2018 (9) TMI 1106 – AUTHORITY FOR ADVANCE RULING, MAHARASHTRA – 2018 (17) G. S. T. L. 90 (A. A. R. – GST) – Works contract – immovable property or not? – supply and installation of ‘car parking system’ – Whether the activity of supply and installation of ‘car parking system’ would qualify as immovable property and thereby ‘works contract’ as defined in Section 2(119) of the CGST Act?
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Held that:- The ‘car parking system’ is not supplied as chattel qua chattel. It is not brought as an identifiable set of goods. Dismantling one whole, to be assembled later, for the sake of convenience or transportation is one category where there is simple assembling without no further activity critical to the assembling – The other category is that various items are carried to be assembled and which require various steps of activities to be performed on these items and only after which it is possible that they can be assembled. Even without going into the activities that go into the making, we can
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ER OF CENTRAL EXCISE [2014 (9) TMI 38 – BOMBAY HIGH COURT] in relattion to tower parts, green shelter, printers and office chairs, have held that the product cannot be shifted without damage. Apart from that various items and components are embedded in the earth. The product,therefore, is immovable.
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Thus, it is concluded that The impugned car parking system, be it installed on a vacant plot of land or in a building, does not result into supply as chattel. In fact, before installation, there can be no goods as such which could be called a ‘car parking system’ – The system requires substantial work to be done at the site to be called a ‘car parking system’ – Once made operational the ‘car parking system’ obtains a state of permanency. It is not such as can be easily removed from the existing place and put into place at some other location – The definition of “works contract” under the GST Act is in relation to immovable property.
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Thus, the transaction of supply and installat
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mmovable property and thereby works contract as defined in Section 2(119) of the CGST Act. At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act/MGST Act would be mentioned as being under the GST Act 02. FACTS AND CONTENTION – AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus – STATEMENT OF THE RELEVANT FACTS HAVING A BEARING ON THE OUESTION(S) ON WHICH THE, ADVANCE RULING IS REQUIRED 1. This Application is being preferred by Precision Automation & Robotics India Limited ( Company / Applicant ), a company incorporated in India under the provisions of t
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parking system: Stacker type parking system: Chess type parking system 4. It is relevant to state that there are various important steps involved in the process of setting up of car parking system which are dependent upon the requirement of customers. At the inception, after receiving the order from the customer, the Company is required to prepare a drawing of the car parking system, the foundation details, utility and the civil requirements. Sample designs of the car parking systems are attached herewith as Exhibit A. It is important to note that the car parking system is either installed in a building or on independent vacant land. Irrespective of the location, a specific foundation is created and steel structure and / or RCC structure, which is a basic frame work of the parking system, is erected in such foundation. This specific foundation and structure is a pre-requisite for successful installation and effective working of the car parking system. In this regard, we would like to
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erify smooth and safe functioning of the same. 6. The erection of a car parking system involves elaborate work and has to be correlated with and tailored, to meet the needs and requirements of a particular building/premises, Therefore, none of the car parking systems can be a readymade assembled unit and its erection cannot be done in a routine manner. 7. For ease of understating of the complex process of installation of Car parking system, we have depicted the same by way of a diagram: Drawing & design of the car parking system is prepared according to the requirement of the customer ¯ Manufacture, build, test, dismantle, packing and supply steps ¯ Buildings specific foundation (either in the basement of building or on land) as per the requirement of the car parking to be installed ¯ Steel structure frame work (and/or RCC support) according to the car parking system is created and installed on the foundation ¯ Various parts such as pellets, control panel, side
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produced below for your ready reference: works contract means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract; 10. Given the above background, the present application is being preferred before the Hon ble authority of Advance Ruling to determine whether the activity of supply and installation of car parking System would quality as immovable property and thereby works contract as defined in Section 2 (119) of CGST Act. STATEMENT CONTAINING TIIE APPLICANT S INTERPRETATION OF LAW AND/OR FACTS. AS THE CASE MAY BE IN RESPECT OF THE QUESTION(S) ON WHICH THE ADVANCE RULING IS REOUIRED. 1. ISSUE FOR DETERMINATION 1.1 Whether the activity of supply and installation of car parking system as works contract as
