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TMI Blog2021 (2) TMI 1292X X X X Extracts X X X X X X X X Extracts X X X X ..... Ajmeri Gate, Jaipur-302001, Rajasthan - (hereinafter the applicant) is fit to pronounce advance ruling as it falls under the ambit of the Section 97(2) (a) given as under:- a. Classification of goods and / or services or both Further, the applicant being a registered person (GSTIN is 08AAAFZ2103K1ZA as per the declaration given by him in Form ARA-01) the issue raised by the applicant is neither pending for proceedings nor proceedings were passed by any authority. Based on the above observations, the applicant is admitted to pronounce advance ruling. A. SUBMISSION AND INTERPRETATION OF THE APPLICANT: 1. M/s Zuberi Engineering Company (hereinafter referred to as "applicant"), having its registered address as Anukampa 1st, M.I. Road Jaipur is a partnership firm engaged in undertaking multidisciplinary projects on turnkey basis for Power Plants, Industrial Plants, Cement Industries, Fertilizer Industries, Mining Industries, Steel Pl ants & Oil Refineries. 2. That the applicant is registered under GST as per the provisions of the GST laws bearing GSTIN 08AAAFZ2103K1ZA in the state of Rajasthan. 3. That the applicant has to undertake a supply in respect of a tender floated by Wate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreed to be severed before supply or under a contract of supply; 9. The term "services" has been defined under section 2(102) as (102) "services" means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged; 10. According to Section 9 of the Central Goods and Services Tax Act 2017 which is charging section for GST 9. (1) Subject to the provisions of sub-section (2), there shall be levied a tax called the central goods and services tax on all intra-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption, on the value determined under section 15 and at such rates, not exceeding twenty per cent., as may be notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person. 11. The GST rates on goods have been notified by the Government in Notification No. 01/2017 - Central Tax (Rate) dated 28.06.2017 which has been amend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lving goods falling under Entry 234 of Goods Tariff Schedule and services falling under Entry 38 of Services Tariff Notification comes to 8.9% of the gross consideration, being arrived as under: * (5% of 70% of gross consideration + 18% of 30% of gross consideration) = 8.9% of gross consideration FACTS AND APPLICATION OF PROVISIONS IN APPLICANT'S CASE 1. In order to derive the classification of the supply to be undertaken by the applicant, primarily the nature of activity to be undertaken by the applicant needs to be understood. 2. A clause of PROJECT PROFILE /INTRODUCTION TO PROJECT is given in Volume-I (TECHNICAL BID) of Tender Document from where extract of Introduction to Project is reproduced as under: Introduction and History Ambapura Lift Irrigation Project is proposed in Mahi dam submergence area near village Padla of Banswara District. The water lift from Mahi dam reservoir for irrigation purpose in the command area by sprinkle system. 3. That according to the scope of works under the contract, the applicant has to develop a pressurized irrigation sprinkler system on turnkey basis to be operated on Solar power which includes the following activities to be carri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis of meticulous reading of the complete Tender document and focusing the relevant clauses as highlighted above, it is understood that the broad scope of work includes construction of a sprinkler irrigation system including supply of materials to be operated on solar power generated by a Solar Power Generating System to be constructed and commissioned as part of the EPC contract. 7. Now, moving on to the classification of said supply involving supply of goods as well as services, firstly the relevant Tariff item of the goods should be recognized. 8. As per the understanding of the applicant, the HSN Code of the irrigation sprinkler system should be 8424 falling under the below highlighted entry of Chapter 84 as specified in the First Schedule to the Customs Tariff Act, 1975 which has to be referred as Tariff Item for GST Tariff Schedule as per Explanation provided therein: Tariff Item Description of Goods 8424 MECHANICAL APPLIANCES (WHETHER OR NOT HAND OPERATED) FOR PROJECTING, DISPERSING OR SPRAYING LIQUIDS OR POWDERS; FIRE EXTINGUISHERS, WHETHER OR NOT CHARGED; SPRAY GUNS AND SIMILAR APPLIANCES; STEAM OR SAND BLASTING MACHINES AND SIMILAR JET PROJECTING MACHINES - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r power based devices is notified being taxable at the rate of 18% and the relevant extract of the said entry is as under: (1) (2) (3) (4) (5) "38 9954 or 9983 or 9987 Service by way of construction or engineering or installation or other technical services, provided in relation of setting up of following, (b) Solar power based devices (c) Solar power generating system 9 -" Explanation: - This entry shall be read in conjunction with serial number 234 of Schedule I of the notification No. 1/2017- Central Tax (Rate), published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) dated 28th June, 2017 vide GSR number 673(E) dated 28th June, 2017. 14. The services of construction and installation to be provided by the applicant in respect of setting up of lift irrigation sprinkler system based on solar power are clearly classifiable under the above entry. 15. Now, once it is concluded that goods to be supplied by the applicant are classifiable under Entry 234 of GST Goods Tariff Schedule and service to be supplied under Entry 38 of the service notification and both are required to be supplied along with each other as part of an EPC contract, both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peline at Chaks, O and M for eight years including installation of solar power unit of 5*100 KW capacity, EPC contract on turnkey basis, as mentioned by the applicant in their form GST ARA-01 dated 13.05.2020. 