2018 (5) TMI 963 – AUTHORITY FOR ADVANCE RULING – MAHARASHTRA – 2018 (14) G. S. T. L. 35 (A. A. R. – GST) – Works Contract – Separate taxability for goods and services – rate of tax – Concessional rate of duty – classification of future contract – Whether in case of separate contracts for supply of goods and services for a solar power plant, there would be separate taxability of goods as 'solar power generating system' at 5% and services at 18%? – Held that: – “works contracts” u/s 2(119) being deemed to be a supply of services, the impugned agreements represent transactions of the nature of a supply of “service” – The agreements tendered in support of this question reveal that the impugned transaction of setting up and operation of a solar photovoltaic plant is in the nature of a “works contract” in terms of clause (119) of section 2 of the GST Act. Schedule II [Activities to be treated as supply of goods or supply of services] treats “works contracts” u/s 2(119) as supply of 'servic
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ate) under the Integrated Goods and Services Tax Act, 2017 (IGST Act) which states is under the notification prescribing the tax rate on 'goods' – We have to observe that the facts of the transactions have to be seen in terms of what the sub-contracting agreement says, what has been supplied, whether the item supplied is a part. Such and many other questions have to be answered. No details have been brought before us. If the transaction is a supply of “goods” then the applicable Schedules (exempt or taxable) would have to be seen – In the absence of any documents before us, we would not be able to deal with this question in the present proceedings.
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Whether benefit of concessional rate of 5% of solar power generation system and parts thereof would also be available to sub-contractors? – Held that: – If the transaction is a supply of “goods” then the applicable Schedules (exempt or taxable) would have to be seen. No details have been brought before us. Further, the question would h
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lication has been filed under section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as the CGST Act and MGST Act"] by Fermi Solar Farms Private Ltd., the applicant, seeking an advance ruling in respect of the following questions : Whether in case of separate contracts for supply of goods and services for a solar power plant, there would be separate taxability of goods as 'solar power generating system' at 5% and services at 18% ? Whether parts supplied on standalone basis (when supplied without PV modules)would also be eligible to concessional rate of 5% as parts of solar power generation system? Whether benefit of concessional rate of 5% of solar power generation system and parts thereof would also be available to sub-contractors? At the outset, we would like to make it clear that the provisions of both the CGST Act and MGST Act are the same except for certain provisions. Therefore, unless
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Independent Power Producer ('IPP') category for setting up and sale of power produced from Fermi's power plant to third party. 3. In setting up of a solar power generation plant, the following steps are involved:- Soil and Topo Survey Plant coordinate fixing. Boundary fencing and Plant layout T/L Survey, Piling, Building Construction Structure erection, inverter erection, equipment foundation Charging transmission, DC system erection, module mounting DC cabling Commissioning of the solar power plant. 4. As part of setting up of solar power plants, Fermi enters into contracts with various Project Developing Companies (hereinafter called 'EPC Contractor') for various activities. Key features of such contracts are ae under:- (a) The contracts typically include offshore supply, onshore supply and supply of works and services. Goods may be imported or procured locally under such contract. (b) Separate contracts are awarded by Fermi for supply of goods and services. (c) F
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Site enabling facilities Leveling and grading Erection, commissioning and testing for solar modules, mounting structures, power transformers, inverters, SCADA, complete switchyard, inverter transformers, connectors, earthing lines etc. 7. Please note that the following two scenarios can arise in this context: Case 1 – All goods may be supplied by EPC contractor – In such case, entire contract is executed by EPC contractor and all goods required are supplied by the contractor (including PV modules). Case 2 – Certain goods supplied by EPC contractor – In such case, modules may be procured directly by Project Developer and balance goods would be supplied by EPC Contractor (i.e. the project Developer procures/ imports PV modules on its own and only awards contract for balance goods) 8. A diagrammatic illustration of a solar power system is provided. Statement containing the applicant's understanding of rate of tax in respect of the aforesaid clarification(s)/transaction(s) 1. Legal pr
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has not been defined Parts for manufacture of solar power generating system and PV modules – There is no restriction provided on what would qualify as parts and in such case all goods which qualify as 'parts' of solar power generating system should be eligible for concessional rate of tax 1.2 Rate of services Under GST, service has been defined as anything other than goods and the general rate for services is 18%. 1.3 Concept of composite supply Section 2(30) of CGST Act defines composite supply to mean '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'. Section 2(90) defines principal supply as "principal supply" means 'the supply of goods or services which constitutes the predominant element of a composite supply
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ed under heading 84,85 or 94 should be eligible to concessional rate of 5% Contract for services – Entire contract would be service contract taxable at 18% 2. Meaning of term 'solar power generating system' and applicability when all goods (including PV modules) are supplied 2.1 The term 'solar power generating system' has not been defined under GST. Solar power generating system generally are the systems which absorb sunlight and convert it into electricity which can be put to further use. 2.2 Solar power system has been defined under Solar Power -Grid Connected Ground mounted and solar Rooftop and metering Regulation -2014 issued by State of Goa. Solar power system as per the regulation means 'a grid- connected solar generating station including the evacuation system up to the Grid inter-connection point . 2.3 Typically the term system has a wide ambit. As per the Oxford Dictionary, the definition of the term 'system' is "a complex whole, a set of thi
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s Ltd. vs. Commr. Of C. Ex., Jaipur wherein it was held that '7. The adjudicating authority admitted the fact that solar photovoltaic module is a Solar Power Generating System. We find that other parts are only panel housing consisting of controllers and switches. Hence the whole system is a Solar Power Generating System and is entitled for the benefit of notification. Therefore, the denial of benefit of notification by the adjudicating authority is not sustainable. The impugned order is set aside and the appeals are allowed . 2.7 Further, in the case of Bangalore Tribunal in the case of B.H.E.L. vs. Commissioner of Central Excise, Hyderabad it was held that In the present case, the appellants have claimed exemption in respect of "inverter charger card" as solar power generating system. The appellants actually manufactured SPV lantern. The above lantern required electricity for its working. it is possible to convert solar energy to electricity with the help of inverter ch
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fy as components of the solar power plant. Hon'ble CESTAT has decided that the items required for initial setting up of the plant would qualify as component, hence the benefit of exemption would extend to such items also as solar power generating system. 2.9 In Jindal Strips Ltd. vs. Collector of Customs, Bombay [2002-TIOL-347-CESTAT-DEL-LB] CESTAT has observed that component means a constituent part or element. It was also observed that "Component" means one of the parts or sub- assemblies or assemblies, of which a manufactured product is made up and into which it may be resolved and includes an accessory (or attachment)"." 2.10 Basis the aforesaid judgments, it can be deduced that the components of the solar power plant which are essential for setting up of the power plants would also be eligible for the benefits provided to the solar power plant. 2.11 Further, where a contract is awarded as a whole for supply of solar power generation system consisting of var