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In the paragraphs below all the above three parameters are examined in reference to the facts presented by the Applicant. Supply & installation of car parking system is a permanent fixture attached to building/land wherein it is erected 2.3 It shall be noted that the term immovable property has not been defined under the CGST Act. Thus, reference is made to the definition of immovable property under the General Clauses Act, 1987 Black s Laws Dictionary which is as under: Immovable property shall include land. benefits to arise out of land and things attached to the earth. or permanently fastened to anything attached to the earth – As per General Clauses Act / Maharashtra Stamp Act. Immovable property means a property that cannot be moved; an object so firmly attached to land that it is regarded as a part of land -As per Black s Law Dictionary 2.4 In terms of the aforesaid definition, immovable property means anything that is attached to land and cannot be easily detached. In this
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movable property and cannot be described as goods. In support of this they have referred to the affidavit of Shri L.N. Venkatraman, Construction Executive of their company. They have also relied on the judgment of the High Court of Bombay in a Sales Tax matter (Sales Tax Reference No. 5 of 1965). The High Court by its order dated 22-1-1968 held that the contract for furnishing and erecting the elevator installation was a composite but indivisible contract for work and labour and no sales of goods can be spelt out of the contract. 4. Government find considerable force in the petitioners contention referred to the para 3(i) above that elevators and escalators erected and installed by them become a part of immovable property and hence….. II. Quality Steel Tubes (P) Ltd. V/s. Collector of Central Excise. (U.P.) [1995 (75) ELT 17 (S.C.)] = 1994 (12) TMI 75 – SUPREME COURT OF INDIA Goods which are attached to the earth and thus become immoveable do not satisfy the test of being goods
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f Nahalchand Laloochand P. Ltd vs Panchali Co-operative Housing Society Ltd. [2010 AIR SCW 5549], = 2010 (8) TMI 816 – SUPREME COURT OF INDIA it was inter alia observed that builder cannot sell car parking to the individual flat owners as it is a part of common area of land or building. Such area of the building cannot be sold to the individual person as the cost of such common area is recovered from all the flat owners and accordingly every flat owner has undivided share in that common area. In the present facts, it is important to note that builder cannot sell the car parking system to the individual flat owners. This substantiates the fact that ear parking system becomes a part of building/land. Further, in case of new construction, if the automated car parking is envisaged in the architecture of a building, the builder is specifically required to include the same in the application made to the municipal corporation for obtaining approval of the building plan. Further, Occupancy Cer
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ar No. 58/1/2002 dated January 15, 2002. If items assembled or erected at site and attached by foundation to earth cannot be dismantled without substantial damage to its components and thus cannot be reassembled, then the items would not be considered as moveable and will, therefore, not be excisable goods. If any goods installed at site (example paper making machine) are capable of being sold or shifted as such after removal from the base and without dismantling into its components/parts, the goods would be considered to be movable and thus excisable. The mere fact that the goods, though being capable of being sold or shifted without dismantling, are actually dismantled into their components/parts for ease of transportation etc., they will not cease to be dutiable merely because they are transported in dismantled condition. Rule2(a) of the Rules for the Interpretation of Central Excise Tariff will be attracted as the guiding factor is capability of being marketed in the original form
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moveable property and thereby it must be held that it is not attached to the earth. If the answer is yes to the latter it is attached to the earth. III. T.T.G. Industries Ltd v. Collector of Central Excise [(2004) 4 SCC 751] = 2004 (5) TMI 77 – SUPREME COURT OF INDIA We are not impressed by this reasoning, because it ignores the evidence brought on record as to the nature of processes employed in the erection of the machine, the manner in which it is installed and rendered functional, and other relevant facts which may lead one to conclude that what emerged as a result was not merely a machine but something which is in the nature of being immovable, and if required to be moved, cannot be moved without first dismantling it, and then re-erecting it at some other place. Some of the other decisions which we shall hereafter notice clarify the position further. 2.10. On combined reading of the Circular and the judgments referred above, it is evident that if dismantling of the entire system/
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re created/made after installation/assembling of various parts in a systematic manner. Unless all the requisite parts have been assembled or installed in the specified manner, the immovable property does not come into existence and cannot be made functional. Parts of the immovable property in its singular form Cannot be considered as immovable property. 2.13. In this context, reference is made to the Hon ble Supreme Court judgment in the case of Kone Elevator India Private Limited Vs. State of Tamil Nadu [2014 (304) ELT 161 (SC)] = 2014 (5) TMI 265 – SUPREME COURT wherein the issue of immovability of lift was discussed. Relevant extract or the judgment is reproduced below: The lift basically comprises components like lift car, motors, ropes, rails, etc. having their own identity even prior to installation. Without installation, the lift cannot be mechanically functional because it is a permanent fixture of the building having been so designed. These aspects have been elaborately discus
