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TMI Blog2020 (12) TMI 837X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 2(53) of the SGST Act, 2017, Government means the Central Government or Government of Odisha respectively. There is no denying of the fact that the Appellant is providing service to Odisha Knowledge Corporation Limited (here-in-after referred to as OKCL ) which is a body corporate. The Appellant has failed to produce any documentary evidence as to how the provision of service to OKCL qualifies to be a provision of service to the Central Government, State Government or Union Territory Administration - The argument put forth by the Appellant that they are the implementing agency on behalf of the Government is not correct, as they are not providing any services to Government. In terms of para-8 of the agreement between OKCL and the Appellant, it is noticed that the Appellant is required to supply and install the specified goods and provide specified services in the ICT Labs of the Govt. and Govt. Schools located in the specified zones. Therefore, it is evident that the Appellant made supplies to OKCL which is a body corporate and registered under the Companies Act, 1956 as a Company. Appellant have clearly admitted that the funds for implementation of project are bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l/2020-21/, - - - Dated:- 29-9-2020 - SHRI R. MANGA BABU, AND SHRI SUSHI! KUMAR LOHANI, MEMBER Present for the Appellant (P.H. attended through Video Conference) 1. Shri Raju Malhotra, GM(F A), M/s.TCIL 2. Shri Sandeep Chilana, Advocate 1. BRIEFS FACTS OF THE CASE 1.1. M/s Telecommunication Consultants India Ltd. (hereinafter referred to as the Applicant or the Appellant ) assigned with GSTIN 21AAACT0061H1Z0 having registered address at TCIL Bhawan, Greater Kailash-I, New Delhi-110048, had filed an application on 21.08.2018 under Section 97(1) of CGST Act, 2017 read with Rule 104 of CGST Rules 2017 OGST Rules, 2017 in Form GST ARA-01 before the Authority for Advance Ruling, Odisha(herein after referred to as AAR ) seeking an Advance Ruling on the applicability of Entry No. 72 of Notification No.12/2017-Central Tax(Rate), dated 28.06.2017, read with Entry No. 72 of Notification bearing SRO No. 306/2017-Finance Department, Government of Odisha to the services provided by them under the category of Information and Communication Technology)ICT @ School Project. 1.2. The Appellant is a Public Sector undertaking working under the administrative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation bearing SRO No. 306/2017-Finance Department, Government of Odisha to the services provided by them under the ICT @ School Project. Entry No. 72 of Notification No. 1212017-Central Tax being relevant is quoted below: SI.No. Chapter Heading, Group or Service Description of Services Rate (per cent) Condition (1) (2) (3) (4) (5) 72 Heading 9992 Services provided to the Central Government, State Government, Union territory administration under any training programme for which total expenditure is borne by the Central Government, State Government, Union territory administration. Nil Nil (The Entry No.72 of Notification No. 12/2017-Central Tax is same as entry no. 72 of Notification SRO No. 306/2017-Finance Department of Odisha) 1.7. The AAR, Odisha, after examining the grounds filed in the application filed by the Appellant, has observed that three pre- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 10,000/-) through -e payment in ICICI BANK LTD, CPIN: 20012100004854 dated 03.01.2020. After due verification of the application and other aspects, the application is admitted. The Appellant in their appeal have, inter alia, prayed as follows:- (i) to set aside the impugned Ruling vide Order No. 03/0DISHA-AAR/2018-19 dated 09.10.2018 = 2018 (11) TMI 712 - AUTHORITY FOR ADVANCE RULING, ODISHA passed by the Learned Odisha Authority for Advance Ruling for Goods and Service Tax; (ii) to hold that Entry No.72 of Notification No.12/2017-Central Tax (Rate)dated 28.06.2017, read with Entry No.72 of Notification SRO No.306/2017-Finance Department, is applicable to the services provided by the Appellant under the ICT Project. GROUNDS OF APPEAL 2. The grounds of appeal as mentioned by the Appellant, in their appeal, are summarised here-as-under; 2.1. First pre-requisite: The services are provided under the training programme: The Appellant has contended that they are carrying out various activities viz. installation, commissioning, site maintenance, operation, etc. to implement the ICT Project in the Government schools in the State of Odisha. The A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant is engaged in the supply of operation or maintenance services in as much as operation or maintenance of self-owned equipment. Thus it cannot be said that the Appellant is engaged in the supply of operation or maintenance services in as much as operation or maintenance of self-owned equipment does not amount to supply of services to third party. Thus, it is clear that the entire infrastructure is owned by the Appellant and the repair and maintenance activities undertaken by the Appellant are in regard to the self-owned equipment. Therefore, there is no supply of maintenance or operation services by the Appellant. In fact, the repair and maintenance of the equipment and infrastructure is performed by the Appellant so that it may continue to provide computer training during the contract period in a smooth manner, without any obstruction. Point No.(vi) There is no supply of goods during the period of contract: As already submitted, the activities undertaken by the Appellant are under BOOT model basis and therefore, the ownership in the infrastructure developed by it would be transferred after the expiry of the contract period (i.e. 5 years). This is also clearly pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led, are rendered in conjunction with each other. To understand the same, attention is invited to the definition of composite supply under the CGST Act. (b) As per Section 2(30) of the CGST Act, 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. (c) It is, therefore, evident that for any two or more supplies to constitute composite supply as per Section 2(30) of the CGST Act, it is necessary that they are naturally bundled. It is, thus, legally untenable for a supply to be composite and artificially bundled at the same time. To this extent the impugned ruling is legally incorrect and unsustainable. (d) Assuming