2018 (12) TMI 1155 – AUTHORITY FOR ADVANCE RULING, ODISHA – 2019 (20) G. S. T. L. 505 (A. A. R. – GST) – Levy of GST – Supply of goods or not – pure services – services provided by them by way of providing energy saving street lighting services including OM of the street lighting installations to Bhubaneswar Municipal Corporation (BMC) – Entry No. 3 of Notification No. 12/2017-CentraI Tax.
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Held that:- There is no clarity as to whether the service supplied is a case of pure service and whether the contract in pursuance to which the service is being supplied by the applicant to BMC is not a works contract. In fact, the present ruling entirely hinges on answer to the first question i.e., whether the supply is a case of supply of pure service. The term pure service has not been deemed in the said notification for which it has to be understood by applying the common parlance test and general understanding. As per dictionary, pure means unadulterated and unmixed. Accordingly, pure ser
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, the ultimate supply to BMC cannot be held as a case of supply of puce service. Thus, on this account, the condition is not fulfilled.
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The activities undertaken by the applicant do not constitute supply of ‘pure services’ as it involves significant use of goods/materials. It is also a case of supply of works contract service by the Applicant to BMC. The benefit of exemption from tax in terms of S 1.3 of the notification No. 12/2017- Central Tax (Rate), dated 28.06.2017 is not available to the applicant – When there is ambiguity In exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject / assessee and it must be interpreted in favour of the revenue.” Further, Entry at Sl. No. 3 of the notification No. 12/2017-central tax dated 28.06.2017 is unambiguous and it cannot be stretched or construed otherwise. It has no extension and putting any other extension is neither warranted nor intended to and would lead to
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ices provided by the applicant by way of providing energy saving street lighting services including OM of the street lighting installations to Bhubaneswar Municipal Corporation (BMC). 1.0 M/s. Super Wealth Financial Enterprises (P) Ltd., (hereinafter referred to as the Applicant ) assigned with GSTIN 21AAECS9864P1ZN having registered address at Lewis Road, Gouri Vihar, Bhubaneswar, Odisha-751002, have filed an application on 06.08.2018 under Section 97 of CGST Act, 2017 & OGST Act, 2017 read with Rule 104 of CGST Rules 2017 & OGST Rules, 2017 in Form GST ARA-01 seeking an Advance Ruling on the applicability of Entry No. 3 of Notification No. 12/2017-Central Tax to the services provided by them by way of providing energy saving street lighting services including OM of the street lighting installations to Bhubaneswar Municipal Corporation (BMC). The appellant enclosed copies of challans as proof of payment of ₹ 5,000/- for SGST bearing CIN No HDFC18062100079651 dated 29.06.
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itions 3. Chapter 99 Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union Territory or Local Authority or a Governmental Authority by way of any activity in relation to any function entrusted to a Panchayat under article 243 G of the constitution or in relation to any function entrusted to a Municipality under Article 243 W of the Constitution. Nil Nil 3.0 For applicability of the aforementioned entry the following conditions need be fulfilled: (i) The supply must be a case of supply of pure service (ii) Supply must be made to either Central Government or a State Government or a Union Territory Administration or a Local Authority or a Government Authority or Government Entity (iii) The service supplied must not be works contract service or a composite supply involving supply of goods as well (iv) The service so supplied must be in relation to any function entrusted to a P
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l. No. 3 of Notification No. 12/2017-C.T.(Rate) dated 28.6.2017. d) At the end of 10 years, when the ownership of Energy saving equipment is transferred to BMC, the applicant would be making a supply of goods to BMC. Such a supply would not be chargeable to GST, since transfer of capital goods after being put to use are subject to valuation as per Section 18(6) of the CGST Act. As per Section 18(6), in case of supply of capital goods or plant & machinery, on which Input tax credit ( ITC ) has been taken, the registered person shall pay an amount equal to ITC taken in respect of such capital goods or plant & machinery reduced by such percentage point as may be prescribed or the tax on the transaction value determined under section-15, whichever is higher. Rule 40(a) of the CGST Rules prescribe reduction of 5% for each quarter or pan thereof. Going by the provision of Section 18(6) read with Rule 40(a), no GST would be payable, since the WDV of the Electric Fixture would become N
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hah & Chartered Accountant Shri Yash Dev Arya on 29.10.2018. Further, the Jurisdictional Officer of State GST & the jurisdictional Officer of Central GST appeared in person. During personal hearing, the representatives of the applicant have submitted fresh written submission wherein they inter-alia submitted as under. a) The applicant has a manufacturing unit at Nashik, Maharashtra for manufacturing of components of energy saving equipment. The said goods were stock transferred from the Nashik unit to the Branch office in Bhubaneswar (Odisha) for installation in terms of Energy Performance Contract with BMC on payment of Central Excise duty. b) BMC has been paying a fixed amount (hereinafter referred to as O&M fees ), calculated at a fixed rate determined for each energy saving equipment installed in lieu of saving of the O&M cost by BMC. O&M fee is being received by the applicant on monthly basis in addition to the Energy performance fees. c) Even though the Energy
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lied services to a local authority (a municipal corporation) as defined under Section 2(69) of the CGST Act. Further, provision of public amenities such as street lighting listed under Twelfth schedule of the Constitution is one of the functions entrusted to the municipality under Article 243W of the constitution f) Since there is no transfer of property in energy saving equipment from the applicant to the BMC during the term of the contract, the applicant would not be making any supply of goods during such period. The only supply made by the applicant during the period of the contract is the supply of service of management, operation and maintenance of the Energy Saving equipment. Therefore, the activity of management, operation and maintenance of Energy saving equipment undertaken by the applicant under the Energy Performance Contract would not qualify as a composite supply in terms of Section 2(30) of the CGST Act. g) The notification uses words involving supply of any goods. Mere u