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.14 In terms of Section 8 of the CGST Act, it has been clarified that a composite supply comprising two or more supplies, one of which is a principal supply will be treated as supply of such principal supply. 2.15 Base on the above, a conclusion can be drawn that where a contract consists of supply of various goods all of which are intended for setting up a solar power plant, the entire contract should be treated as a composite supply for which the principal supply is providing a solar power generating system and hence, entire supply contract (which would include PV modules as well as all other goods ) should be taxable at 5% as 'solar power generation system'. It is further submitted that Ministry of New and Renewable Energy ('MNRE') in various instances has also approved entire BOQ consisting of various parts e.g. cables, module mounting structures, spares, etc. as essential to solar power generating system and hence the concessions applicable have been extended to su
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is essentially a piece which enhances the functionality of equipment and adds to the function of the equipment. However, even without the accessory the equipment can function on its own. 3.4 In the present case, it is not the case that all other goods/ equipment are ancillary and the same are required essentially for functioning of the solar power plant and hence, should form part of the solar power generating system. 3.5 Per the above, our understanding is that supply of other parts (apart from solar power generating system) should also constitute as supply of 'parts of solar power generating system' which should attract concessional rate of 5% (provided they fall within Chapter 84, 85 or 94). Hence, benefit should be available even if standalone parts are supplied (and not supplied together with PV modules) as long as the same qualifies as part of solar power generating system falling under heading 84, 85 or 94. 3.6 Reference is also made to the erstwhile excise law, wherein
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l be eligible for benefit of exemption under Notification No. 64/94 – Cus. The Tribunal held that power cables and control cables together form part of inside cabling of wind turbine controller. Since, control cables are eligible for exemption has to be extended to power cables also In Pushpam Forging Vs. CCE, Raigad [2006 (193) ELT 334 (Tri.- Mumbai)]. the Tribunal held that flanges are parts of windmill tower which is inturn a part of Wind Operated Electricity Generators. Once tower is accepted and held to be a part of WOEG, flanges of the tower will be a part of the whole Wine Operated Electricity Generator In CCE Vs. Megatech Control Pvt. Ltd. [2002 (145) ELT 379 (Tri. – Chennai)], the Tribunal held that control panels are part of wind operated electricity generators and are meant specifically for wine mill and will be eligible for benefit. Vide Circular No. 1005/15/2015 – CX dated October 20, 2015. the CBEC had clarified that tower, nacelle, rotor, wind turbine controller, nacelle
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higher tax burden on the developer of the solar power plants. Please note that since electricity has been exempted from GST, GST payable on the input side would burden the developer and hence, would prove detrimental to the growth of solar power generating plants in the country. Accordingly, concessional rate of 5% should also be available to parts of solar power generating system supplied on standalone basis. 3.8 Basis the understanding, it can be deduced that the components which are essential for setting up of the solar power plant together will qualify as parts of solar power generating system (falling under Chapter 84, 85 or 94 and hence, should be eligible for concessional rate of 5%. 4. whether benefit would also be available to sub-contractor 4.1 In a typical contract structure, the EPC contractor engages various sub-contractor (manufacturers/supplies/sub-contractors) who further supply the goods to EPC contractor (and EPC contractor supplies to SPV). 4.2 Notification no. 1/201
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and foundation works for switchyard, solar plant and all other equipment Site enabling facilities Leveling and grading Erection, commissioning and testing for solar modules, mounting structures, power transformers, inverters, SCADA, complete switchyard, inverter, transformers, connectors, earthing lines etc. 5.2 We would like to humbly submit that such contract is a separate contract for services itself and hence, has to be taxed on independent basis. In our understanding, the same should be analyzed independent of the contract for goods. 5.3 Since such contract is standalone contract for services including works, the same should qualify as works contract service. Works contract has been as "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)
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re procured by developer on its own) and only balance products are supplied, the goods should qualify as 'Parts of solar power generating system' and should be eligible for concessional rate of 5% GST as long since the same are covered under heading 84, 85 or 94. 6.4 Concessional rate of 5% for supply of solar power generating system or its parts should also be available to sub-contractors." 03. CONTENTION – AS PER THE CONCERNED OFFICER The submission, as reproduced verbatim, could be seen thus- "M/s Fermi Solar Farms Pvt. Ltd. is engaged in operation of providing the solar power generating system to the buyers. Fermi Solar Farms Pvt. Ltd enters into two types of agreement with the buyers- 1) Agreement of solar power generating system where supplier supplies solar power generating equipment with intention of setting up solar power generating system. 2) Agreement for engineering and construction services to be provided by supplier to the buyers. (I) Fermi Solar Farms P
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in modules or made up into panels. (IV) Solar power generating system includes (in bracket GST Rates) 1. Solar panels (@5%) 2. Solar battery (@28%) 3. Solar charge controller (@18%) 4. Solar modules (@5%) 5. Inverter (@12%) 6. Cables for connection (@28%) However all these renewable devices & parts for installation of solar power generating system will be taxed @5% as per notification cited supra. But the inverters, cables, batteries will not attract tax rate @5% they will attract their respective tax rates. (V) After analyzing the agreements signed by Fermi solar forms ltd. With buyer, it is noticed that both the contracts are different. The dealer expects separate consideration from buyer for supply of equipment, part thereof and supply of engineering and construction services. Hence there are two different supply of goods and services. Dealers makes separate agreement for supply of equipment's of solar power generating system and supply of engineering and construction servi
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for supply of equipment's for solar power plant will be @5% (2) However for installation and engineering services, the supplier will need to raise separate works contract invoices with GST @18%" 04. HEARING The case was taken up for hearing on dt.17.01.2018 and on dt. 12.02.2018. when Sh. Prashant Agarwal (Partner, PricewaterhouseCoopers Pvt. Ltd.) attended and reiterated the contention as made in the written submission. During the hearing on dt. 12.02.2018, copy of the agreements in such types of contracts was submitted and our attention was invited to various clauses therein. The concerned officer holding the post of State Tax Officer was absent on both the occasions. However, a written submission has been reproduced above. 05. OBSERVATIONS We have gone through the facts of the case. The issue put before us is the classification of a future transaction which would be effected on the lines of sample agreement copies as have been tendered during hearing. It has been submitted
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al capacity of 60 MW (AC)/81 MW (DC) at village__ in the state of Karnataka (the "Plant"). (B) The Buyer has selected the Supplier for the subject project based on the previous credentials. The Buyer desires to purchase an end to end solar power generating system with various integral components as defined in schedule A from the Supplier and the Supplier has agreed to provide the same to the Buyer in accordance with the terms and conditions herein specified. (C) The Parties are entering into this Agreement to record the terms and condition under which the supplier shall supply the Equipment, Spare Parts and Materials to the Buyer. 1.1 Definitions "Access Road(s)" shall mean all roads and pathways, if any, which leads to the Project Land from the nearest Public Road, over which the Buyer is granted Access Rights. "Access Rights" shall mean the easementary, ownership or other property rights or rights of way in relation to the Access Roads, granted to the Bu