without admitting (for the sake of argument only) that Para 1 (c) of Schedule II is applicable to the present case, it is humbly submitted that there has never been any denial on part of the Appellant as regards the said transfer involving supply of goods. Conversely, in the application as wel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id' by the government. There is no dispute as regards the fact that it is the responsibility of OMSM (State Government) to ensure that appropriate funds are provided for implementation of the ICT Scheme. In fact, the said submission can be traced to Clause 5.2 of the agreement between OMSM and OKCL. Therefore, even though the expenditure is 'paid' by OKCL under contract to the Appellant, the same is 'borne' by Central and State Government only (jointly). PERSONAL HEARING 3. The Appellant was offered a Personal Hearing vide letter C.No.IV(01)02/CC/ODISHA-AAAR/BBSR/2019-20/4109-13A dated 13.02.2020 on 25.02.2020 at 11.00 A.M.. The Appellant vide their letter TCIU2019-20/ODISHA-AAAR dated 17.02.2020 has requested to adjourn the P.H. to any other date after 01.04.2020. Again, the P.H. was fixed on 17.03.2020 at 11.00 AM and the Appellant requested to adjourn the date to any convenience date after 30.04.2020 due to pandemic COVID-19. Finally, the P.H. was offered on 15.07.2020 at 12.00 noon. The Appellant vide their letter dated 14.07.2020 has expressed to inability to present personally for scheduled PH due to pandemic COVID19. The Appellant requested in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly of goods. Q4: Whether in such type of application/disputes any Ruling has been delivered? Ans : In Delhi, one such application is pending before Advance Ruling Authority for decision. In Odisha, in case of M/s.IL FS Education and Technology Services Ltd., the Advancing Ruling Authority has already rejected the benefit of Exemption Entry No.72 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017, read with Entry No.72 of Notification SRO NO.306/2017-Finance Department. And the Appellate Authority for Advance Ruling Authority has upheld the Ruling of AAR, Odisha. 4. DISCUSSION AND FINDINGS 4.1. We have carefully considered the submissions made by the Appellant in their appeal as well as oral submissions made by them during the course of hearing held through video conference on 09.09.2020 4.2. Now coming to the merits of the case, we notice that the prime issue raised by the Appellant is, as to whether the services provided by them to M/s.OKCL are eligible for exemption under Entry No.72 of the Notification No.12/2017, Central Tax (Rate) dated 28.06.2017 and entry No.72 of Notification SRO No.306/2017, dated 29.06.2017, issued by the Fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t they are the implementing agency on behalf of the Government is not correct, as they are not providing any services to Government. 4.6. In terms of para-8 of the agreement dated 07.10.2013 between OKCL and the Appellant, it is noticed that the Appellant is required to supply and install the specified goods and provide specified services in the ICT Labs of the Govt. and Govt. Schools located in the specified zones. Therefore, it is evident that the Appellant made supplies to OKCL which is a body corporate and registered under the Companies Act, 1956 as a Company. 4.7. We notice that the Authority for Advance Ruling, Odisha, in their findings(para 5.3 of the Order) has clearly observed that OKCL was promoted by the Higher Technical Education Department, Govt of Odisha and was incorporated under the Companies Act, 1956, as a Public Sector Undertaking to create new paradigm in education and development through universalisation and integration of Information Technology in teaching, learning and educational management processes in particular and socio-economic transformative processes in general. OKCL can sue and be sued in its own name and capacity distinct from its owners. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reement cited between OMSM and OKCL is not relevant to the present issue. The Appellant themselves have admitted that OKCL will release the money for the supplies made by the Appellant. The contention/pleading of the Appellant that they merely act as an implementing agency on behalf of OMSM, is factually not correct. 4.10. In this regard, we find that at para 10.10.1 of the said appeal, the Appellant themselves have contended that the activities undertaken by the Appellant are under BOOT model basis and therefore, the ownership in the infrastructure developed by it would be transferred after the expiry of the contract period (i.e. 5 years). This is also clearly provided in the agreement that the ownership of the entire hardware, software, other equipment, etc. will be transferred at zero value at the end of the contract period. Therefore, the stand taken by the Appellant is self-contradictory in as much as on one hand, they claim that there was provision of service, as operation or maintenance of self-owned equipment does not amount to supply of services to third party. But on the other side, they claim that the ownership in the infrastructure developed by it would be transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT infrastructure equipments is to be carried out by the Appellant on its own cost. The above claim of the Appellant is not acceptable because as discussed above, the total project amount of ₹ 107,14,83,000/- includes for the supply of goods service, which also includes repair maintenance service. 4.10.4. The Appellant under Para 1.22. of the appeal has mentioned that after the expiry of contract period of five years, the entire infrastructure will be transferred to SMED, Government of Odisha at zero transfer value. This is also clearly provided under Para 8.20 of the agreement, . that the ownership of the entire hardware will be transferred at zero value at the end of the contract period. This said transfer of the ownership is also unconditional. Therefore, we hold that the consideration received by the Appellant in respect of provision of supply could not be treated as the consideration for only service rendered. Moreover, under Schedule II of Para 1(c) of the CGST Act, 2017/SGST Act, 2017, it is clearly defined that any transfer of title in goods under an agreement which stipulates that property in goods shall pass at a future date upon payment of full considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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