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tomatic car parking system comes into existence only when its constituent parts such as indexers, lifters, etc, are installed together. The car parking system cannot function unless all the requisite parts and components are installed together with necessary equipment. 2.16. Thus, the automated car parking system becomes operational and functional only after it is installed, adjusted, tested and commissioned to the building at the customer s premises – same as lifts which has been considered as immovable property by Supreme Court. Activities comparable to installation of car parking systems have been consistently held to be as immovable by various courts 2.17. At this stage, we wish to draw, parallel with various similarly placed segments of work, such as furniture units, central air conditioning system, transmission equipment s installed as a part of telecommunication network wherein the courts have clearly held them to be in the nature of immovable property. While it is not the case
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INDIA It has been held that storage units, running counters, overhead unit, rear and side unit, wall unit, pantry unit, kitchen unit are ordinarily immovable and cannot be removed without cannibalizing CCE, Mumbai Vs. Josts Engineering Company Limited [2002 (146) ELT 29 SC] = 2002 (8) TMI 107 – SUPREME COURT OF INDIA It has been held that spray paint booth is considered as immovable property based on the following factors i) the outside portion of the structure is embedded to the earth ii) it can never be dismantled without damaging the portions iii) the system is touching the earth iv) the system cannot work without being installed. CCE, Mumbai IV Vs. Hindustan Max Telecom Private Limited [2008 (224) E.L.T 191 (Bom.) = 2007 (8) TMI 6 – HIGH COURT, BOMBAY The Hon ble High Court held that the transmission apparatus/equipments installed in BTS site room qualify as immovable goods as without tower, UPS. cable trays, AC etc. the BTS would not be in a position to function as transmitting an
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fied under service activity. First, they get the Order from their customers and then design and manufacture the car parking systems in their factory premises, as per requirements of their customers. After finishing the manufacturing process they dismantle the system, transport the entire system to the premises of their customers and reinstall the system. 4.1 Here it is pertinent to mention that the applicant are indulged in manufacturing and installation of Car parking systems since long and it is evident that they were clearing and Installing the entire car parking system under the Central Excise Tariff Heading 84289090 of Central Excise Tariff Act, 1985. 4.2 The entire activity of manufacturing and installation and commissioning of car parking systems are duly classified under GST Tariff of India. It may be seen that under Chapter Heading 8428 the Supply of car parking system may be classified. The entry of Chapter Heading/sub-heading 8428 is reproduced herein as under- Chapter Headi
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t, 2017. The text of clause (30) of Section 2 of the said Act is reproduced herein as under: SECTION 2. Definitions.- …………….. …………….. (30) composite supply means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply; Illustration: Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply. 4.4 In the light of definition of composite supply as defined under clause (30) of Section 2 it may be derived that the manufacturing, erection and commissioning of car parking system in the instant case is a composite supply and supply of car parking system is the principal
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The question before us is – Whether the activity of supply and installation of car parking system would qualify as immovable property and thereby works contract as defined in Section 2(119) of the CGST Act. To answer the question involved, we refer to the definition of works contract as found in clause (119) of section 2 of the GST Act. The same reads thus – works contract means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract; As can be seen from the words underlined above, a works contract under the GST Act is in relation to immovable property . It is, therefore, that we see that all submission by the applicant is directed to convince us about the activity of supply and installation of car parking
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pellets, control panel, side sliding suspension, operator panel, electrical system are installed in the RCC structure ¯ Safety features such as pallet overriding sensor, guiding sensor, car loading sensor and other safety equipments are installed ¯ Testing is undertaken by the Company It wouldn t require much wisdom to infer that the car parking system is not supplied as chattel qua chattel. It is not brought as an identifiable set of goods. Dismantling one whole, to be assembled later, for the sake of convenience or transportation is one category where there is simple assembling without no further activity critical to the assembling. For example, we have various folding items such as kids wardrobes where the cloth to be attached and the rods to be laid in layers to form the wardrobe as a whole is often supplied in pieces. The other category is that various items are carried to be assembled and which require various steps of activities to be performed on these items and only