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if at any point with respect to the supply items are pending as on the date of commencement of commercial operations, the Final Acceptance shall be the date on which all such pending supplies are completed in accordance with the terms of this Agreement, which date shall be intimated in writing by the Buyer to the Supplier; "Other Contractors" shall mean other contractors engaged by the Supplier to implement, operate and maintain the Plant: "Plant/s" shall have 60 MW (AC) Solar PV Power Project at __________ , Karnataka; "Plant Completion" shall mean the date of commencement of commercial operations of 60MW-AC capacity of the Plants and which shall in no event be later than or such other extended date as notified by the Buyer in writing. "Plant Site" shall mean all those parcels of land located at district ____ in the state of Karnataka on which the plant shall be set up; Scheduled Project Completion Date" shall mean the scheduled commissioni
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B hereto for payments to be made by the Buyer to the supplier; "Variation" means any addition, deletion from, or any other modification to the Scope of Supplies as Specified in schedule A and schedule E hereto that requires a change in one or more of the Contract Price, the Supply Schedule or any other provisions of this Agreement in accordance with the terms of this Agreement; "Variation Order" means a written order to the Supplier issued and signed by the Buyer after the execution and delivery of this agreement authorizing a Variation and, if required, an adjustment in one or more of the Contract Price, the Scheduled Project Completion Date, the Supply Schedule or any other amendment of the terms and conditions of this Agreement; 2.1 Scope of Supplies 2.1.1 The Supplier shall perform or cause to be performed all actions as may be required in connection with the supply of the solar power generating system including the design, engineering, manufacturing, inspection
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s directly transferred to the owner by way of High Seas Sale for commercial convenience and in order to avail benefit of concessional customs duty as the benefit of concessional rate of customs duty is only available to the project developers. However, as per this agreement, the risk and liabilities accruing in relation to all those equipment shall remain with the Supplier till the completion of the Project. After the completion of the project, the risk and liabilities are shifted to the Lead Contractor. After the completion of the project, the risk and warranties are shifted to the Owner. 2.1.2. Inspection and Expediting The Supplier shall perform all inspection, expediting, and quality surveillance as are required for performance of the Supplier's obligations hereunder. The Supplier's responsibilities under this Clause shall include, without limitation, inspecting all Equipments, Spare Parts and Materials. 2.1.5. Spare Parts (a) Spare Parts shall be delivered by the Supplier
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igations hereunder on the date that the Buyer specifies (the "Supply Commencement Date") in a written notice delivered to Supplier (the "Notice to proceed"), the form of which is given in Schedule F. This shall be subject to the Buyer releasing the advance as per payment terms to the buyer. The Supplier acknowledges that time is of the essence for this Agreement and shall provide the entire solar generating system including all Equipment, Spare Parts and Materials in accordance with the Supply Schedule. 2.3 Compliance with Applicable Laws The Supplier shall comply with and shall cause the entire solar generating system including all Equipments, Spare Parts and Materials supplied hereunder to comply and be capable of complying, with all Applicable Laws and Applicable Permits. 2.4 Supply Schedule The Supply Schedule for supply of Equipment, Spare Parts and Materials in accordance with the Scope of Supplies, as agreed between the Parties, is set-forth in Schedule C her
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pment Suppliers 3.1.1 All consultants and Sub-vendors providing Equipment, Spare Parts and Materials to the supplier under a subcontract with the Supplier in connection with the Scope of Supplies are herein referred to as "subvendors" and such agreements entered into between Supplier and Subvendors are herein referred to as "Subcontracts", The Buyer shall fully cooperate and participate with the Supplier in appointing Sub-vendors under this Project. In this regard, the supplier shall, by way of written notice, provide the Buyer's Representative (appointed pursuant to Clause 5.2 hereof) with a list of proposed Subvendors ("Notice of Proposed Subvendors'') for the Buyer's approval, and the ultimate decision of the person from amongst the Subvendors approved by the Buyer to whom they may be subcontracted shall be that of the supplier. 3.1.3 Subcontracting shall not relieve the Supplier from any of its liabilities or obligation under this agreement
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s of Payment ……………………………………………. In the event that the Supplier has completed all its obligations required to be completed till Final Acceptance under the terms of this Agreement but the date of commercial operations of the Plant is not achieved within a period of 30 (thirty) days from the Scheduled Project Completion Date ("Wait Period"), on account of failure on part of the Buyer to provide Grid Connectivity except if such failure is attributable to a default on part of the Supplier to perform its obligations under terms of this Agreement, the Buyer shall on the expiry of the afore-mentioned Wait Period, be obliged to pay the Supplier such amounts of the Contract Price as were due and payable on the start of commercial operation of the plant in accordance with Schedule B hereof. 16. INDEPENDENT SUPPLIER 16.1 Supplier as Independent Supplier The Supplier shall be an independent supplier with respect to the Equipment, Spare Parts and Materials
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its agents, representatives or Sub-vendors, is the agent of the other Party. 19.14 Title to the Equipment, Spare Parts and Material (a) Title Title to the Equipment, Spare Parts and Materials and the Scope of Supplies in whole shall pass to the purchaser from Supplier either at the ship's rail at the port of loading or on the high seas. Provided that the Buyer is in compliance with his payment obligations specified under the contract, title to all equipment used in connection with the Solar Power Generating System and which will become a permanent part of the System shall vest in the Buyer when any such payment due to the Supplier as per the agreed payment terms is affected. 19.18 Liability of Supplier Notwithstanding anything contained herein, the Supplier shall be liable for, inter alia, in respect of any guarantees, liquidated damages, performance guarantees, etc., with respect to the Plant Completion and responsible to the Buyer for the Equipments, Spare Parts and Materials sup
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E PARTS AND MATERIALS LIST. The list of equipment and material to be supplied under the terms of the Agreement shall include but not limited to the following: Complete supplies required for the construction of the 60MW AC/81 MW DC Solar PV project shall be in the scope of the supplier. The major areas are covered here below. However, it is understood and agreed that any item not listed out below, but required for the completion of the project shall be in the scope. OFFHORE SUPPLIES: – Delivered at Destination port in India a. Solar Modules, which are an assembly of solar cells that helps in converting solar power into electricity. Solar modules constitute more than 60% of the solar power generating system, hence, qualify as one of the most significant parts in the SPP – Delivered at Project Site directly by way of High Seas Sale ONSHORE SUPPLIES: – Delivered at Project site (these supplies constitutes 20-30% of the entire system) Module mounting Structure Inverters DC Cable PV Connecto