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e is no supply of goods under the said contract to BMC and accordingly, in the Applicant s view, they are entitled to the exemption under the said notification (supra). 6.0 In the considered opinion of the jurisdictional Officer of State GST & Central GST, the objective of the contract between the applicant and BMC is implementation of energy conservation measures within BMC area and that the applicant besides installation of energy saving equipments shall also undertake its operation & maintenance during the contract period and shall replace the worn out/damaged equipments. As par the admission of the applicant, it will be paid consideration in shape of energy saving fee and O & M fee . For implementation of the contracted energy conservation measures and maintenance of covered street lighting fixtures, there must be regular requirement for replacements during the contract period. Such a contract, by no stretch of imagination, can be held as pure service contract as it inv
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of the contract/agreement are extracted below: Conducting a detailed asset survey, feeder wise marking of pales in Phase 1 and creation and maintenance of asset database during the Term of the Project; Metering all fixtures supplied through street lighting phase/feeders considering optimizations required for enabling metering/ installation of feeder panels on switching points: Witnessing the TPEA verification and energy baseline consumption norm for the Existing Lighting Facilities covered under the Project Area; Identifying suitable ECMs and implementing them on the respective meter/handed over points/stretches; Operating and maintaining the covered street lighting fixtures, including making replacements during the Term of the Project, in line with good industry practice and relevant applicable standards; Deputing qualified staff to carry out installation and maintenance of energy efficiency technology during the Term of the Project. Ensuring compliance with all safety standards and f
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ant, both with the application as well as in the written submission furnished at the time of personal hearing were considered. Also considered the considered opinion of the jurisdictional officers with reference to the terms of the contract relevant to this proceeding and the provisions of the CGST/OGST Acts including SI No.3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 and corresponding Notification issued by the State Government were also considered. On such consideration it was found that the applicant fulfills the following conditions quite clearly: (i) The service being supplied by the applicant to BMC is admittedly a supply to a Local Authority i.e. BMC. (ii) The scope of service being Energy conservation measures in street lighting within BMC area is admittedly in relation to a function entrusted to the Municipality under Article 243W in as much as street lighting is listed at Sr. 17 in the Twelfth Schedule of the Constitution. 7.2 However, there is no clarity
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the contract the applicant is also contractually bound to repair/replace the fittings to ensure illumination at the contracted level. The contract also involves installation of metering device, monitoring system and control system for regulated illumination. The original contract was for illuminating approximately 18000 points which has been reportedly increased to 45000 points by now. Illuminating the whole of BMC area with 45000 lighting points for a long contract period of 10 years is just not possible without substantial involvement of goods. It is also envisaged in the contract that the applicant, at the end of the contract period/on termination of the contract will be contractually bound to hand over the lighting system in working condition. This implies that the total business assets of the applicant will be transferred to BMC without any extra consideration. In other words, the consideration payable to the applicant includes the cost of acquisition of the business assets i.e.
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Bulbs etc. of value ₹ 3,89,72,117/- have been moved to Bhubaneshwar project from the manufacturing plant. This is a substantial amount and with material movement at this scale, the ultimate supply to BMC cannot be held as a case of supply of puce service. Thus, on this account, the condition is not fulfilled. 7.5 In addition, the contract between the applicant and BMC is essentially a works contract since the terms of the contract clearly fits into the definition in Section 2 (119) of the CGST/OGST Act. To elaborate, the contract envisages, survey and identification of the street light posts, replacing the existing lighting system with the energy efficient lighting system, setting up a monitoring system to ensure regulated illuminations and also setting up the metering device where necessary, in addition, the contract also envisages operation and maintenance of the lighting system so installed for the entire contract period of 10 years. With such terms as replacement, fitting out
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umar & Company [2018] 69 GST 239/95 taxman.com 327 (SC) = 2018 (7) TMI 1826 – SUPREME COURT OF INDIA has been pleased to held that Exemption notification should be interpreted strictly, the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification. When there is ambiguity In exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject / assessee and it must be interpreted in favour of the revenue. Further, Entry at Sl. No. 3 of the notification No. 12/2017-central tax dated 28.06.2017 is unambiguous and it cannot be stretched or construed otherwise. It has no extension and putting any other extension is neither warranted nor intended to and would lead to absurd conclusion not called for and would render the notification entry redundant. RULING The services provided by the applicant by way of providing energy efficient
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