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on, a specific foundation is created and steel structure and / or RCC structure, which is a basic frame work of the parking system, is erected in such foundation. It is further informed that this specific foundation and structure is a pre-requisite for successful installation and effective working of the car parking system. With an overview of the activity, we turn to the definition of works contract as appearing in the GST Act. We see that the same includes activities for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some Other form) is involved in the execution of the contract. When the activity is to be performed in respect of a pre-existing building or an under-construction building, the plans showing the location of the car parking system, the load-bearing, etc. would
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re aware that the GST Act is a new piece of legislation whereas these decisions dwell on statutes other than the GST Act. We are prudent enough as to not to refer to decisions which interpret provisions but to decisions which lay down cardinal principles of interpretation which stand true irrespective of the times and the statute. Herein, we would like to refer to the decision of the Hon. Supreme Court in T.T.G. Industries Ltd. v. CCE, (2004) 4 SCC = 2004 (5) TMI 77 – SUPREME COURT OF INDIA. The facts of this case, as identified by the Hon. Court, were – 2. The facts of the case are not in dispute. The appellant-company pursuant to the acceptance of its tender, entered into an agreement with M/s. SAIL, Bhilai Steel Plant for design, supply, supervision of erection and commissioning of four sets of Hydraulic Mudguns and Tap Hole Drilling Machines required for blast furnace Nos. 4 and 6 of the Bhilai Steel Plant. For this purpose, it imported several components and also manufactured some
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spraying special clay. This function is performed by the mudgun which is brought to its position and locked against the wall for exerting a force of 240-300 tons to fill up the hole in the furnace. The blast furnace in which the inputs are loaded is a massive vessel of 1719 m cubic metre capacity and the size of its outer diameter is 10.6 metres, and the height 31.25 metres. Hot air at 1200 degrees centigrade is fed into the blast furnace at various levels to melt the raw materials. With a view to protect the shell against heat, the blast furnace is lined with refractory brick of one metre thickness. Thus, the drilling machine has to drill a hole through one metre thickness of the refractory brick lining. The drilling machine as well as the mudgun are erected on a concrete platform described as the cast house floor which is in the nature of a concrete platform around the furnace. The cast house floor is at a height of 25 feet above the ground level. On this platform concrete foundatio
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from the blast furnace and are brought to site and physically lifted by a crane and landed on the cast house floor 25 feet high near the concrete platform where drilling machine and mudgun has to be erected. The weight of the mudgun is approximately 19 tons and the weight of the drilling machine approximately 11 tons. The volume of the mudgun is 1.5 x 4.5 x 1 metre and that of the drilling machine 1 x 6.5 x 1 metre. Having regard to the volume and weight of these machines there is nothing like assembling them at ground level and then lifting them to a height of 25 feet for taking to the cast house floor and then to the platform over which it is mounted and erected. These machines cannot be lifted in an assembled condition. 10. The judicial member noticing these facts observed that it is a physical and engineering impossibility to assemble mudguns or the drill tap hole machines elsewhere in a fully assembled condition and thereafter erect or install the same at a height of 25 feet on th
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) TMI 188 – CEGAT, NEW DELHI which held that the issue of immovable property was never raised before the Supreme Court in Narne Tulaman Manufacturers Pvt. Ltd. She found support for her conclusion in the decision of this Court in Municipal Corporation of Greater Bombay & Ors. v. The Indian Oil Corporation Ltd. (1991) Supp. (2) SCC 18; and held that the twin tests laid down by this Court to determine whether assembly/erection would result in immovable property or not were fully satisfied in the facts of this case. She concluded :- "The test laid down by the Supreme Court is that if the chattel is movable to another place as such for use, it is movable but if it has to be dismantled and reassembled or re-erected at another place for such use, such chattel would be immovable. In the present appeal, even according to the finding of the Collector, mudguns and drill tap hole machines have to be dismantled and disassembled from the cast floor before being erected or assembled elsewhe
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ermine what is immovable property. In that case the facts were that the respondent had taken on lease land over which it had put up, apart from other structures and buildings, six oil tanks for storage of petrol and petroleum products. Each tank rested on a foundation of sand having a height of 2 feet 6 inches with four inches thick asphalt layers to retain the sand. The steel plates were spread on the asphalt layer and the tank was put on the steel plates which acted as bottom of the tanks which rested freely on the asphalt layer. There were no bolts and nuts for holding the tanks on to the foundation. The tanks remained in position by its own weight, each tank being about 30 feet in height 50 feet in diameter weighing about 40 tons. The tanks were connected with pump house with pipes for pumping petroleum products into the tank and sending them back to the pump house. The question arose in the context of ascertaining the rateable value of the structures under the Bombay Municipal Cor