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of Supplies. Exact division between offshore and onshore items also will be finalized during engineering phase. TERMINAL POINT: Karnataka Power Transmission Company Limited 110kV Switchyard The list of Spare Parts to be supplied under the terms of the Agreement shall be as detailed in Schedule E hereto and shall be deemed to form a part of the Scope of Supplies. All the design documents and drawings for the plant shall be submitted for Buyers approval by the Supplier. Buyer shall approve or communicate observations within 5 days. If there is no communication within 5 days, these documents/drawings shall be deemed to be approved and Supplier will go ahead with engineering and procurement. SCHEDULE- B 2. TERMS OF PAYMENT Payment terms will be as per agreed BBU (Billing Breakup) and as mentioned below: SI Milestone Description % Detail Condition description 1 Advance 15% A. Within 10 days of issue of contract Against submission of Corporate contract 10% B (a) Proportionately on Submission
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to inferences thus – 1. The agreement very clearly mentions that the Buyer desires to purchases an end to end solar power generating system with various integral components as defined in schedule A from the Supplier. Thus, the Buyer has expressed a clear intent to purchase the solar power generating system with the various components and not the components merely. 2. If we refer to this Schedule A, it says that "All the design documents and drawings for the plant shall be submitted for Buyers approval by the Supplier. Buyer shall approve or communicate observations within 5 days. If there is no communication within 5 days, these documents/drawings shall be deemed to be approved and Supplier will go ahead with engineering and procurement." This clause unmistakably lays down that the Supplier is appointed not merely to supply equipments but there is design and engineering work even before the supply of equipments. 3. Further, we see that there is Schedule J which says that Spec
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hat time is of the essence for this Agreement and shall provide the entire solar generating system including all Equipments, Spare Parts and Materials in accordance with the Supply Schedule. The agreement clauses reveal that the contract is certified to be completed only after the system has been put into place. One can also see that the risk and liabilities accruing in relation to all the equipment shall remain with the Supplier till the completion of the Project. Thus, it can be seen that though it has been contended that the agreement is for supply of equipments, it actually is a contract for the supply of the entire solar power generating system which requires the supplier to provide goods as well as services to the Buyer. 6. The payment for this agreement also helps us to understand the nature of the agreement. We see that the payment is linked to the successful completion of the project. This should not have been the criterion if the contract was for supply of 'goods' onl
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ore the Hon. Court, a decision has been delivered thus – "24. We have heard learned counsel on both sides and we have perused the entire record. We have also perused the judgements which have been cited across the bar. The applicants executed the said agreement dated November 23, 1994 with Assam Gas for the performance of work of laying HDPE pipe for transportation of natural gas as specified in the "scope of work" as set out in clause 3. It would be necessary to quote clause 3 "scope of work" as the interpretation of the said clause along with other clauses' would determine the nature of the contract, namely, whether the said contract was an indivisible inter-state works contract or a contract to supply pipes and a contract to lay down the pipes as per the requirement of Assam Gas'. "3. scope of work The scope of this contract includes supply of HDPE pipes of various sizes (as mentioned in annexure 1) and all HDPE on line fittings, cleaning/cleari
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the clause 3 "scope of work". We have also perused the other clauses which are referred to the earlier part of the judgment and in particular clause 9 "payment terms", clause 15, clause 21 and clause 23. We have also perused the annexure 1 by which the parties had agreed to the rates forming the consideration in the contract. After having gone through the relevant clauses, we are inclined to observe that the said agreement between the applicants and the Assam Gas was a works contract and it could not be divided into two parts, namely, contract to supply the pipes and a contract to lay down the pipelines. The use of HDPE pipes was an integral part of the performance of the contractual obligation by the applicants in as much as the applicants were required to lay down the tranches and lay down the pipes which would be reaching at site. In order to comply with the contractual obligation cast on the applicants, the applicants were required to do various acts set out in
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d to be divided into two parts, the said payment terms would have indicated that the applicants would be entitled to get cost of the pipes on delivery of required quantity of pipes to be used for the purpose of laying the pipes. In substance, the payment terms set out in the said agreement speak in favour of the applicants that the contract was to be read as an inter-State indivisible works contract. Clause 21 specifically mention that the work was awarded to the applicants on a turnkey basis. The use of the term "turnkey basis" would clearly indicate that the parties intended to look to the transaction as a whole and not as a transaction which could be divided into two parts as has suggested by the respondents. 26. Having considered the various clauses of the said agreement, we are in agreement that the submissions advanced by learned advocate Mr. Joshi appearing on behalf of the applicants that the transaction between the applicants and the Assam Gas was indivisible inter-S
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he pipeline. Same is the case as regards the various items which are mentioned at Sr. No. 2 to 7 in annexure I. We are, therefore, inclined to accept the submission of learned advocate Mr. Joshi that monies payable to the applicants were in regard to the work to be carried out in its entirety. Learned advocate Mr. Joshi's submission with reference to the raising of invoices is required to be accepted to hold that the transaction between the applicants and Assam Gas was indivisible for the purposes of determining the liability under the said Act. A typical invoice at page 47 raised by the applicants was so as to comply with the provisions of the excise duty provisions; Similarly, a typical invoice being commercial invoice raised by the applicants is produced at page 50. The argument advanced by learned advocate Mr. Joshi that the applicants were obliged to raise the invoice at the time: of taking out the pipes out of the factory premises to comply with the excise duty provisions is
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sed commercial invoices and one such invoices is at page 50. Reading of the said commercial invoices would clearly go to show that the amount mentioned in the said invoice was being claimed by the applicants on account of performance of the said agreement. The rates quoted in the said invoices tally with, the rates mentioned in annexure I. in substance, the applicant wanted Assam Gas to pay monies as per the commercial invoices which included amounts for the installation of the pipelines. In our view, the authorities below erred in placing reliance on the invoices which were raised by the applicants to only comply with the excise duty provisions." Coming to the facts of the present case, a reading of the present agreement leads us to infer that though the Buyer intends to purchase the solar power generating system as a whole, by devising certain clauses, it is sought to bring about a splitting up of the intended purchase of the system, as a one whole, into a purchase of goods and
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sions of the GST Act, 'Works contract' is defined in clause (119) of section 2 of the GST Act as – "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; It can be seen that works contract involves activities of building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning. However, these activities are in terms of an immovable property. This is the highlight in the definition. We have known a 'works contract' in the Sales Tax regime to be activities as building, construction, manufacture, processing, fabrication, erection, installation, fitting o
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ts 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 Furnaces Nos. 4 and 6 of Bhilai Steel Plant. For this purpose, it imported severed components and also manufactured some of the components at their factory in Marai Malai Nagar, Chennai. These components were transported to the site at Bhilai where the manufacture and commissioning of the aforesaid machines took place. It is undisputed that duty was paid in respect of the components manufactured at its workshop in Chennai, but no duty was paid on manufacture of the aforesaid mudguns and drilling machines which were erected and commissioned on site. We can now look at how the judgment has been delivered – "8. In their reply to the show-cause, the respondents explained the processes
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rnace 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 foundation intended for housing drilling machine and mudgun are erected. The concrete foundation itself is 5-feet high and it is grouted to earth by concrete foundation. The first step is to secure the base plate on the said concrete platform by means of foundation bolts. The base plate is 80 mm mild sheet of about 5 feet diameter. It is welded to the columns which are similar to huge pillars. This fabrication activity takes place in the cast house floor at 25 feet above ground level. After welding the columns, the base plate has to be secured to the
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o 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 tap hole-drilling machines elsewhere in a fully assembled condition and thereafter erect or install the same at a height of 25 feet on the cast floor of the blast furnace. She found that even the adjudicating authority conceded the fact that the equipments have to be assembled/erected on the base frame projection of the furnace. She also accepted the submission urged on the behalf of the appellant that if the machines are to be removed from the blast furnace, they have to be first dismantled into parts and brought down to the ground only by using cranes and trolley ways considering the size, and also considering the fact that there is not space available for moving the machines i
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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 tap hole-drilling machines have to be dismantled and disassembled from the cast floor before being erected or assembled elsewhere. We have also arrived at the same conclusion independently, in para 10 above. Accordingly applying the test laid down by the Supreme Court we hold that the erection and installation of mudguns and tap hole-drilling machines result in immovable property. In the light of the ratio of the above case-law, we hold that the mudguns and
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halt 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 their own weight, each tank being about 30 feet in height 50 feet in diameter, weighing about 40tons. 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 Corporation Act. The High Court held that the tanks are neither structure nor a building nor land under the Act. While allowing the appeal this Court observed: (SCC p. 33, para 32) "32. The tanks, though, are resting on earth on their own weight without being fixed with nuts and bolts, they have permanently been erected without bein
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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 specialised functions. We are not impressed by this reasoning, because it ignores the evidence brought on record as to the nature of processed 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 them re-erecting it at some other place. Some of the other decisions which we shall hereafter notice cla
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plied 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 twofold. One, that any article must be 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 immovable and 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. Therefore, both the tests, as explained by this Court, were not satisfied in the case of appellant as the tube mill or welding head having been erected and installed. in the premises and embedded to earth ceased to be goods within meaning of Section 3 of the Act." 25. In Mittal Engg. Works (P) Ltd. v. CCE [(1997) I SCC 203 : (1996) 88 ELT 622 = 1996 (11) TMI 66 – SUPREME COURT OF INDIA ] this Court was conce
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urt then referred to the decision in Quality Steel Tubes [(1995)2 SCC 372 : (1995) 75 ELT 17 = 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 weighbridges 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 crystalliser has to be assembled, erected and attached to the earth by a foundation at the site of the sugar factory. It is not capable of being sold as it is, without anything more. This Court, therefore, concluded that mono vertical crystallisers are not "goods" within the meaning of the Act and, therefore, not exigible to excise duty. In Triveni Engg. & Industries Ltd. v. CCE [ (2000) 7 SCC 29: (2000) 120 ELT 273 = 2000 (8) TMI 86 – SUPREME
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cannot be termed as 'excisable goods' for purpose of the Act. From a combined reading of the definition of 'immovable property' in Section 3 of the Transfer of Property Act, Section 3(26) of the General Clauses Act, it is evident that in an immovable property there is neither mobility nor marketability as understood in the excise law. whether an article is permanently fastened to anything attached to the earth requires determination of both the intention as well as the factum of fastening to anything attached to the earth. And this has to be ascertained from the facts and circumstances of each case." 26. it was also held that the decision of this Court in Sirpur Paper Mills Ltd.[(1998) 1SCC 400: (1998) 97 ELT 3] must be viewed in the light of the findings recorded by CEGAT therein, that the whole purpose behind attaching the machine to a concrete base was to prevent wobbling of the machine and to secure maximum operational efficiency and also safety. In view of th
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rected for basing these machines, we are satisfied that the judicial member of CEGAT was right in reaching the conclusion that what ultimately emerged as a result of processes undertaken and erection done cannot be described as "goods" within the meaning of the Excise Act and exigible to excise duty. We find considerable similarly of facts of the case in hand and the facts in Mittal Engg. [(1997) 1 SCC 203 : (1996) 88 ELT 622] and Quality Steel Tubes [(1995) 2 SCC 372 : (1995) , 75 ELT 17] and the principles underlying those decisions must apply to the facts of the case in hand . It cannot be disputed that such drilling machines and mudguns are not equipments which are usually shifted from one place to another, nor it is practicable to shift them frequently. Counsel for the appellant submitted before us that once they are erected and assembled they continue to operate from where they are positioned till such time as they are worn out or discarded. According to him they really
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ision of the Hon. Supreme Court in the case of Commissioner of Central Excise, Ahmedabad v. Solid and Correct Engineering Works [(2010) 5 SCC 122] . The facts in this case were thus- "3. M/s Solid and Correct Engineering Works, M/s Solid Steel Plant Manufacturers and M/s Solmec Earthmovers Equipment are partnership concerns engaged in the manufacture of parts and components for road and civil construction machinery and equipments like asphalt drum/hot mix plants and asphalt paver machines, etc. M/s Solex Electronics equipments is , however, a proprietary concern engaged in the manufacture of electronic control panel boards. It is not in dispute that the three partnership concerns mentioned above are registered with the Central Excise Department nor is it disputed that the proprietary concern is a small-scale industrial unit that is availing exemption from payment of duty in terms of the relevant exemption notification. 4. M/s Solidmec Equipments Ltd. (hereinafter referred to as &q
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and classified parts and components being manufactured by them as complete plants/systems, even when they were merely parts and components and not machines or plants functional by themselves. The erroneous classification and declaration was, according to the notice, intended to avoid payment of higher rate of duty applicable to parts of such plants and machinery at the material point of time. The notice also pointed out that the units manufacturing parts and components of the plants had availed benefit of exemption wrongly and in breach of the provisions of Rules 9(1) and 173-F and other rules regulating the grant of such benefit. 6. Insofar as Solidmec marketing company was concerned, the show-cause notice alleged that solidmec was engaged in the manufacturing of asphalt batch mix and drum mix/hot mix plants by assembling and installing the parts and components manufactured by the manufacturing units of the group. According to the notice the process of assembly of the parts and compo
