In re Allied Digital Services Ltd. (GST AAR Maharashtra)
Comprehensive ‘CCTV based City Surveillance System’ can be termed as immovable property for following reasons:
1) CCTV based Surveillance System have permanently been fastened to the things attached to the earth.
2) The CCTV based Surveillance System cannot not be shifted without first dismantling it and then erecting it at another site.
In the facts before us and having regard to the principles laid down in the judgments discussed above, we are of the firm view that set up of a comprehensive CCTV based city surveillance system for the city of Pune and Pimpri-Chinchwad does result into installation/commissioning of immovable property wherein transfer of property in goods is involved in the execution of the contract and thus the ‘Surveillance Project’ is a works contract as defined in Sub-section 119 of Section 2 of the GST Act and is supply of services as per 6(a) of Schedule II of the GST Act. And therefore the amount received for the supply of services post GST are taxable under the provision of GST Act.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, MAHARASHTRA
(Under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017)
The present application 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 Allied Digital Services Ltd, the applicant. seeking an advance ruling in respect of the following questions:
Question 1 :- Whether the amount received for supply of services during the post GST period to the Government of Maharashtra (Home Department) as per the contract in question are taxable under SGST/CGST Act ?
Question 2 :- if answer to the question No.1 is in affirmative then what is the rate of tax under SGST/CGST?
At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / MOST Act would be mentioned as being under the “GST Act”.
02. FACTS AND CONTENTION AS PER THE APPLICANT
The submissions, as reproduced verbatim, could be seen thus-
Statement of relevant facts having a bearing on the question(s) on which advance ruling is required.
1. The Government of Maharashtra (for short “GOM”) has envisaged to setup a comprehensive CCTV based City Surveillance System for the city of Pune and Pimpri-Chinchwad (hereinafter referred to as the “Surveillance Project”).
2. The GOM published the Request for proposal (for sort’ RFP’) to seek services of a reputed IT firm as a SystemIntegrator for Design, Development, Implementation & Maintenance of CCTV based Surveillance System For Pune and Pimpri-Chinchwad areas. Accordingly the Applicant, has submitted its proposal for the same.
3. The GOM has selected the Applicant as successful bidder and issued Letter of Intent dated 17th September 2013 to the Applicant. the Applicant in turn signed and returned the same as a token of acceptance of Letter of Intent.
4. Therefore the agreement dated 28th day of October, 2013 is made between the Home Department of GoM and the Applicant. The Applicant is referred to as ‘Systems Integrator” or “SI” in the contract document.
5. The Applicant has certain queries regarding the applicability of GST tax on the payments made by the GoM to the Applicant under above stated contract.
6. The important clauses of the said agreement relevant for deciding the issue are as follows:
“I. Definitions
in the Agreement, the following terms shall be interpreted as indicated,
(a) ‘GOM’ means Home Department, Government of Maharashtra;
(b) Contract’ means this Agreement entered into between GOM and the Systems Integrator including all attachments and annexure thereto and all documents incorporated by reference therein;
(c) ‘Systems Integrator’ means M/s. Allied Digital Services Limited interchangeably referred to as “SI” in the contract; and
(d) ‘RFP’ means the Tender Published by GOM (Ref. No. ISS 1012/CR-71/Sp1-4) and th subsequent corrigenda / Clarifications issued.
(e) ‘GO Live’ means the date on which the proposed solution becomes operational after successfu conclusion of all acceptance tests to the satisfaction of GOM.
(f) “Deliverable” means any action/output generated by the SI while discharging their contractua obligations. This would include feeds, analytics, information and all the other services rendere as per the scope of work and as per the SLAS.
(g) “Assets” refer to all the hardware / Software / furniture / data / documentations / manuals catalogs / brochures / or any other material procured, created or utilized by the SI or the GOM fo the Pune Surveillance Project.
3) Term of the Agreement
The term of this agreement shall be a period of 5 years and 10 months from the date of execution o this Agreement. This includes the estimated period of 42 weeks for implementation of the project an 60 months from the date of successful go live of the project.
4 Fees
Total fees to be paid to the Systems Integrator for the execution of this Contract are Rs. 2,24,31,50,105.50. GOM shall pay the Systems Integrator the total fees in following manner : (a) 204 of the total fees against Project Go Live (i.e. successful FAT) and (b) Remaining 80% of total fees hit 20 equal installments (Rs. 8,97,26,004.22 /per quarter). The fees shall be inclusive of Value Adde Tax or Sales Tax, Service Tax, Income Tax, duties, fees, levies, charges, and commissions a applicable under the relevant Laws of India. Should there be a change in applicable taxes, the actu taxes on the date of billing would prevail.
The payment shall be made at the end of every three months starting from the date of Successful go Live and shall be subject to strict adherence of the respective SLAS. If the Systems Integrator is liable for any penalty/liquidated damages as per the SLAs (refer to the clause no. 7 of this agreement), die same shall be adjusted from quarterly payments due to the System Integrator.
GOM will release the payment within 30 days of submission of valid invoice subject to the conditi that invoice and all supporting documents produced are in order and work is performed to t e satisfaction of GOM. GOM shall be entitled to delay or withhold the payment of any invoice or part f it delivered by SI. where GOM dispute such invoice or part of it provided that such dispute bonafide. The disputed amount shall be settled in Resolution of dispute.
6) Work Completion Timelines
List of the broad activities to be carried out by the Systems Integrator and the timelines from the date of work Order are given in the table below. “T” stands for the date of issue of the Work Order.