2. The applicant has sought advance ruling on classification of any Goods or Services or both through their GST ARA-01 dated 13.05.2020. The GST rate on goods have been notified by the Govt, in notification no. 01/2017-Central Tax(Rate) dated 28.06.2017 which has been amended by various Notifications, wherein it has been described as follows: - Sl.No. Chapter Description 234 84, 85 or 94 Following renewable energy devices and part for their manufacture:- a) Bio gas plant b) Solar power based devices c) Solar power generating system Etc. Explanation if the goods specified in this entry are supplied, by a supplier, along with supplies of other goods and services, one of which being a taxable service specified in the entry at SI. No. 38, of the Table mentioned in the notification No. 11/2017-Central Tax(Rate), dated 28th June, 2017 [ G.S. R. 690(E)], the value of supply of goods for the purpose of this entry shall be deemed as seventy percent, of the gross considera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmissions in their application and also during personal hearing made by the applicant. We have also gone through the tender document issued by Water Resources Department of Government of Rajasthan for awarding EPC contract for pressurized Irrigation (Sprinkler System) including Construction of Intake well, Pump House, Panel Room and Supply, Erecting/Laying, Testing Commissioning Submerge V. T. Pumps, Rising Mains, Distribution network of Pipe Line at Chaks, O & M for Eight years including installation of Solar Power unit of 5x100 KW capacity, EPC contract on turnkey. 2. The applicant has contended that the lift irrigation project is required to be completely operated by Solar Power to be generated by the Solar power unit to be installed by the applicant at site and hence, it is a "Solar power based device" and falls under S.No. 234 of Schedule I of Notification No.01/2017-Central Tax(Rate) dated 28.06.2017 as inserted vide Notification No. 24/202018-Central Tax (Rate) dated 31.12.2018 and S.No. 38 of Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017 as inserted vide Notification No. 27/2018-Central Tax (Rate) dated 31.12.2018. According to the explanation to the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uses solar energy directly as heat or convert it into electricity, i.e. solar cooker, solar lamp, solar dryer etc. Whereas, as per tender documents floated by water resources Department Government of Rajasthan the applicant has to undertake a Supply of a complete irrigation Project starting from survey, investigation designing & details planning including land acquisition (private & forest) for Ambapura lift irrigation scheme for pressurized Irrigation (Sprinkler System) including Construction of Intake well, Pump House, Panel Room and Supply, Erecting/Laying, Testing Commissioning Submerge V. T. Pumps, Rising Mains, Distribution network of Pipe Line at Chaks. O & M for eight year including installation of Solar power unit of 5*100 KV EPC contract on turnkey basis. From the above, it is clear that the applicant is neither manufacturing renewable energy devices & parts thereof nor providing Service by way of construction or engineering or installation or other technical services in relation of setting up of renewable energy. The tender is for supply of the lift irrigation project as a whole and not only for solar power generating system. The applicant will be undertaking the cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her form) is involved in the execution of such contract; The tender is for the engineering, procurement and commissioning of the sprinkler system based irrigation project including the installation of Solar Power units and what would be transferred is the entire irrigation project including the Civil work and land involved in project. Private and forest land would be acquired, civil structure would be created and various equipment would be installed. The said project cannot be shifted anywhere, it is essentially of the nature of immovable property. The project after completion at the time of transfer will be an immovable property. Further the maintenance and other related service are also part of the tender documents and involve the project as a whole. It is thus, we are of the considered view that the work specified in the tender documents qualifies as "work contract" and will be taxed accordingly. 6. According to Section 8 of Central Goods and Services Tax Act, 2017, the tax liability on a composite or a mixed supply shall be determined in the following manner, namely:- (a) a composite supply comprising two or more supplies, one of which is a principal supply, shall be treat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... territory, a local authority, 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 historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under the Ancient Monuments and Archaeological Sites and Remains Act, 1958 (24 of 1958); (b) canal, dam or other irrigation works; (c) pipeline, conduit or plant for (i) water supply (ii) water treatment, or (iii) sewerage treatment or disposal. 6 6 12 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; 12. It is therefore, we find that as per tender document the setting up the irrigation project including Construction of Intake well, Pump House, Panel Room and Supply, Erecting/Laying, Testing Commissioning Submerge V.T. Pumps, Rising Mains, Distribution network of Pipe Line at Chaks, O&M for Eight years including installatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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