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rovide as exhaustive definition of the said expression. It reads: (26) '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; 23. It is not the case of the respondents that plants in question are per se immoveable property. What is argued is that they become immovable as they are permanently imbedded in earth in as much as they are fixed to a foundation imbedded in earth no manner only 1 = feet deep. That argument needs to be tested on the touch stone of the provisions referred above. 24. Section 3(26) of the General Clauses Act includes within the definition of the term "immovable property" things attached to the earth or permanently fastened to anything attached to the earth. The term "attached to the earth"; has not been defined in the General Clauses Act, 1897. Section 3 of the Transfer of Property Act, however, gives the following meaning to the
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t of the plant to the foundation is not comparable or synonymous to trees and shrubs rooted in earth. It is also not synonymous to imbedding in earth of the plant as in the case of walls and buildings, for the obvious reason that a building imbedded in the earth is permanent and cannot be detached without demolition. imbedding of wall in the earth is also in no way comparable to attachment of a plant to a foundation meant only to provide stability to the plant especially because the attachment is not permanent and what is attached can be easily detached from the foundation, so also the attachment of the plant to the foundation at which it rests does not fall in the third category, for an attachment to fall in that category it must be for permanent beneficial enjoyment of that to which the plant is attached. It is nobody's case that the attachment of the plant to the foundation is meant for permanent beneficial enjoyment of either the foundation or the land in which the same is imbe
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ich is determined by the circumstances of each case. One of the important considerations is founded on the interest in the land wherein the person who causes the annexation, possesses articles that may be removed without structural damage and even articles merely resting on their own weight are fixtures only if they are attached with the intention of permanently improving the premises. 29. The Indian law has developed on similar lines and the mode of annexation and object of annexation have been applied as relevant test in this country also. There are cases where machinery installed by monthly tenant was held to be moveable property as in cases where the lease itself contemplated the removal of the machinery by the tenant at the end of the tenancy. The mode of annexation has been similarly given considerable significance by the courts in this country in order to be treated as fixture. Attachment to the earth must be as defined in Section 3 of the Transfer of Property Act. For instance
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use which is imbedded in the earth for the beneficial enjoyment of the houses. They have no separate existence from the house. Articles attached that do not form part of the house such as window blinds, and sashes, and ornamental articles such as glasses and tapestry fixed by tenant, are not affixtures. 31. Applying the above tests to the case at hand, we have no difficulty in holding that the manufacture of the plants in question do not constitute annexation hence cannot be termed as immovable property for the following reason: (i) The plants in question are not per se immovable property. (ii) Such plants cannot be said to be "attached to the earth" within the meaning of that expression as defined in section 3 of the Transfer of Property Act. (iii) The fixing of the plants to a foundation is meant only to give stability to the plant and keep its operation vibration free. (iv) The setting up of the plant itself is not intended to be permanent at a given place. The plant can b
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is attached. The Hon. Court even went on to distinguish and record with approval earlier decisions issue of 'immovable property'. We may have a look at the same, too. "33. In Sirpur Paper Mills Ltd. [(1998) 1 SCC 400] this Court was dealing with a near similar situation as in the present case. The question there was whether the paper machine assembled at site mainly with the help of components bought from the market was dutiable under the Central Excise Act, 1944. The argument advanced on behalf of the assessee was that since the machine was embedded in a concrete base the same was immovable property even when the embedding was meant only to provide a wobble free operation of the machine. Repelling that contention this Court held that just because the machine was attached to earth for a more efficient working and operation the same did not per se become immovable property. 34. The Court observed: (Sirpur Paper Mills Ltd. case [(1998) 1 SCC 400], SCC p. 402, para 5) "
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Mr Bagaria upon the decision of this Court in Quality Steel Tubes (p) Ltd. v. CCE [(1995) 2 SCC 372: (1995) 75 ELT17] and Mittal Engg. Works (P) Ltd. v. CCE [(1997)1 SCC 203 : (1996) 88 ELT622]. In Quality Steel Tubes (p) Ltd. case [(1995) 2 SCC 372 : (1995) 75 ELT17] this Court was examining whether "the tube mill and welding head" erected and installed by the assessee for manufacture of tubes and pipes out of duty-paid raw material was assessable to duty under residuary Tariff Item 68 of the Schedule being excisable goods. Answering the question in negative this Court held that tube mill and welding head erected and installed in the premises and embedded to earth ceased to be goods within the meaning of Section 3 of the Act as the same no longer remained 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 tube mill which involved a comprehensive process of installing slitting l
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re assembled at site with bottom plates, tanks, coils drive frames, supports, plates, distance places, cutters, cutter supports, tank ribs, distance plate angles, water tanks, coil extension pipes, loose bend angles, coil supports, railing stands, intermediate platforms, drive frame railings and flats, oil trough, worm wheels, shafts, housing, stirrer arms and support channels, pipes, floats, heaters, ladders, platforms, etc. The court noted that the mono vertical crystallisers have to be assembled, erected and attached to the earth on a foundation at the site of the sugar factory and are incapable of being sold to the consumers in the market as it is without anything more. 41. Relying upon the decision of this Court in Quality Steel Tubes (P) Ltd. case[(1995) 2 SCC 372 : (1995) 75 ELT 17], the erection and installation of mono vertical crystallisers was held not dutiable under the Excise Act. This Court observed that: [Mittal Engg. Works (P) Ltd. case [(1997) 1 SCC 203 : (1996) 88 ELT
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see on a specially made concrete platform at a level of 25 ft height. Considering the weight and volume of the machine and the processes involved in its erection and installation, this Court held that the same was immovable property which could not be shifted without dismantling the same. 43. It is noteworthy that in none of the cases relied upon by the assessee referred to above was there any element of installation of the machine for a given period of time as is the position in 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 thi
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tly. In that view of the matter we see no difficulty in holding that the plants in question were not immovable property so as to be immune from the levy of excise duty. Our answer to Question 1 is accordingly in the affirmative. " Thus, we see how the Hon. Courts have evolved the term 'immovable property' when faced with the question of what constitutes movable and immovable property. Though not issued for the purposes of the GST Act, we may as well 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) 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 v. Hutchison Max Telecom P. Ltd., (2008 (224) E.L.T 191 (Bom.)"