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merged as a result of the processes undertaken by the appellant was an immovable property. It cannot be moved from the place where it is erected as it is, and if it becomes necessary to move it, it has first to be dismantled and then re-erected at another place. This factual position was also accepted by the Adjudicating Authority. 23. The technical member, however, held that the aforesaid decision was of no help to the appellant inasmuch as a leading international manufacturing firm had offered such machines for export to different parts of the world. He further observed that though on account of their size and weight, it may be necessary to shift or transport them in parts for assembly and erection at the site in the steel plant, they must nevertheless be deemed as individual machines having specialized functions. We are not impressed by this reasoning, because it ignores the evidence brought on record as to the nature of processes employed in the erection of the machine, the manner
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the process of welding facility. After noticing several decisions of this Court, the Court observed that the twin tests of exgibility of an article to duty under the Excise Act are that it must be a goods mentioned either in the Schedule or under Item 68 and must be marketable. The word "goods" applied to those which can be brought to market for being bought and sold and therefore, it implied that it applied to such goods as are movable. It noticed the decisions of this Court laying down the marketability tests. Thereafter this Court observed :- (SCC p.376, para 5) "The basic test therefore, of levying duty under the Act is two fold. One, that any article, must be a goods and second, that it should be marketable or capable of being brought to market. Goods which are attached to the earth and thus become immoveable do not satisfy the test of being goods within the meaning of the Act nor it can be said to be capable of being brought to the market for being bought and sold
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ed at site. The process involved welding and gas cutting. The mono vertical crystalliser is a tall structure, rather like a tower with a platform at its summit. This Court noticed that marketability was a decisive test for dutiability. It meant that the goods were saleable or suitable for sale, that is to say, they should be capable of being sold to consumers in the market, as it is, without anything more. The Court then referred to the decision in (Quality Steel Tubes (P) Ltd. v. Collector of Central Excise, UP – 1995 (75) E.L.T. 17 (S.C.) = 1994 (12) TMI 75 – SUPREME COURT OF INDIA) and distinguished the judgment in Narne Tulaman (1989) 1 SCC 172 : 1989 SCC (Tax) 64 (1988) 38 ELT 566 : 1988 Supp (3) SCR 1] = 1988 (9) TMI 51 – SUPREME COURT OF INDIA holding that the contention that the weigh bridges were not goods within the meaning of the Act was neither raised nor decided in that case. After considering the material placed on the record it was held that the mono vertical crystallise
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his Court in Municipal Corporation of Greater Bombay (1991 Supp (2) SCC 18)] = 1990 (11) TMI 407 – SUPREME COURT, Quality Steel Tubes (P) Ltd. v. Collector of Central Excise, UP – 1995 (75) E.L.T. 17 (S.C.) = 1994 (12) TMI 75 – SUPREME COURT OF INDIA and Mittal Engineering Works Pvt. Ltd. v. CCE – 1996 (88) E.L.T. 622 (S.C.) = 1996 (11) TMI 66 – SUPREME COURT OF INDIA as also the earlier judgment of this Court in Sirpur Paper Mills Ltd. v. Collector of Central Excise, Hyderabad – 1998 (97) E.L.T. 3 (S.C.). = 1997 (12) TMI 109 – SUPREME COURT OF INDIA This Court observed :- "14. There can be no doubt that if an article is an immovable property, it cannot be termed as "excisable goods" for purposes of the Act. From a combined reading of the definition of 'immovable property' in Section 3 of the Transfer of Property Act, Section 3(25) of the General Clauses Act, it is evident that in an immovable property there is neither mobility nor marketability as understood in
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judgments noticed above, and having regard to the facts of this case, we have no doubt in our mind that the mudguns and the drilling machines erected at site by the appellant on a specially made concrete platform at a level of 25 feet above the ground on a base plate secured to the concrete platform, brought into existence not excisable goods but immovable property which could not be shifted without first dismantling it and then re-erecting it at another site. We have earlier noticed the processes involved and the manner in which the equipments were assembled and erected. We have also noticed the volume of the machines concerned and their weight. Taking all these facts into consideration and having regard to the nature of structure erected for basing these machines, we are satisfied that the judicial member of the CEGAT was right in reaching the conclusion that what ultimately emerged as a result of processes undertaken and erections done cannot be described as "goods" withi
