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TMI Blog2020 (8) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the COST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression 'GST Act' would mean COST Act and MGST Act. 2. FACTS AND CONTENTION - AS PER THE APPLICANT The submissions of the applicant is as under:- 2.1 Prasa Infocom & Power Solutions Private Limited ("Applicant"), is engaged in the business of providing data center construction and contracting services. 2.2 M/s Cray Inc. ('Cray') has entered into a Contract with Indian Institute of Tropical Meteorology (ITM) for supply of high performance computing solutions (including its maintenance) and preparation and maintenance of Data Center. Cray has sub-contracted the portion related to preparation of Data Center (including its maintenance) to the Applicant vide contract dated 05.05.2017 ('hereinafter referred to as the Contract') for a data center project for the Ministry of Earth Sciences at Pune. 2.3. The 'scope of services' in the contract dated 05.05.2017 provided that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forementioned Rate Notification, it is pertinent to note that in order to be eligible to pay GST under the aforementioned entry of the Rate Notification, the supply of services by the Applicant will have to be in the nature of works contract. 2.6 Applicant has reproduced the definition of 'Works Contract' ,s per Section 2 (119) of the CGST Act, and the various dictionary meanings of the words/terms used in the said definition and submitted that to qualify as a 'works contract', a contract shall not be a contract for mere supply of goods or supply of services but :hall be a composite supply involving supply of both goods as well as services, which results in the creation or repair/maintenance/renovation/improvement etc. of an immovable property as a whole. 2.7 Applicant has submitted that they have agreed to complete the project on a turn-key, end-to-end basis as is evident from the statement of work dated 20.05.2017 and all such activities undertaken by the Applicant are required to set up Data Center, as a whole. Additionally, Cray is required to provide its acceptance after inspection of services or deliverables as mentioned in the statement of works. Further, the Applicant is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by the jurisdictional officer are as under:- 3.1 Applicant under letter dated 08.11.2019 has intimated that the works with respect to construction and commissioning of the service in relation to the said contract has been completed, and further, invoicing in relation to the said work done has been done separately for goods and services and GST has been paid accordingly. Thus, in the instant case, the supply of goods and service is already completed and therefore their application is liable for rejection, because in advance ruling, as per the provisions of Section 95 of the CGST Act, 2017, only those cases are eligible where the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant and not already completed at the time of filing of the application. 3.2 From the definition of Works Contract under the GST Laws, it is clear that works contract is applicable only in immovable properties for GST purpose and where the value of goods and services are not distinct. Perusal of the copy of agreement / documents submitted by the applicant reveal that the value of goods/equipment is clearly distinct and separated from the value of services. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Advocate & Authorized Representative appeared made oral and written submission. Jurisdictional Officer Shri. Shailendra Nath, Superintendent, Range-III, Division - IV, (Kothrud), Pune- II Commissionerate also appeared and made submissions. We heard both the sides. 05. DISCUSSIONS AND FINDINGS: 5.1 We have gone through the facts of the case, documents on record and oral and written contentions made by both, the applicant as well as the jurisdictional officer. The question before us is whether supply of goods and services by the applicant to M/s Cray Inc. (Cray) qualify as 'works contract' as defined under Section 2(119) of the Central Goods and Services Tax Act, 2017 (CGST Act)? 5.2 M/s Cray Inc. ('Cray') has entered into a 'Services and Development Agreement' with the Applicant on 04.04.2017 wherein the applicant, acting as an independent contractor, and not as an agent of Cray, shall furnish personnel and services pursuant to the terms and conditions mentioned under Article Nos. I to XXX of the said agreement. 5.2.1 The 'scope of services' as per Article I of the impugned agreement states that both the parties may enter into mutually agreed upon written orders for services and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sting of goods and services are shown separately and the major value of the contract exceeding 85% or the total cost of the project is pertaining to supply of goods. 5.3 The applicant has also submitted the Amendment dated 05.05.2017, made to the Agreement mentioned at 5.3 above. While the amendment is dated 05.05.2017, it incorporates a Statement of Work in letter format dated much after i.e. on 20.05.2017 and a Cost Summary dated 17.05.2017. 5.3.1 The Statement of Work mentioned in 5.3 above includes Design approval for the complete data center, Supply of items, Installation of items, Testing and commissioning of the installed equipment, Detailed documentation, namely as built drawings, operational manuals, warranty and test certificates, detailed hand over along with training to end customer and providing process flow chart for maintaining all the equipment. 5.3.2 The Cost Summary mentioned in 5.3 above, against 'Funds Flow', mentions that 40% advance to be paid to applicant for supply of large value items and the balance against material readiness before delivery. For supply of small value items, 100% amount to be paid against delivery and for installation and commissioning, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... involved in the execution of such contract" 5.5.1 The what we need to find out is whether the applicant in the subject case is dealing in any immovable property which is transferred in the execution of the contract. The applicant has submitted that as per their contracts with Cray, the final outcome or deliverable is ready to operate Date Centre. Their contention is that the installed equipment cannot be dismantled and removed after installation, without damage. Hence it is in the nature of permanent installation of equipment within the Data Centre and becomes a part of such data Centre and therefore inherits the characteristics of an "immovable property" and therefore their transaction is a transaction of "works contract", covered under Section 2(119) of the Act. 5.5.2 The documents submitted by the applicant reveal that the contract pricing is different for Equipment/Materials, their Installation and Maintenance. For goods supplied, the prices are shown exclusive of VAT/CST and for services rendered the prices are shown excluding Service Tax. The Statement of Works Activities dated 17.05.2017 has clearly bifurcated the contract into a supply of goods and supply of services. Fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Construction Services) and falls under description of services- (ii) Composite supply of works contract as defined in clause (119) of Section 2 of CGST Act, 2017 it is to state that only those supply is classifiable under Chapter 9954 which are mainly related to the construction service. In this case, it is found that there is absolutely no construction of any kind. The Data Centre, as per the submissions made, appears to be a space /room where the equipment /machinery /other various apparatus are installed. The value of Civil Construction shown is insignificant, as compared to the value of goods/ services. The major portion in this project is of sale of equipment/ Machinery/ other various apparatus. 5.7 The jurisdictional officer has submitted that the Applicant, under letter dated 08.11.2019 has intimated that the works with respect to construction and commissioning of the service in relation to the said contract has been completed and therefore their application is liable for rejection, because in advance ruling, as per the provisions of Section 95 of the CGST Act, 2017, only those cases are eligible where the supply of goods or services or both being undertaken or proposed to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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