2018 (10) TMI 780 – AUTHORITY FOR ADVANCE RULING, ODISHA – TMI – Classification of supply – setting up a project in the school – supply of goods and services including training – composite supply – services provided by them under the ICT @ School Project – Applicability of Entry 72 to the business transactions of the Applicant – Whether the services provided by the Applicant to the Government and government aided higher secondary schools under the ICT Project, are covered under the scope of Entry No. 72 of Notification No. 12/2017-CentraI Tax (Rate) dated 28.06.2017?
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Held that:- The contract is for supply, installation, maintenance and commissioning of projection system, interactive white board, computer hardware, connected accessories, installation of software and other allied accessories, site preparation, maintenance of equipment and provision of computer education services for 5 years in 3409 Govt. and Govt. aided high schools of Odisha under ICT@ school project in the state
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such transfer will not be a taxable supply. Thus, there was no supply of goods either during or after the contract period – The aforesaid contention of the applicant lacks credence and acceptability for the reason that, as per the payment schedule agreed upon between the contracting parties, the applicant will receive the entire consideration for supply and installation of goods in installments before expiry of the contract period. Thus, it is not a case of transfer of goods without consideration but rather a case of supply of goods on consideration payable in installments agreed between the contracting parties.
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Besides, as per para 1 (c) of Schedule Il of the OGST/CGST Act, 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 consideration as agreed, is a supply of goods and not a service. In view of this, the second condition/pre-requisite is not satisfied.
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Expenditure borne by the Cen
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ify and value. The service provided or to be provided is not exclusively in the nature of training programme.
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Though the source of funding for the service is the State Government and Central Government, yet, as per the contract, the payment reasonability is vested on OKCL.
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The activities of the applicant by way of supply of goods and services under the ICT project are not covered under Entry 72 of the notification no. 12/2017 dated 28.06.2017, to be entitled to the benefit of exemption from GST. – Order No. 01/ODISHA-AAR/18-19 Dated:- 20-6-2018 – SRI ANAND SATPATHY, AND SRI NILANJAN PAN, MEMBER Present for the Applicant: Sri Kapil Sharma, Advocate, Sri Vineesh Khanna, authorized Representative Subject: GST Act, 2017-Advance Ruling U/s 98 – Applicability of Entry No. 72 of Notification No.12/2017-Central Tax read with Entry No. 72 of Notification SRO No. 306/2017-Finance Department, to the services provided by the applicant under the ICT @ School Project. 1.0 M/s. IL &
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low: SLNo. 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 * Entry No. 72 of Notification SRO No. 306/2017-Finance Department is identical to the Entry No. 72 of Notification No. 12/2017-CentraI Tax Notification bearing SRO No. 306/2017- of Finance Department, Government of Odisha and Notification No. 12/2017-Central Tax of Government of India have been issued u/s 11 of the OGST Act and CGST Act respectively exempting the notified services from levy of GST. Entry Sl No. 72 of the said two Notifications exempts services provided to the Central Government or any State Government or any Union Territory Administration under any training program for which the total expenditure i
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vi. education services not definable by level This service code does not include: – services related to literacy programmes for adults, cf. 999220, 999231 – higher education services comparable to the regular education system, cf. 99924, 99925 – cultural education services, cf. 999291 – education services provided by instructors, coaches, etc., as part of spotting activities, cf. 999292 Thus education and training services are also included under the head 9992. 2.0 The Applicant, while filing the Application seeking the Advance Ruling, explained the facts and circumstances under which the supply order was received and how, as per their understanding, Entry 72 of Notification No.12/2017-Central Tax is applicable to their case. It was submitted that Odisha Madhyamik Shiksha Mission (OMSM), Government of Odisha, had mandated the Odisha Knowledge Corporation Limited (OKCL) to implement ICT project in 4000 government and government aided higher secondary schools across the State of Odisha.
