In re Jayshreeben Rameshchandra Kothari (GST AAR Gujarat)
We find that during the course of discharge of various functions by various entities, different work orders are issued according to which services are provided by the applicant. The scope of work as defined in the Work Orders submitted by the applicant on sample basis do not get covered under any such activity in relation to any function entrusted to a Panchayat under Article 243G of the Constitution of India or in relation to any function entrusted to a Municipality under Article 243W of the Constitution of India. Since the applicant, at various stages, enters into different agreements with various authorities for provision of services, it is not practical to examine at this stage, each contract, he has entered into with the recipients of services. Further, during the course of providing services, the applicant may also enter into further agreements with the service recipients. It is not possible to foresee the nature of all these agreements at present. Further, there could also be modifications/ amendments in the existing agreements and the nature of service could be subsequently altered. Therefore, the reply to the query raised by the applicant cannot be answered in plain ‘no’ or ‘yes’. Therefore, we hold that the nature of these agreements and the services provided by the applicant would determine whether the third condition as discussed above has been met or otherwise. We hold that applicant shall be eligible for the exemption under the Notification No.12/2017-State Tax (Rate) dated 28.06.2017 only if all the conditions as specified at para 23.1 supra are met in respect of supply of such services. Therefore, the exemption sought by the applicant will depend upon the nature of services provided by them in terms of specific contracts entered by them with respective service recipients.
In view of the above facts, we come to the conclusion that we do not find sufficient evidence to establish conclusively that all such conditions have been satisfied in respect of services provided by the applicant.
Read AAAR Ruling: No GST exemption on ‘equipments on hire’ for ‘live videography’ to State Government
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING,GUJARAT
BRIEF FACTS OF THE CASE:
The applicant is a Proprietor of M/s Dimple Colour Lab, having a GSTIN: 24ARDPK0507E1ZH, filed an application for Advance Ruling under Section 97 of CGST Act, 2017 and Section 97 of the GGST Act, 2017 in FORM GST ARA-01 discharging the fee of Rs. 5,000/- each under the CGST Act and the SGST Act.
2. The applicant submitted that they are engaged in supply of goods such as Temporary live videography with LED & LCD Screen, Live Telecast equipment, Cameras, etc. on hire basis to Central Govt., State Govt., Union Territory, Local Authority, Village Panchayat, who undertake activities in relation to any function entrusted under Article-243G of the Constitution.
3. The applicant further submitted that Central Govt., State Govt., Union Territory, Local Authority, Village Panchayat, place orders to them for providing/supplyingTemporary live videography with LED & LCD Screen, Live Telecast equipment, Cameras, etc.. They have enclosed specimen Work Orders viz. (a) Work Order No. AB/TC/1082 dated 26.04.2017 issued by Office of the Executive Engineer, Baroda Electrical Division, R & B Department, Vadodara and (b) Work Order No. Duda/Vasi dated 28.08.2018 issued by the Collector, Bharuch.
4. The applicant submitted that the illustrative supply of services which constitute hire charges for a consideration, inter-alia, include:
(a) Hire Charges for erecting and dismantling of TV with necessary suitable cables as provided on site as per the requirement on Site and as per the direction of Engineer-in-Charge;
(b) LED Screen with suitable Iron Platform Structure, back support of Iron H Frames and wiring etc., complete 16 mega pixel Outdoor Screen with a refresh rate of 4800 MHZ or so as per requirement of on Site and as per the direction of Engineer-in-Charge;
(c) Hire Charges, for providing, erecting and dismantling of DTH system, having enough size Disc for receiving Digital Signal and Set Top Box, as required for program, with good quality interconnecting wires & necessary recharge (Tata Sky, Dish TV, Airtel etc.);
(d) Hire charges for providing, erecting and dismantling of HD Digital Video Recording (3CCD) for receiving and general Shoots, with competent Authorized Person (each camera), as per the direction of Engineer-in-Charge;
(e) Hire charges for providing, erecting and dismantling, after use of HD Online Recording Set-up and providing HD DVD’s as per function requirement, as per the direction of Engineer-in-charge;
(f) Hire Charges for providing erection and dismantling after use of live Black Magic HD Digital set up for mixing, as per direction of Engineer-in-charge.
5. The applicant further submitted that after completion of the event all the instruments and accessories which are deployed at site for an event are taken back by the applicant and are used for another event. In other words, the Equipment are given on “Hire” only and there is no transfer of ownership of goods at any point of time. The consideration charged by applicant are “hire Charges”.
6. The applicant further submitted that the activity-transfer of the right to use any goods, for any purpose (whether or not, for a specified period), for cash deferred payment or other valuable consideration is considered as Supply of Service as per clause 5 (f) of Schedule II to the Central Goods and Service Tax Act, 2017.
7. The applicant further submitted that the said service falls under the category of “Pure Services” and not in the nature of Works Contract service or Composite supply, involving supply of any Goods.
8. Accordingly, the applicant sought the Advance Ruling on the following questions:
(i) Whether or not, the aforesaid services fall under the scope of clause 5 (f) of the Schedule II to the Central Goods and Service Tax Act, 2017?
(ii) Whether or not, the Service related to collection of Hire Charges for temporary transfer of right to use goods from “Central Govt., State Govt. or Union Territory or Local Authority or a Government Authority by way of any activity in relation to any Function entrusted to a Panchayat under Article 243-G of the Constitution or in relation to any function entrusted to a Municipality under Article 243-W of the Constitution” are covered and exempted under the scope of Sr. No. 3 of the Notification No.12/2017-Central Tax (Rate) dated 28.06.2017?