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not necessary for us to express any opinion as to whether the mudgun and the drilling machines are really a component of the plant and machinery of the steel plant, but we are satisfied that having regard to the manner in which these machines are erected and installed upon concrete structures, they do not answer the description of "goods" within the meaning of the term in the Excise Act. Thus, it can be seen that the Hon. Supreme Court while holding the machines as immovable property took into account facts such that the machines could not be shifted without first dismantling them and then re-erecting them at another site. It was also sought to distinguish as to how a concrete base meant just to prevent wobbling of the machine would not place the machine in the category of immovable property as something attached to the earth. We would also look at the decision of the Hon. Supreme Court in the case of Commissioner of Central Excise, Ahmedabad v. Solid and Correct Engineering
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marketing company engaged in the manufacture of Asphalt Drum/Hot Mix Plants at the sites provided by the purchasers of such plants. It is common ground that Solidmec advertises its product and undertakes contracts for supplying, erection, commissioning and after sale services relating thereto. It is also admitted that all the five concerns referred to above are closely held by Shri Hasmukhbhai his brothers and the members of their families. 5. An inspection of the factories of the respondents by a team of officers from Central Excise, Preventing Wing, Headquarters, Ahmedabad, led to the issue of a notice dated 30th November 1999 to the four manufacturing units as well as to Solidmec calling upon them to show cause why the amounts mentioned in the said notice be not recovered from them towards central excise duty. The notice accused the four manufacturing units of having wrongly declared and classified parts and components being manufactured by them as complete plants/systems, even when
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as a distinct product with a new name, quality, usage and character emerged out of the said process. Resultantly the end-product; namely, Asphalt Drum/Hot Mix Plants became exigible to Central Excise duty, which duty Solidmec had successfully avoided. The notice also proposed to levy penalties upon all the five concerns under appropriate provisions of the Central Excise Act. The Hon. Court has very elaborately dealt with the issue and it would be useful to go through the observations – 22. Section 3 of the Transfer of Property Act, 1882 does not spell out an exhaustive definition of the expression "immovable property". It simply provides that unless there is something repugnant in the subject or context 'immovable property' under the Transfer of Property Act, 1882 does not include standing timber, growing crops or grass. Section 3(26) of the General Clauses Act, 1897, similarly does not provide an exhaustive definition of the said expression. It reads: "Section
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quot;(a) rooted in the earth, as in the case of trees and shrubs; (b) imbedded in the earth, as in the case of walls and buildings; (c) attached to what is so imbedded for the permanent beneficial enjoyment of that to which it is attached." 25. It is evident from the above that the expression "attached to the earth" has three distinct dimensions, viz. (a) rooted in the earth as in the case of trees and shrubs (b) imbedded in the earth as in the case of walls or buildings or (c) attached to what is imbedded for the permanent beneficial enjoyment of that to which it is attached. Attachment of the plant in question with the help of nuts and bolts to a foundation not more than 1½ feet deep intended to provide stability to the working of the plant and prevent vibration/wobble free operation does not qualify for being described as attached to the earth under any one of the three clauses extracted above. That is because attachment of the plant to the foundation is not co
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e is that what is annexed to the freehold becomes part of the realty under the maxim quidcquid plantatur solo, solo cedit. This maxim, however, has no application in India. Even so, the question whether a chattel is imbedded in the earth so as to become immovable property is decided on the same principles as those which determine what constitutes an annexation to the land in English law. The English law has evolved the twin tests of degree or mode of annexation and the object of annexation. 27. In Wake V. Halt (1883) 8 App Cas 195 Lord Blackburn speaking for the Court of Appeal observed: "The degree and nature of annexation is an important element for consideration; for where a chattel is so annexed that it cannot be removed without great damage to the land, it affords a strong ground for thinking that it was intended to be annexed in perpetuity to the land." 28. The English law attaches greater importance to the object of annexation which is determined by the circumstances o
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t is sold with the option to pull it down. A mortgage of the super structure of a house though expressed to be exclusive of the land beneath, creates an interest in immovable property, for it is permanently attached to the ground on which it is built. 30. The courts in this country have applied the test whether the annexation is with the object of permanent beneficial enjoyment of the land or building. Machinery for metal-shaping and electro-plating which was attached by bolts to special concrete bases and could not be easily removed, was not treated to be a part of structure or the soil beneath it, as the attachment was not for more beneficial enjoyment of either the soil or concrete. Attachment in order to qualify the expression attached to the earth, must be for the beneficial attachment of that to which it is attached. Doors, windows and shutters of a house are attached to the house, which is imbedded in the earth. They are attached to the house which is imbedded in the earth for t