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nical committee, all activities i.e. site preparation, installation and commission are to be completed in the time prescribed in the agreement, i.e. 4 months from the date of handing over of the sites by OKCL. Once the labs are ready, the Applicant shall operate the same for imparting computer training. For this, they are required to provide one teacher, having specified qualifications and experience, to each school. The teachers so appointed would utilize the available ICT infrastructure (i.e. the ITC lab so created by the Applicant) for imparting computer training to the students in accordance with the curriculum developed in this regard by the Board of Secondary Education. After the expiry of the contract period (i.e. 5 years), the entire infrastructure (supplied and installed) will be transferred to the School and Mass Education Department (SMED), Government of Odisha at zero transfer value. 3.0 The Applicant, in their application dated 27.03.2018 raised the following question to b
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menting ICT Projects on BOOT model only. In all such cases, the private parties are implementing ICT Projects under BOOT Model, wherein, all the activities including supply, installation, commissioning, operation, maintenance, and computer training are to be performed by such private parties. It is a matter of fact that competitors of Applicant are also providing similar bundle of services to other State Governments under ICT in school scheme. Under such contracts all activities are to be undertaken by a single vendor and there is no possibility of performance of different activities by different vendors. This practice is being followed by the entire industry since the introduction of ICT Projects. The perspective of recipient of supplies here i.e. the Government of Odisha or other state governments in other cases, is to receive everything together as a bundle in all the cases. In other words, the state governments want one private party to implement ICT project in a wholesome manner.
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repair and maintenance of the equipment and infrastructure is performed by the Applicant, so that it may continue to provide computer training during the contract period in a smooth manner without any obstruction. 3.4 The applicant also submits that the activities undertaken 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). They stated that the details in this regard are 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 and therefore, they are not engaged in the supply of goods in as much as supply of goods is taking place after the expiry of 5 years. As regards supply of goods, they submitted that even if some value is to be attributed towards supply of goods (equipment / infrastructure), the supply of goods here is ancillary to the principal supply
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n and the written submission of the Applicant). The Applicant appeared through its Advocate and representatives and the Jurisdictional Officer of State GST & the Jurisdictional Officer of Central GST appeared in person. During personal hearing, the applicant was asked to explain and justify as to how the service supplied by them is a training programme and if it is a training programme, what is the course content, the course duration and the consideration received by them. In response to the queries, the applicant sought time to reply. Therefore, another date for P.H. was fixed on 29.05.2018. Sri Vineesh Khanna, authorised representative of the applicant, appeared for personal hearing on 29.05.2018 and requested for a short adjournment. The request for adjournment was admitted and the next date of P.H. was fixed on 11.06.2018. The applicant through its Advocate and representative were heard on the said date in the matter and the contentions advanced were also examined. During perso
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rs are also given training as and when required which includes hand holding during the technology-aided classes. Subject based training is also being facilitated through e-content (multimedia content developed by State duly mapped with curriculum) which is also coordinated by the School Coordinator on daily basis. He further submitted that the expenses incurred by Applicant towards the salary component of the school coordinators across the State of Odisha approximately amounts to ₹ 37 Crore per annum. 4.1 The Applicant, in their fresh written submission, cited various judicial pronouncements which mainly decided the distinction between training and education i.e. what constitutes a training and what constitutes education. The issue under consideration being different from the distinction between training and education , the cases relied upon are not taken to the ambit of the present proceedings. They have also submitted computer syllabus for Class 8, 9 and 10 students, samples of
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de by the Applicant to the Government and Government aided higher secondary schools in Odisha under the ICT Project, are covered under the scope of Entry No. 72 of Notification No. 12/2017-CentraI Tax (Rate) dated 28.06.2017. 5.2 For deciding the issue i.e. applicability of Entry at Sl.No.72 of the Notification No. 12/2017 dated 28.06.2017 and similar Notification issued by Government of Odisha, it is necessary to examine the nature of supply made by the applicant. On plain reading of the entry, it is clear that following three pre-requisites are to be satisfied in order for the supply to qualify for the notified exemption a. The supply has to be a supply of Service provided to the Central Government, State Government or Union Territory administration; b. Such Service must be under any training program; c. The total expenditure of such Service is borne by the Central Government, State Government or Union territory administration. 5.3 As regards the first pre-requisite as stated above,
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egistered entity under the Companies Act 1956 can execute all contracts in its own name and capacity. The Union or State Government, can also execute contracts made in the exercise of the executive power of the Union or of a State, and shall be expressed to be made by the President, or by the Governor of the State under Article 299 of the Constitution of India 1949. Article 299 of the Constitution of India 1949 does not apply to OKCL. They also contended that employees of OKCL are not public servants. Any dispute between the employees and the management of OKCL, (including the tortuous liability) shall be settled by the applicable Industrial Tribunals and Labour Courts and the Industrial Employment Standing Orders Act, 1946 shall apply to them. The employees of the Government are regarded as Civil servants. The liability of States for the acts of omission and commission committed by the Civil servants is governed by written or unwritten laws. Under the Constitution of India two Article
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d the relevant documents and found that work order has been issued by the Odisha Knowledge Corporation Limited (OKCL) in their own capacity and the Applicant has signed agreement with OKCL on 12.09.2013 for implementation of the ICT @ school project in Government and Government aided higher secondary schools across the State of Odisha. When the contract is made between OKCL and M/s. IL & FS, it is also necessary for us to see the legal status of OKCL. From the contract/agreement deed, it is obvious that OKCL is a public limited company incorporated and registered under the Companies Act, 1956 and having its registered office at Jaydev Vihar, Bhubaneswar-751013, Odisha. Thus OKCL is a company and not State Government/Central Government or Union Territory. The status of OKCL is not disputed. 5.5 Further, we also see that OKCL had invited a tender for supply of goods and various services and M/S IL & FS had been selected in the tender and awarded the contract by OKCL. Thus, as per
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n & Communication Technology) Labs and providing manpower services to manage them for a period of five years. They referred to Clause-8 of the agreement dt.12.09.2013 between the applicant and OKCL at Annexure-D of the Application which enumerates the Roles and Responsibilities of IL & FS ET S. (the Applicant) As enumerated therein, the Applicant, in fulfillment of its contractual obligations, has to prepare the site (flooring, furniture and fixtures) to be used as an ICT Lab, procure, supply and install requisite number of -IT equipment i.e. computer hardware, software(provided by OKCL), Integrated Computer cum Projector, Interactive white Board, webcam, multi- functional printer, UPS, Servo, Generator etc. in the ICT Lab, to maintain and upkeep the ICT Labs in proper working conditions for the entire contract period along with deployment of manpower in the ICT Labs of 3409 nos. of Govt. and Govt. Aided High Schools to impart computer knowledge to the students and teachers in
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rd of Secondary Education of Odisha. Thus, it will be incorrect to dub the entire project as a training programme. It is rather a composite supply of goods and services, not naturally but artificially bundled having distinctly separate components with distinct value attributable to each of the components. 5.7 Now we intend to examine as to whether the service component provided by the Applicant was under any training programme . In this regard the applicant was asked to furnish the course content, course duration and consideration receivable by the applicant for imparting the training. On being asked these aspects, the applicant inter-allia stated that they are imparting computer skills to the students as well as teachers and as far as students are concerned, they have submitted copy of quarter wise curriculum for Class 8, 9 and 10 students. They have also produced samples of payment claim/bills, sample questions and report card of the students. They also stated that the expenses incur
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s the amount payable for supply of hardware and connected accessories and the balance amount is on account of different services to be provided with includes maintenance of the hardware and network equipments, up keeping of the ICT lab, telephone and internet charges, electricity charges and fuel for generator. No doubt, the applicant has provided computer training service as part of the contract, but the said service is not pre-dominant or principal supply. In fact the contracted supply has three distinct supply components out of which training is a small component. Further, from the Bills/payment claim submitted by applicant, it is seen that most of the payment was towards supply of hardware and connected accessories, consumables, electricity, internet, petrol diesel, Telephone charges etc. 5.9 It has also been contended that during the period of contract, the infrastructure built by the Applicant remains property of the Applicant and in no case, the ownership of the infrastructure i
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fer of title in goods under an agreement which stipulates that property in goods shall pass at a future date upon payment of full consideration as agreed, is a supply of goods and not a service. In view of this, the second condition/pre-requisite is not satisfied. 5.10 As regards expenditure borne by the Central Government, State Government or Union territory administration, it is quite clear that as per the contract, payment for the work done is to be made by OKCL and not the state government, though the source of funding the expenditure is by the State Government. It may be profitable to refer the judgement of the Hon ble Supreme Court in the case of CIT v. Ajax Products Ltd. (1965) 55 ITR 741 =1964 (10) TMI 21 – SUPREME COURT, where it is held by the Hon ble Court that: In a taxing statute, one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing to be i
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