Statement containing the applicant’s interpretation of law and/or facts, as the case may be, in respect of aforesaid question(s):
9. The applicant, vide their letter dated 23.01.2019,submitted that as per clause No. 5(f) of the Schedule-II to the CGST Act, 2017, transfer of the right to use any goods, for any purpose (whether or not for a specified period), for cash, deferred payment or other valuable consideration, shall be treated as ‘Supply of services’. The services supplied by the applicant, being in the nature of transfer of the right to use any goods for any purpose, for a specified period, fall under the aforesaid clause.
10. The applicant further submitted that they supply the services, viz. Transfer of right to use any goods, for any purpose, for a specified period, to Central Govt., State Govt. or Union Territory or Local Authority or a Governmental Authority, which covered under Sr. No. 3 of the Notification No.12/2017-Central Tax (Rate) dated 28.06.2017.
11. The applicant further submitted that from the List of activities specified under Twelfth Schedule (Article 243-W of the Constitution) and under Eleventh Schedule (Article 243-G of the Constitution), it is evident that “Promotion of Cultural, Educational and Aesthetic Aspects” is one of the Functions, specified under Article 243-W of the Constitution and “Cultural Activities “are specified under Article 243-G of the Constitution.
12. In view of the aforesaid provisions, the applicant further submitted that Services, without involving any Supply of Goods, would be treated as Supply of ‘Pure Services’. Therefore, supply the Services, viz. Temporary Live Videography with LED & LCD Screen, Live Telecast Equipment, Cameras etc., on hire, which is nothing but transfer of the right to use any goods for any purpose for a specified period to Central Govt., State Govt. or Union Territory or Local Authority or a Governmental Authority, fall under Sr. No. 3 of the Notification No.12/2017-Central Tax (Rate) dated 28.06.2017.
13. At the time of personal hearing held through Video Conferencing on 18.06.2020, the Authorised Representative of the applicant, Shri Dhaval Shah reiterated the facts as stated in the Application and requested to allow to submit further submission.
14. In the addition to earlier submission dated 23.01.2019, the applicant has submitted additional submission vide their letter dated 22.06.2020 with documents as under:
[i] The Applicant is engaged in providing services to the Government of Gujarat and its various ministries through the Government owned bodies. They are providing Temporary LED Screen with live Videography for celebration of various cultural/social/educational/aesthetic/slum improvement and up gradation/urban poverty alleviation/Development of Agricultural industries/Irrigation, water management and watershed development/Social Forestry and Farm Forestry etc., in a different nomenclature viz. “Namami Devi Narmade Mahostav”, “Poshan Abhiyan Programme at Public Entrance & Parking” , “Sujlam Suflam Jal Abhiyan”, “Divyang Shay Vitran Camp, “VishvaAdivashi Divas”, “National School Child Health Programme” , “National Tribal Art Festival 2019”, “ Gujarat Gaurav Din”, “International Yoga Day” or such other kind of Cultural Programme. The Applicant has submitted various work order issued by the State Government for the different programmes/events on different time, which is annexed herewith and marked as ANNEXURE – A collectively.
[ii] The Applicant have provided pure services to the State Government and its bodies and never provided services other than the Government. The Applicant application is in respect of classification of services and benefit of the Notification No.12/2017-Central Tax (Rate) dated 28.06.2017 which is to be decided keeping in mind the facts and evidence produced herein.
[iii] The work order issued by the State Government clearly provides that the scope of their work is only supply of services and no goods are supplied to the state government. The Applicant have already submitted the scope of their services by its submission dated 23.01.2019 but as a matter of repetition, reiterate as under:
(A) The Applicant have been given a work order for providing services to the State Government for live videography of the event of Chief Minister or other ministers and have to erect and dismantle TV sets. The applicant has to lay necessary suitable Cables as per direction of Engineer in Charge on temporary basis at the site.
(B) The Applicant have to install LED screens at the venue on Iron Platform structure, back support of Iron H Frames and Wiring etc., with 16 Mega Pixel camera so 4 that large group of people can see the event even seating at distant places at the same venue.
(C) That the Applicant have to run DTH System with enough size disc for proper Digital Signal and Set TOP Box as per requirement compatible to Tata Sky, Dish TV, and Airtel.
(D) After completion of the event, all the instruments and accessories, which are deployed at Site, for an event are taken back by the applicant and are used for another event of the state government. The equipment was used by the applicant and there is no transfer of ownership of goods or no one else uses their systems at any point of time. Copy of colour photographs are also annexed herewith to give an idea about the work undertaken by the Applicant and marked as ANNEXURE – B collectively;
[iv] Now to arrive at any conclusion, one has to see the activity of the applicant viz–a-viz the scope of work ordered under work contract. Admittedly, the applicant has been given the work for services only and remuneration was also paid accordingly. This would clarify for the work order submitted at Annexure – A to this submission.
[v] The CGST Act, 2017 provides the definition of Supply of Services under clause (5) of Schedule II. It states that the following shall be treated as supply of services, namely — (a)……. 5 (b)…… (f) transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuation consideration. However, the services they have provided was temporary and no right to use was even transferred to other parties. They took their materials/equipment at the venue and their staff provided the services and brought back all the equipment after completion of the event.
[vi] In this background of the facts, it is clear that they have neither provided any goods nor transferred the right of a goods. This entire activity is nothing but “Pure Service” as defined under sub-clause (5) of Schedule II of CGST Act, 2017 and, therefore, the applicant satisfies one of the criteria of Sr. No. 3 of Notification No.12/2017-Central Tax (Rate) dated 28.06.2017
[vii] Now, another aspect of the matter is whether the applicant is eligible for the Sr. No. 3 of the Notification No.12/2017- Central Tax or not. For proper appreciation of the case, Sr. No. 3 of the said notification is reproduced as below:
