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TMI Blog2021 (8) TMI 733X X X X Extracts X X X X X X X X Extracts X X X X ..... ased on the agreement entered into by the applicant vide contract agreement dated 21.07.2015. To fulfill the scope of the contract, they supply the Components/spares for the Operation and Maintenance period, as per para 3.01.04/3.01.05 of the Lr. of TANGEDCO dated 30.01.2018 and the cost of such supplies are included in the contract price. Thus, the supply of Components/spares for the Operation and Maintenance period are part of the supplies of Works Contract entered into with TANGEDCO and therefore liable to GST at the appropriate rates. The Components, which were supplied in Sale-in-Transit transaction, without payment of tax under the erstwhile Central Sales Tax regime, by the Applicant , i.e., AHPL to its Customer (i.e., TANGEDCO) in Tamil Nadu is a Supply as per Section 7 of the CGST/TNGST Act 2017 and will attract levy of Goods and Services Tax. X X X X Extracts X X X X X X X X Extracts X X X X ..... to introduction of GST, the components purchased by the AHPL in a sale - in - transit transaction from its Vendors were subject to the levy of Central Sales Tax ("CST") under the Central Sales Tax Act, 1956 ("CST Act"). In terms of CST Act, CST was levied at first point of sale of taxable goods. Further, in terms of Section 6 (2) of the CST Act, the subsequent sale of such goods during movement thereof from one state to another ("Sale-in-transit") was exempt from levy of CST. Thus, at the time of entering into the Contract, AHPL quoted/ agreed to supply the Components to TANGEDCO at the prices charged by the Vendors during the sale-in-transit inclusive of any amount of CST, which was already discharged by the Vendor (s) of AHPL at the time purchase of such goods from their suppliers (i.e., suppliers of Vendors) and was not required to be paid by AHPL on purchase of such Components from Vendors. Post 1 July 2017, the Central Goods and Services Tax Act, 2017, ("CGST Act"), Integrated Goods and Services Tax Act, 2017 ("IGST Act"), State Goods and Service Tax Act (s), 2017 of respective States in India, Union Territory Goods and Services Tax Act, 2017 ("UTGST") and rules, notifications ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attract levy of Goods and Service Tax? It was reiterated that the Company filed the present Application for Advance Ruling No. 27/ 2020 dated 4 December 2020 ("Application") in respect of the contractual arrangement to understand the implications post introduction of GST. In particular, the present application has been filed regarding the levy of GST on supply of above-mentioned Components during the sale-in-transit basis the submissions made in the Application and Additional Submissions dated 26th February 2021. The applicant has further stated that GST laws do not provide for single point but multiple points of taxation.; GST laws do not provide exemption on subsequent supply of goods or sale of goods in transit by transferring the title of goods by handing over the relevant documents.; GST laws provide for issuance of tax invoice and corresponding e-way bills for supply of goods involving movement thereof from one place to another; they believe that the transaction between vendors & AHPL and AHPL with TANGEDCO is chargeable to GST as * The Components provided by Vendors and subsequently sold by AHPL falls under the definition of 'Goods'; * TANGEDCO, AHPL and its Ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commissioning spares i.e., the spare parts required for commissioning the Project has been stated under a separate category from the spares or components stated as SI. 10 and/or 11 required post such commissioning work * In Para 3.01.05 and 3.01.06 it has been categorically stated that the spares will be supplied for operation and maintenance of the Project even beyond the stage of commissioning of the Project * Neither the contract contemplates that the activity of operation and maintenance be provided by AHPL nor is the same undertaken by them. Tus the Contract between AHPL and TANGEDCO, categorically provides for a scenario where the supply of Components will be sans the supply of service. * In terms of para 29.05, AHPL has completed the commissioning of the Project on 3rd September 2019 and the completion certificate to this effect has been issued by TANGEDCO * Post completion of RMU activities, it has been supplying the Components for operation and maintenance of the Project in terms of para 3.01.05 and para 3.01.06 of the letter, without undertaking any supply of services. * The authority has statutory jurisdiction to determine the issue of taxability of transactio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arguments made by the applicant during the personal hearing. The applicant has stated as 'Unregistered' in the application form GST ARA-01. We find that the applicant is not registered in the State of Tamil Nadu but holds Active GST registration at Delhi/Haryana. The applicant undertakes the works of Renovation, Modernisation and Uprating of Sholayar Power House-I from 2X35 MW to 2X42 MW herein after referred to as 'Project') as per Contract Agreement dated 21.07.2015 to TANGEDCO, in the State of Tamil Nadu and the ruling sought is on the supplies made to the 'Project' and therefore, the application is prima-facie taken up for consideration. The ruling sought is on the following reframed questions: 1. Whether the supply of goods undertaken in course of Sale-in-Transit, i.e., supply undertaken when the goods are in movement from one state to another, is exempt under the extant Goods and Services Tax regime? 