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TMI Blog2022 (2) TMI 1046X X X X Extracts X X X X X X X X Extracts X X X X ..... s are still in existence today and no new headings have been incorporated in the said notification after Notification No 3/2019 Dated 29th March, 2019, which can be considered to be relevant to the applicant's subject activities. Further, at this stage it is crucial to mention that the applicant had accepted the earlier ruling of this Authority - the subject activity of the applicant will be covered under Since Entry No 3 (xii) of Notification No. 11/2017-CTR- dated 28.06.2017 as amended till date. The activities of the applicant were covered under entry 3 (ii) of the Notification No. 11/2017 CGST (Rate) dated June 28, 2017 and thereafter with effect from 01.04.2019, the said activities are covered under Sr. No. 3 (xii) as amended by Notification No 03/2019 CGST (Rate) dated 29th March, 2019, taxable at the rate of 18% - the supplies of the Applicant are covered by sub-clause (xii) of Entry No. 3 of Notification No. 11/2017-CTR dated 28.06.2017 as amended and taxable @ 18% GST. - GST-ARA-80/2019-20/B-25 - - - Dated:- 18-2-2022 - SHRI. RAJIV MAGOO, AND SHRI. T. R. RAMNANI, MEMBER No. GST-ARA-80/2019-20/B-25 Mumbai, dt. 18.02.2022 PROCEEDINGS (Under Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... data centres, disaster recovery station, satellite data centre and connectivity equipment at Naval ports across mainland and coastal region in India (b) Installing rack, stack in the buildings and other civil infrastructures necessary to house the equipment and enable operation of all the centres/ports (c) Assemble/install all equipment and powering it up by connecting with power supply and back-up generators. (d) Interconnecting and configuring all the equipment in all the data centres, nearline data centres, disaster recovery station, satellite data centre, etc. with each other to enable information exchange across the network as desired. 2.4 Relevant clauses of the contract which stipulate the requirement of an exhaustive civil work to be undertaken by the Applicant to house the said network are reproduced below: Network Architecture Tier I. Tier I would interconnect 11 major locations of the Indian Navy across the country over defence owned OFC and DWDM network infrastructure. Tier II. The remaining 33 locations of the Indian Navy would be connected over defence owned OFC and DWDM network infrastructure Tier III. Tier Ill cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DG sets along with control panel, day tank and other accessories required for operation of the power plant. DG Sets should be in weather proof shelters. Electrical wiring and associated equipment from power house to UPS room. 2.5. The said network comes into existence when the building, civil structures are erected, and all the equipment are installed and interconnected with each other through its data centers, nearline data centres, disaster recovery station, etc. Such network cannot be moved to another place in 'as is' form but it requires the optic fiber cables to be disengaged, existing civil structures to be demolished, all the equipment to be removed and undertake altogether a fresh activity to re-erect the civil structure and re-install all the necessary equipment and re-engage the same with the optic fiber cables at such other place. Previous Application for Advance Ruling: 2.6 Applicant had earlier approached this Authority to determine following questions: i. Whether the supply of goods or services for 'setting up of network' would qualify as 'works contract' as defined in Section 2(119) of the CGST Act? ii. If supplies conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y or a governmental Authority or a Government Entity by way of construction, erection, commissioning, installation, completion, fitting out repair, maintenance, renovation, or alteration of - (a) a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession; (b) . 6% Provided that where the services are supplied to a Government Entity, they should have been procured by the said entity in relation to a work entrusted to it by the Central Government State Government, Union territory or local authority, as the case may be 2.12 On a bare perusal of above entry, services of works contract are covered by Entry No. 3(vi)(a) of rate Notification if following conditions are fulfilled: i. Recipient must be either of Central Government, State Government, Union Territory, a local authority, a governmental authority or a Government Entity ii. The works contract must result in construction, erection, commissioning, installation, completion fitting out, repair, maintenance, renovation, or alteration of a 'civil structure' or any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 Both, the rate Notification as well as Notification No. 12/2017 are issued by the Central Government in exercise of its powers conferred under CGST Act and as such contents of both these notifications form part of the same statutory framework which further supports the persuasive force of the definition of original works' as provided under Notification No. 12/2017 to determine the scope of 'original works' as referred in Entry No. 3(vi)(a) of rate Notification. 2.17 Reference is made to the ruling of the Rajasthan Authority for Advance Ruling in the case of Tata Projects Ltd. - SUCG Consortium wherein the Authorities deliberated applicability of Entry No. 3 (vi)(a) of rate Notification to applicant's activities referred to Notification No. 12/2017 to Rule that recipient of service viz. Jaipur Development Authority qualified as 'Governmental Authority'. 