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ad construction or repair project for which it is set up is completed. It can be seen that the Hon. Supreme Court has reiterated the same principles as were seen in the earlier decision of (T.T.G. Industries Ltd. v. CCE, (2004) 4 SCC = 2004 (5) TMI 77 – SUPREME COURT OF INDIA). The Hon. Court observed that the expression attached to the earth has three distinct dimensions – (a) rooted in the earth as in the case of trees and shrubs (b) imbedded in the earth as in the case of walls or buildings or (c) attached to what is imbedded for the permanent beneficial enjoyment of that to which it is attached. It has categorically observed that the attachment of the plant to the foundation at which it rests does not fall in the third category [attached to what is imbedded for the permanent beneficial enjoyment of that to which it is attached], for the reason that an attachment to fall in the third category it must be for permanent beneficial enjoyment of that to which the plant is attached. The H
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997 (12) TMI 109 – SUPREME COURT OF INDIA, SCC p. 402, para 5) 5. Apart from this finding of fact made by the Tribunal, the point advanced on behalf of the appellant, that whatever is embedded in earth must be treated as immovable property is basically not sound. For example, a factory owner or a house-holder may purchase a water pump and fix it on a cement base for operational efficiency and also for security. That will not make the water pump an item of immovable property. Some of the components of water pump may even be assembled on site. That too will not make any difference to the principle. The test is whether the paper making machine can be sold in the market. The Tribunal has found as a fact that it can be sold. In view of that finding, we are unable to uphold the contention of the appellant that the machine must be treated as a part of the immovable property of the company. Just because a plant and machinery are fixed in the earth for better functioning, it does not automatica
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d movable goods that could be brought to market for being bought and sold. 39. We do not see any comparison between the erection and installation of a rube mill which involved a comprehensive process of Installing slitting line, tube rolling plant, welding plant. testing equipment and galvanising, etc. referred to in the decision of this Court in Quality Steel Tubes Case [(1995) 2 SCC 372 : (1995) 75 ELT 17] = 1994 (12) TMI 75 – SUPREME COURT OF INDIA with the setting up of a hot mix plant as in this case, As observed by this Court in Triveni Engg. & Industries Ltd. case [(2000) 7 SCC 29: (2000) 120 ELT 273], = 2000 (8) TMI 86 – SUPREME COURT OF INDIA the facts and circumstances of each case shall have to be examined for determining not only the factum of fastening/attachment to the earth but also the Intention behind the same. 40. In Mittal Engg. Works (P) Ltd. case [(1997) 1 SCC 203 : (1996) 88 EL T 622] = 1996 (11) TMI 66 – SUPREME COURT OF INDIA this Court was examining whether
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arket as it is without anything more. 41. Relying upon the decision of this Court in Quality Steel Tubes Case [(1995) 2 SCC 372 : (1995) 75 ELT 17] = 1994 (12) TMI 75 – SUPREME COURT OF INDIA, the erection and installation of mono vertical crystallisers was held no/ dutiable under the Excise Act. This Court observed that: [Mittal Engg. Works (P) Ltd. case [(1997) 1 SCC 203 : (1996) 88 EL T 622] = 1996 (11) TMI 66 – SUPREME COURT OF INDIA]. SCC p. 208, para 10] 10. ……The Tribunal ought to have remembered… that the record showed that mono vertical crystallisers had, apart from assembly, to be erected and attached by foundations to the earth and, therefore, were not, in any event marketable as they were. This decision also, in our opinion, does not lend any support to the case of the assessee in these appeals as we are not dealing with the case of a machine like mono vertical crystallisers which is permanently embedded in the structure of a sugar factory as was the po
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period of time as is the position n the instant case. The machines in question were by their very nature intended to be fixed permanently to the structures which were embedded in the earth. The structures were also custom-made for the fixing of such machines without which the same could not become functional. The machines thus becoming a part and parcel of the structures in which they were fitted were no longer movable goods. It was in those peculiar circumstances that the installation and erection of machines at the sites were held to be by this Court to be immovable property that ceased to remain movable or marketable as they were at the time of their purchase. Once such a machine is fixed, embedded or assimilated in a permanent structure, the movable character of the machine becomes extinct. The same cannot thereafter be treated as movable so as to be dutiable under the Excise Act. But cases in which there is no assimilation of the machine with the structure permanently, would stand