2. Whether the Components, which were supplied in Sale-in-Transit transaction, without payment of tax under the erstwhile Central Sales Tax regime, by the Applicant, i.e., AHPL to its Customer(i.e., TANGEDCO) in Tamil Nadu, will attract levy of Goods a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as duly recorded by the recipient vide their communication dated 3rd September 2019. Further, the applicant was required to supply parts and spares to the recipient, during the guarantee period starting on 3rd September 2020. Prior to GST, they were claiming exemption on the sale of components to TANGEDCO in Tamil Nadu under Section 6(2) of the Central sales tax Act 1956. The applicant has stated that GST is leviable at each stage of supply of goods in a sale-in-transit with the facility to avail input tax credit of GST so paid by the recipients thereof, who are registered under the GST laws. 7.2 On perusal of the letter of TANGEDCO WCT No. CE/H/SE/H(E) /EHRM/ A4/ F.Specn.HE.2305/SHOLAYAR PH-I RMU/WCT No.l3/D.18/2018 dt. 30.01.2018, the following are observed: 3.01.04.01 The list of commissioning spares is enclosed in Annexure-I. The Contract price includes the prices for such commissioning spares. The Contractor shall supply alongwith the equipment commissioning spares required upto performance guarantee tests. 3.01.05.01 The Contractor shall supply spares for operation and maintenance of the plant for period of one year from commissioning as well as mandatory spares for oper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ite supply of works contract which are supply of services. 7.3 The applicant has furnished copies of some Purchase Orders/Invoice along with their application. On perusal of these documents the following are observed: * PO number 4502216645 dated 04/May/2018 raised on M/s. Sun Casting & Alloys, Tirunelveli for 'Paint' with the address for invoicing as the applicant's address and the delivery address at Sholayar site and IGST stands mentioned; Bill No. 1A/2017-18 dated 4/05/2018 addressed to the applicant and despatched to site. * PO number 4502505646 dated 19/Mar/2019 raised on M/s. Abhishek Enterprise, Faridabad for 'Specs of Rubber Mat', 'Specific of Lighting Fixtures', 'Specs of Lighting Fixtures Accessories' with CGST/SGST and delivery EXW Faridabad with the Invoice addressed to the applicant address; Invoice No. 2019-20/6365 dated 29-June 2019 addressed to the applicant and consigned to TANGEDCO, Sholayar Power House From the above documents, it is seen that the applicant places orders on their vendors with the direction to deliver the goods at the Sholayar site for use in the project. The vendors of the applicant raises invoice on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of title to the goods during their movement from one State to another and enjoy exemption under section 6(2). The relevant portion of the Section 6(2) of the Central sales Tax Act 1956 is extracted below for ease of reference: "Section 6(2) of the Central sales Tax Act 1956 Notwithstanding anything contained in sub-section (1) or subsection (1A), where a sale of any goods in the course of inter-State trade or commerce has either occasioned the movement of such goods from one State to another or has been effected by a transfer of documents of title to such goods during their movement from one State to another, any subsequent sale during such movement effected by a transfer of documents of title to such goods to a registered dealer, if the goods are of the description referred to in sub-section (3) of section 8, shall be exempt from tax under this Act." If an inter-State sale satisfies the pre-conditions provided in sub-section (2) of Section 6 of the Central Sales Tax Act 1956, it shall not be liable to tax-levy. It is essential that the concerned sale must be (i) a subsequent inter-State sale; (ii) effected by transfer of documents of title to the goods during the movement o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efined under Section 7 of the GST Act which is as follows: 7. (1) for the purposes of this Act, the expression "supply" includes- (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; (b) import of services for a consideration whether or not in the course or furtherance of business; and (c) the activities specified in Schedule I, made or agreed to be made without a consideration; (1A) where certain activities or transactions constitute a supply in accordance with the provisions of sub-section (1), they shall be treated either as supply of goods or supply of services as referred to in Schedule II.; As per Schedule II to the Act, which provides whether the supply is to be treated as a 'Supply of Goods' or 'Supply of Service', under Para 6(a) states as follows : 6. Composite supply The following composite supplies shall be treated as a supply of services, namely:- (a) works contract as defined in clause (119) of section 2 Section 2(119) of the GST Act 2017 defines "Works Contrac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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