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smission apparatus meets the test of manufacture. The Commissioner further noted the various equipments installed at the BTS site room. The following equipments/apparatus were found to be installed in BTS site room:- a) Microwave Antennas b) Base station controller/Base Trans receiver station c) Microwave Terminal. d) GSM Antennas e) Power supplement with rechargeable battery back up. f) Air conditioners. 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 trans-receiver 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 BT
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vice (MTS) and is based on global system for mobile communication (GSM). The infrastructure for GSM is similar to other networks. The Tribunal then set out the various infrastructure required for GSM and noted that GSM Architecture consists of Radio Station Sub Systems (constitution of MS, BTS, & BSCs) which are networked with the operation support subsystem (constitued MSCs) which networked with 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 contractor
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engaged in providing cellular mobile services by virtue of a license granted by the Government of India under the provisions of section 4 of the Indian Telegraph Act, 1885. Thus, their activity is purely service oriented. The Tribunal held that in such circumstances, the activity of installing and commissioning cell site cannot be an activity of either manufacture and no marketable goods arise. For the aforesaid 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 hew 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) an
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tion the room housing the equipment. This act of dismantling from the permanent site would render such goods not marketable. Apart from that the goods cannot be re-erected as in the previous place as the requirement of each place is different. Further, from the statement of Narayan as set out in the order of the Commissioner, it may be noted that he had stated that regarding installation of BTS the designing 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 Boar
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; for reasons that the solar power plant could not be shifted without first dismantling it and then re-erecting it at another site. An overview of all above makes us observe that the impugned transaction for supply of an end to end solar power generating system with various integral components is a "works contract" in terms of clause (119) of section 2 of the GST Act. We would now look at the second agreement. CONTRACT CONTENDED TO BE FOR SUPPLY OF SERVICES The title of the agreement says 'Engineering and Construction Agreement'. Let us look at the clauses of the agreement – WHEREAS: (A) The Owner desires to set-up and operate solar photovoltaic plants with a total capacity of 60 MW AC (81 MW DC at ____________ in the state of Karnataka (the "Plant"). (B) The Owner has selected the Contractor for the subject project, based on the previous experience and capability/credentials of the Contractor. The Owner desires to purchase from the Contractor to do erection
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arnataka; "Work Completion Deadline" shall have the meaning set forth in Schedule I of this Agreement; "Work Completion Certificate" shall mean the certificate to be issued by the Owner to the Contractor upon successful completion of Plant; "Plant Completion" shall mean the date on which installed modules are connected to the external Grid to begin commercial operations of the Plant following the achievement of the Modules Installation Date, and installation and commissioning of 60 MW AC capacity is achieved and all other Work related to the Plant are completed which shall in no event be later than the Work Completion Deadline; "Prime Subcontractors" shall have the meaning set forth in Clause 7.4 hereof; "Prime Subcontractor Contracts" shall have the meaning set forth in Clause 7.4 hereof; means the Plant, including the Works, as an integrated whole; "Specification Manual" shall mean the manual setting out the specifications a
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th the terms and conditions of this Agreement. Owner shall give in writing Notice to Proceed for commencement of work. 3. SCOPE OF WORK 3.1 The Contractor agrees that it shall, either on its own or, through one or more Subcontractors including Prime Subcontractor as may be appointed in accordance with this Clause 3.1, perform the entire Works, as per the Specification Manual and in accordance with the terms of this Agreement, to the satisfaction of the Owner. It is further clarified that the Owner will have a right to accept or reject a Affiliates or Subcontractor at its discretion and Owner's decision in this regards would be binding on the Contractor, provided such acceptance shall not be unreasonable withheld 3.2 The Contractor agrees that pursuant to Clause 3.1 above, in the event the Work (either in whole or in part) is to be executed by one or more of its Affiliates or Subcontractors, it shall cause and ensure that all such Affiliate(s) and/or Subcontractor(s) (as the case ma
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The Work shall be performed such that the same shall be suitable and fit for its intended purpose as provided in this Agreement and shall comply with the provisions of all Applicable Laws and all Approvals in this regard. 3.5 The Contractor agrees that it shall execute the Work in accordance with the terms of this Agreement so as to cause and ensure that the Work in relation to Plant completes and the Plant commences commercial operations on or before the Work Completion Deadline in the manner set-out in Schedule I hereto, except to the extent that there is an extension to the Work Completion Deadline on account of a Force Majeure Event or owing to delay caused by non-fulfillment by the Owner of its obligations under Clause 7.9.1. 7.9.3 and 7.9.4 of this Agreement unless the same is caused or attributable to a failure by the Contractor to perform its obligations hereunder. 3.6 Addenda and Change Orders shall be dealt with in accordance with Schedule V hereto. 7. OBLIGATIONS AND COVENA
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necessary or prudent in accordance with good industry practice. Further, all insurances need to be endorsed in favor of Lender / Security Trustee of the project. All lender related clauses (as advised by lenders insurance agent) to be endorsed in the policies. 13. PLANT START UP, ACCEPTANCE TESTING AND PERFORMANCE GUARANTEE 13.1 The Contractor agrees that it shall be responsible for carrying out, coordinating all tasks and responsibilities associated with the successful completion and commissioning of the Plant on or before the Work Completion Deadline. 13.5 The Contractor agrees and acknowledges that notwithstanding the issue of the Work Completion Certificate it shall not be absolved of its liability for any Defects in Plant (including but not limited to the Equipment and machinery) and Deficiency in execution of Work, even if such Defects and Deficiency existed on or before the issue of Work Completion Certificate. It shall also not affect in any manner any warranties or guarantees
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y supporting design calculations, that are prepared in connection with the performance of obligations under this Agreement shall, upon their preparation, be made available to the Owner for review and comment in order to monitor compliance with this Agreement as such documents are prepared and completed. 21.2 Review Not Release of Obligations Review and comment by the Owner or its designees with respect to any of such Design Documents or other information pursuant to Clause 22.1, shall not relieve or release the Contractor from any of its duties, Obligations or liabilities provided for under the terms of this Agreement unless and until the same is attributable to a change that is carried out to such Design or Documents based on the insistence of the Owner clearly disregarding the suggestions of the Contractor. 21.3 Final Documents Within 7 (seven) days after achievement of the Plant Completion, the Contractor shall furnish the Owner with 3 (three) copies (one of which shall be of reprod
