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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 ..... n the subject case but there is no 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 the contract. Therefore there is no works contract involved in the subject case. The items are in nature of machine/instruments/equipment and are all replaceable and hence cannot he said to be of immovable nature - answered in negative. - GST-ARA-26/2019-20/B-43 - - - Dated:- 18-3-2020 - MS. VINITHA SEKHAR, AND MR. A. A. CHAHURE, JOINT COMMISSIONER OF STATE TAX, (MEMBER) PROCEEDINGS (Under Section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) The present application has been filed under Section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as the CGST Act and MGST Act respectively ] by M/s. Prasa Infocom Power Solutions Private Limited, the applicant, seeking an advance rulin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manuals, warranty and test certificates, detailed hand over along with training to end customer and providing process flow chart for maintaining all the equipment. 2.4. Before supplying and subsequently commissioning the equipment, Applicant was required to undertake civil and mechanical works, namely construction of a civil structure to house the equipment. Applicant also undertook supply and installation of other ancillary equipment necessary in a civil structure namely UPS and batteries, fire alarm system, chillers, air conditioners, surveillance systems, etc. All such activities undertaken by the Applicant were required to set up Data Center, as a whole. Thus the Contract does not limit itself to mere supply of equipment but extends to civil and mechanical works, installation, testing and commissioning as well. Thus, the Contract involves a composite supply of goods as well as services that are naturally bundled in the course of setting up of a data center . The Data Center cannot be shifted to another location without first dismantling and then re-erecting it at another site. 2.5 The applicant has cited the various provisions and definitions of the GST Act and stated tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CGST Act the applicant, has cited the decision of the Hon ble Supreme Court in the case of T.T.G. Industries Limited v. CCE, 2004 4 SCC 751 = 2004 (5) TMI 77 - SUPREME COURT as well as the decision of the Maharashtra Authority for Advance Ruling in Fermi Solar Farms Private Limited, 2018 VIL 14 AAR = 2018 (9) TMI 1339 - APPELLATE AUTHORITY FOR ADVANCE RULING MAHARASHTRA . in support of their contention that, Applicant is supplying goods and services which is resulting in setting up of a Data Center, which cannot be shifted to another location without first dismantling and then re-erecting it at r site and hence. Data Center shall be treated as an immovable property under the CGST Act and the transaction, as a whole, shall be regarded as supply of works contract . Applicant has also referred to various online web sources to explain the structure and design of a data center reference and submitted that essentially, a data center is referred to as an immovable structure with various security and temperature control features housing enormous servers which cannot be moved or shifted. 2.9 In view of above, applicant has submitted that it is supplying goods and services wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 954 (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 submit that only those supply are classifiable under Chapter 9954 which are mainly related to the construction service. In this case, i is found that there is a construction of a room to fit/ install the equipment/machinery/other various apparatus and the value of construction is not significant, as compared to the value of such equipment/machinery/apparatus. The major portion in this project is of fitting/ installation of equipment/Machinery/other various apparatus. It is also submitted that since their work/project does not qualify under the definition or works Contract . the benefit of Notification No. 08/2017- I.T. (Rate) dated 28.06.2017 is not available to them. Further, it is to say that vide Not. No. 03/2019 IT (Rate) dated 29.03.2019, the item (ii) of S. No. 3 which relates to works contract is omitted. 3.4 Hence it is requested to reject the claim of applicant classifying the said project/ work under as works Contract as defined under Section 2 (119) of CGST Act, 2017. 04. HEARING Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if the applicant fails to supply and install the necessary components required for Cray to install its system then the applicant is liable for liquidated damages. 5.2.3.1 The detailed Statement of Works Activities is dated 24.04.2017 and therein the applicant, in a tabular form, has given separately, the costs of goods supplied, the Installation Price and the AMC Fees for a three year period along with VAT/CST/Service Tax thereon. There is also an unexplained Buyback cost mentioned which would presumably be in respect of the goods supplied by the applicant to Cray. The total cost as per the statement dated 24.04.2017 is ₹ 26,21,16,223/-, after a Buyback cost of ₹ 1 crore. 5.2.3.2 There is another detailed Statement of Works Activities dated 17.05.2017 and therein too, the applicant, in a tabular form, has given separately, the costs of goods supplied, the Installation Price and the AMC Fees for a three-year period along with VAT/CST/Service Tax thereon. There is again an unexplained Buyback cost mentioned which would presumably be in respect of the goods supplied by the applicant to Cray. The total cost as per this Statement is ₹ 34,60,95,168/-, after deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equipment, transport and delivery to sites, training, installation, testing and commissioning of such equipment. They have further submitted that maintenance of the Data Centre for further period of three years are also being undertaken by them. It is seen from the documents submitted by them that, separate prices are indicated for each of the activity for supply of various materials and the activity for installation, testing commissioning., maintenance, etc. Since the agreement was entered prior to the introduction of GST, they have, in their documents, shown levy of Value Added Tax (VAT)/Central Sales Tax (CST) and Service Tax. 5.5 Since the applicant is claiming that the subject activities undertaken by them amounts to Works Contract as per GST Laws, we shall therefore discuss all the provisions relating to Works Contract. GST Schedule II clearly mentions that the following are supply of services:- a. construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, b. works contract including transfer of property in goods (whether as goods or in some other form) involved in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce we now refer to the definition of Composite Supply as mentioned in sub-section (30) of Section 2 of CGST Act, 2017 and which is as under:- Composite supply means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply . 5.5.4 From the discussions made above we find that, as per the subject agreement and documents submitted by the applicant, the major part of the contract is supply of goods. These goods are sold to the client by the applicant and they receive separate payment for such goods sold. Further we find that the goods that are supplied are used by the applicant to provide services of installation, testing and commissioning of the Data Centre. Without these goods the services cannot be supplied by the applicant and therefore we find that the goods and services are supplied as a combination and in conjunction and in the course of their business where the principal supply is supply of goods. Thus we find that there is a composite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rks contract is applicable only in immovable properties for GST arose and where the value of goods and services are not distinct and in the subject case, 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. Therefore, their project/work is not classifiable under Works Contract . 5.8.1 We agree with these submissions of the jurisdictional officer and for reasons mentioned in the aforesaid paras we hold that the supply of goods and service by the applicant to Cray Inc. (Cray) does not qualify as works contract as defined under Section 2(19) of the Central Goods and Services Tax Act, 2017 (CGST Act)? 5.9 The decision of the Authority for Advance Ruling, Maharashtra in case of M/s Jalaram Feeds = 2019 (6) TMI 1063 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA , as cited by the jurisdictional officer, is not applicable in the subject case because the facts of both the matters are totally different. 5.10 The jurisdictional officer has submitted that, on going through the list of goods and services. it is seen that items at Sr. No. 2 to 17 are in nature of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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