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mention herein the reference by the Hon. Bombay High Court in M/s. Bharti Airtel Ltd. (Earlier known as Bharti Tele-Ventures Ltd.) v. The Commissioner of Central Excise (2014 SCC OnLine Bom 907 : (2015) 77 VST 434) = 2014 (9) TMI 38 – BOMBAY HIGH COURT with regard to a Circular being issued by the Central Board of Excise & Customs in a decision of the same Hon. Bombay High Court – (i) In the decision of the Division Bench of this Court in the case of Commissioner of C.Ex., Mumbai-IV Vs. Hutchison Max Telecom P.Ltd., (2008 (224) E.L.T. 191 (Bom.) , = 2007 (8) TMI 6 – HIGH COURT, BOMBAY the issue which fell for consideration of the Division Bench inter alia was pertaining to transmission tower set up by the assessee and whether the setting up of the towers amounted to manufacture as the towers being a new product with a distinct name, characteristics and use and is distinct from the components used in the manufacture as contended on behalf of the Revenue. The Division Bench after ma
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g) Transmission tower was erected at the top of the building. h) The tower was fitted with microwave antennas. i) The BTS/BSC was installed in prefabricated building object. Based on this material the Commissioner held that what emerges is a new commodity. The argument advanced that only "Base station controller / Base transreceiver station, cell site / Mobile Switching centre" were connected with the transmission and reception signals and other equipments were not part of the same, the argument was held as not acceptable as without the tower, UPS, Cable trays, AC., etc., the BTS would not be in a position to function as transmitting and receiving apparatus. The contention of the assessee that various equipments installed at site were individual machine was rejected. The Commissioner further held that with the assembly of various equipment installed what emerges is a commodity with a distinct name, identity, character and use; distinct from inputs and classifiable under chap
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the Public network. The entire sub systems of BTSs and BSCs or MSCs and the number of constituents would depend on the Geographical area covered by the Cellular Network and there is no fixed designation numbers to constitute a component of transmission apparatus. It is not necessary to set out the other facts in detail considering the the Tribunal has in extenso set out the facts. The Tribunal relying on para 20 in the case of Triveni Engineering & India Ltd. (supra) on the test of marketability, held that the so called BTS/BSC site erected, installed and commissioned by the contractors of the company cannot be construed as marketable goods manufactured by the appellant since they cannot go to the market as such BTS/BSC site are not marketable. It also held that the test of marketability would also not be satisfied for another reason being, that for the installation of every BTS/BSC, licence from WPC/SACFA a wing of Department of Telecommunications, Government of India has to be ob
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foresaid reasons, the appeal was allowed and accordingly, the orders were set aside. 9. It is not necessary for us to answer the issue as to whether the activities is purely service and consequently, the appellants are not manufacturers. We proceed on the footing that what has been assembled and installed is a new commodity having a distinct name from the components from which it was assembled. The question is whether this new commodity is marketable. We have already considered the test of marketability as laid down by the Supreme Court in Triveni Engineering & India Ltd. (supra) and also Moti Laminates Pvt. Ltd. (supra). At this stage, we also note that we proceed on the footing by ignoring the second finding of marketability recorded by the Tribunal namely that BTS/BSC is not marketable as licence is required from the Department of Telecommunication, Government of India. The facts on record would indicate that the equipments erected are embedded in the earth or on a building. The
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ning team after survey identified the location as per the requirements of the local coverage needs, determining the shelter location, fabrication of I-beam and pole location. It may be possible for us to agree that by installing or erecting, a new product comes into being with a different name in the market from its components. However, as discussed the test of marketability is not satisfied. The product cannot be shifted without damage. Apart from that various items and components are embedded in the earth. The product,therefore, is immovable. The order dated 15/1/2002 of Central Board of Excise & Customs, New Delhi itself regards items assembled and erected on the site and attached to the foundation on earth which cannot be dismantled without substantial damage to their components and thus, cannot be reassembled, as non excisable. The new product would not be considered as movable and, therefore, will not be an excisable good. Para 6 of the said circular will not apply to the fac
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car parking system obtains a state of permanency. It is not such as can be easily removed from the existing place and put into place at some other location. The definition of works contract under the GST Act is in relation to immovable property. We have already elaborately explained our opinion as to the facts at pages 6 and 7 of this order. In view thereof, we are of the considered opinion that the transaction of supply and installation of a car parking system would qualify as immovable property and thereby works contract as defined in Section 2(119) of the CGST Act. Since we are called upon to decide the coverage of the impugned transaction only in respect of section 2(119) of the CGST Act and having recorded our opinion thereto, there arises no occasion for us to discuss as to whether the transaction is a composite supply as defined in Section 2(30) of the CGST Act. 06. In view of the deliberations as held hereinabove, we pass the order as under : ORDER (under section 98 of the Cent
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