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h documents, as well as any drawings, tracings, specifications, calculations, memoranda, data, notes and other materials that are supplied by the Owner and come into the possession of Contractor for the purposes of performing its obligations under this Agreement, shall be delivered to the Owner upon commissioning of the Plant. 21.5 Use of Drawings by the Contractor The Contractor shall be entitled to retain and use solely and specifically in connection with performance of its obligations under this Agreement a reproducible set of all Design Documents and other documents delivered to the Owner. 24. MISCELLANEOUS 24.11 Execution in Counterparts This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute one and the same instrument. SCHEDULE II: SPECIFICATION MANUAL To be submitted after detailed engineering. However the project shall be implemented as the best industry practices and all applicabl
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Transportation of the above off shore Equipments, Spare Parts and Materials from Indian Port to the Plant Site and to ensure that the Equipments, Spare Parts and Materials are delivered in proper condition. Owner shall extend all supports for the documentation part. Scope of work covers all Services, Erection, testing and commissioning of entire solar power projects. Scope shall include the following but not limited to: 1. Land development activities 2. Construction of necessary , Roads and Drainage system, Boundary wall/fencing, Bore wells 3. All Civil and foundation works for Switchyard ,solar plant and all other Equipment 4. Site enabling facilities 5. Leveling and grading Erection testing and commissioning of 6. Solar Modules 7. Module mounting Structures 8. Power Transformers 9. Inverters 10. Scada system and SLDC telemetry system 11. Transmission line as per connectivity approval 12. Complete Switchyard and remote end works as applicable. 13. Inverter Transformers 14. Auxiliary
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OR 60 MW AC SOLAR PV POWER PLANT Contractor shall submit the design basis meeting the agreed technical specification to the Owner for his approval. Also the documents /drawings mutually agreed will be furnished for approval, SPECIFIC CRITERIA LIST OF PREFERRED SUPPLIERS/Contractors To be furnished later during project implementation. The following are agreed upon by the Contractor for carrying out above mention scope. 1. Installation and Construction The Contractor shall perform the necessary construction to install the plant's equipment and to provide all necessary support and ancillary structures, components, and facilities as detailed in the designs approved in Item 1 of this Scope Of works. All construction shall be performed in compliance with Indian Standard codes and in accordance with best industry practices. Construction shall be completed by the Completion Date as specified in this Agreement. 9. Protection of Physical Immovable and Movable Property The Contractor shall do
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CAL DIAGRAMS, DOCUMENTS AND DRAWINGS 1. Single line diagram 2. Plant layout 3. Protection SLD 4. Makes of Equipments considered 5. Submission of Quality Plan/Inspection Plan/ Test reports within 10 days from the issuance of LOI a. Earthing Calculation b. Inverter Room Layout c. Control Room Layout d. Cable Routing Plan e. Cable schedule f. Interconnection / termination Schedule g. Auxiliary Power Supply Arrangement CONSTRUCTION DRAWINGS:- a. Solar panel foundation arrangement b. Layout and detail of roads and drains c. Architectural details & Finishing schedule. d. Building layout & details for foundations, trenches, grade slab, plinth beam, equipment foundations, roof, etc. e. Drawing of Module Supporting Structures. 6. DOCUMENTS a. Bill of Material and Bill of Quantities for all equipments with quantity, model, maker name, year of manufacturing, specifications, standard etc. b. Detailed project schedule for every step till commissioning. c. General safety, protection, and oth
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reports shall be provided. Functionality checks to be carried out such as Protection checks for transformer, switchyard and inverter Dummy synchronisation. The MQP and different test certificates should be submitted for compliance with the relevant IS/ IEC standards. All the Type test and routine tests for all equipments on the AC side should be conducted and acceptance report for the same should be submitted in standard formats. PLANT OPERATIONAL TEST Upon commissioning, plant performance shall be observed under real live conditions for a period of 30 days on a continuous basis for trouble-free operation A look at the above clauses reveals that this contract is also one for executing a works contract involving a provision of goods as well as services. The contract is, amongst other things, for construction of civil works and results in setting up of a solar power plant. We have seen in the preceding paras that setting up of a solar power plant results into immovable property. In view
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re is a clause which says -This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute one and the same instrument. We are convinced that both the agreements are for the single works contract of setting up of a solar power plant. The contracts would have different consideration but that should not change the way look at such agreements. The bifurcation into such agreement which themselves reveal the real intent would not impede the interpretation and applicability of the provisions. The contention as made by the applicant reveals that the applicant desires to treat the first agreement as one being for supply of goods, a composite supply for which the principal supply is providing a solar power generating system which attracts tax at 5% as 'solar power generation system'. However we have seen above that the contract of setting up of a solar power generation plant is a "works contrac
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'. Having seen that the impugned agreements are of the nature of "works contract" in terms of clause (119) of section 2 of the GST Act, we find that para 6, as reproduced below, of Schedule II [Activities to be treated as supply of goods or supply of services] treats "works contracts" u/s 2(119) as supply of 'services' – "6. Composite supply The following composite supplies shall be treated as a supply of services, namely:- (a) works contract as defined in clause (119) of section 2;" In view of "works contracts" u/s 2(119) being deemed to be a supply of services, the impugned agreements represent transactions of the nature of a supply of "service". We would now move on to answer the questions as posed – Question 1 Whether in case of separate contracts for supply of goods and services for a solar power plant, there would be separate taxability of goods as 'solar power generating system' at 5% and services at 18%? In s
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r the IGST Act and 9% each under the CGST Act and the MGST Act, aggregating to 18% of CGST and MGST. The entry reads thus – SI No. Chapter, Section or Heading Description of Service Rate (per cent.) [CGST + MGST = IGST] Condition 3 Heading 9954 (Construction services) (ii) composite supply of works contract as defined in clause 119 of section 2 of Central Goods and Services Tax Act, 2017. 9 + 9 = 18 – Question 2 Whether parts supplied on standalone basis (when supplied without PV modules) would also be eligible to concessional rate of 5% as parts of solar power generation system? The applicant argues that since the concessional rate of 5% [as clarified to be under Notification no. 1/2017-Integrated Tax (Rate)] is provided to renewable energy products and parts thereof, the same should be applicable to all suppliers providing such products. The applicant has laid claim to sr. no.234 of Schedule I of Notification No.1/2017 – Integrated Tax (Rate) under the Integrated Goods and Services T
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ot be able to deal with this question in the present proceedings. Question 3 Whether benefit of concessional rate of 5% of solar power generation system and parts thereof would also be available to sub-contractors? If the transaction is a supply of "goods" then the applicable Schedules (exempt or taxable) would have to be seen. No details have been brought before us. Further, the question would have to be posed by the supplier who would be the sub-contractor. This seems to be a general question. In the absence of any documents before us, we would not be able to deal with this question in the present proceedings. 05. In view of the extensive deliberations as held hereinabove, we pass an order as follows : ORDER (under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) NO.GST-ARA-03/2017/B- 07, Mumbai, dt. 03/03/2018 For reasons as discussed in the body of the order, the questions are answered thus – Q.1 Whether in c
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