2.18 Without prejudice to the above, in absence of the definition of 'original works' under rate Notification, reference may also be drawn from the definition as provided in the Service Tax (Determination of Value) Rules, 2006 ( Service tax valuation rules') as notified under Finance Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rts to use materials and achieve a desired result. Relevant portion of the dictionary is reproduced below: Original, Adj.: 1' [only before a noun) existing at the beginning of a particular period, process or activity Works, HAVE RESULT/EFFECT 10 (VN) to cause or produce something as a result of efforts; USE MATERIAL 11 (VN) sth (in to sth) to make a material into a particular shape of form by presenting, stretching, hitting it, etc. EFFORT 5 [U] the use of physical strength or mental power in order to do or make something PRODUCT OF WORK 7 [U] a thing or things that are produced as a result of work 2.22 In view of the above, 'original works' together would refer to an activity of creating something i.e. being brought to existence at the first instance. Having derived the meaning of 'original works' in common parlance, Applicant refers to the scope of contract which requires it to perform activities to bring structures in the form of buildings, roads, etc. into existence. The Applicant therefore submits that since its activities result in bringing a new structure into existence, these activities indeed qualify as 'original works ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n appellant's own case vide Order No. GST-ARA-106/2018-19/B-34 dated March, 28th, 2019. 5.2 The Applicant, registered under GST Laws is engaged in manufacturing of telecom products such as optic fiber optic fiber cable, etc.; laying of these optic fiber cables to create a network, setting up of control centers, installation of equipment necessary to operate the network for desired purpose, commissioning of network and any other ancillary activity that may be necessary for creation of network infrastructure for its customers in telecom industry. 5.3 The Indian Navy has entrusted the setting of a countrywide IP/MPLS based multiprotocol converged network, Naval Communication Network (referred to as network ), as core infrastructure for supporting strategic and operational needs of Navy, to Bharat Sanchar Nigam Limited ( BSNL ) which in turn has contracted with the Applicant to set up the network including the responsibility to supply all the material and services required for setting up of network, training services to operate the same and supply of satellite connectivity vehicles required for ensuring seamless connectivity during breakdown of network. Applicant has further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7-CT (Rate) dated June 28, 2017. 5.8 To decide under which Schedule entry, the applicant's activities would get covered, after the deletion of Entry No. 3 (ii) or replacement thereof, for that purpose, we have to understand the further substitutions made to the said Entry 3 of Notification No. 11/2017-CT (Rate) by way of subsequent amendments. 5.9 Entry No. 3 of Notification No. 11/2017-CT (Rate), as amended till 25.01.2018 is reproduced as under:- SI.No. Chapter, Section or Heading Description of Service Rate (%) Condition (1) (2) (3) (4) (5) 3. Heading 9954 (Construction Services) (i) Construction of a complex, .. (ii) composite supply of works contract as defined in clause 119 of section 2 of Central Goods and Services Tax Act, 2017. 9 (iii) (a),(b),(c), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (xii) Construction services other than (i), (ii), (iii), (iv), (v), (vi), (vii), (viii),(ix), (x)and (xi) above. 9 - 5.10 Vide Notification No 3/2019-CT(Rate), dated 29th March, 2019, Serial number 3, item (ii) was omitted and further amendments were made in Sr. No 3(i), 3 (iv), 3 (v), 3 (vi) and 3 (xii) and therefore, amended Notification no. 11/2017-CTR dated 28.06.2017 is as under:- SI.No. Chapter, Section or Heading Description of Service Rate (%) Condition (1) (2) (3) (4) (5) 3. Heading 9954 (Construction Services) (i) Construction of a complex, .. (ii) DELETED .. (iii) (a),(b),(c), . (iv) Composite supply of works.. ... . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 - 5.11 It is seen from the amendments made as above, the activities which were earlier covered by the Entry 3 (ii), after deletion of said sub-clause (ii), would get covered (said activities) under respective residual entry i.e Sr. No. 3 (xii) of the Notification No. 11/2017-CTR dated 28.06.2017 as amended by Notification No 03/2019 CGST (Rate) dated 29th March, 2019. The Authority, vide its earlier order (referred by the applicant) had classified the subject activities under the Entry 3(ii) of Notification No. 11/2017 - CTR- dated 28.06.2017, after considering all the headings of the said notification including Sr. No. 3 (vi) (a). The remaining headings are still in existence today and no new headings have been incorporated in the said notification after Notification No 3/2019 Dated 29th March, 2019, which can be considered to be relevant to the applicant's subject activities. Further, at this stage it is crucial to mention that the applicant had accepted the earlier ruling of this Authority. In view of the above, we feel that the subject activity of the applicant will be covered under Since Entry No 3 (xii) of Notification No. 11/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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