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The Appellant had entered into a Joint Venture (JV) to bid on Rail Vikas Nigam Limited's (RVNL) tender for the construction of a PEB shed, structure, building, water supply, general electrical works, OHE works, signal and telecommunication works, and supply, installation, and commissioning of machinery and plant for setting up an Electric Loco Shed. The Appellant had engaged in providing works contract services as a sub-contract to JV for the original works of RVNL. According to the J.V. Agreement, the Appellant was assigned the work of supply, installation, and commissioning of the plant and machinery, mechanical engineering works, electrical works, etc. Subsequently the Appellant sought an advance ruling on whether the work awarded to the Appellant is a composite supply of work contract service. The AAR held that the work awarded to the applicant was not a composite supply of work contract service. Aggrieved the Appellant preferred an appeal before the Uttar Pradesh AAAR.
The Appellant contended that the AAR failed to appreciate the material fact that the items of plant and machinery supplied, installed, and commissioned by the were of permanent nature. The AAR noted that for a contract to be classified as a work contract, the property must be immovable, which is not described under the GST provisions.
The AAAR observed that upon installation the overhead electric supply assembly becomes one with the general electrical supply mechanism of the plant and cannot be moved without causing substantial damage not only to itself but the Entire Loco Shed itself. Subsequently, the AAAR set aside the order of the AAR and held that the contract of transfer of property in goods is coupled with supply of services as covered under the definition of ‘Works contract service’ as defined under Section 2(119) of the CGST Act. Accordingly, the Appellant is eligible for benefit of Notification No. 11/2017-Central Tax.
HYT Engineering Company Private Limited (Appeal Order No. 02/AAAR dated 15 July 2022)
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