% for each year from the School and at the end of the contract, all the infrastructure will be left to the school Innovative STEMulation Robotics Lab Solution The contract period is for five years. The applicant sets up Robotic Lab at the school premises to provide services to school children and also monitors and takes care of the maintenance of all supplied hardware throughou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n case of e-Classrooms. In case of Language Labs and Digital Campus also the same methodology is adopted. 5.8 The applicant has declared that the contract is for providing digital solutions, along with the hardware, on a lease basis for a period of 5 years for a consideration which shall be paid by the contractee on periodical basis extending to multiple years. The applicant, at the end of the contract period, in all cases except Planetarium, is leaving the entire project infrastructure to the contractee itself. The contract must now be examined to see whether it is a supply of lease with periodic collection of lease rentals or supply of materials with deferred collection of the consideration. 5.9 The sample contract is examined and f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sl No. Chapter, Section or Heading Description of Service Rate (per cent.) Condition 17 Heading 9973 (Leasing or rental services, with or without operator) (iii) Transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration. Same rate of Central tax as on supply of like goods involving transfer of title in goods (vi) Leasing or rental services, without operator, other than (i), (ii), (iii), (iv), and (v) above. Same rate of Central tax as on supp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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