Main question raised by the applicant is whether, there is any asset transfer involved in the activity of shifting of transmission lines under the supervision of RRVPNL (diversion of existing one 220KV and two 132KV lines from their mining area to other route in their premises) or not.
The Superintending Engineer (T 86 C), RRVPNL, Chittorgarh, has issued a Corrigendum Letter No. RVPN/SE/T86C/COR/TECH/ F./D.973 dated 24.09.2019 in which the words “GST @ 18% applicable on asset transfer” should be read as the words “GST @ 18% applicable on cost of Infrastructure for ‘Value of Supply’ “. The RRVPNL has submitted a copy of the same to this office during the Personal hearing on dated 25.09.2019 and the same was also given to the authorized representative of the applicant.
Contention of the applicant that there is no asset transfer, has been resolved by the RRVPNL by issuing corrigendum dated 24.09.2019. After issue of the said corrigendum the question raised by the applicant turned redundant and therefore no advance ruling is required to be given.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, RAJASTHAN
Note: Under Section 100 of the CGST/ RGST Act, 2017, an appeal against this ruling lies before the Appellate Authority for Advance Ruling constituted under section 99 of CGST/ RGST Act, 2017, within a period of 30 days from the date of service of this order.
(e) determination of the liability to pay tax on any goods or services or both;
(g) whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both, within the meaning of that term.
1. SUBMISSION AND INTERPRETATION OF THE APPLICANT:
(i) Work to be executed by WCL, under supervision of RRVPNL, or
(ii) Work to be executed by RRVPNL itself by charging the cost of work, and overhead charges, above the cost estimate.
At present, the applicant is working under (i) option and undertook the charge for raising/ shifting of transmission lines.
“It shall be ensured that asset/infrastructure built by intending agency/consumer shall have to be transferred to RRVPNL. Any expenditure or taxes incurred or to be incurred on such transfer shall be borne by intending agency/ consumer” .
That the demand issued by RRVPNL through the Superintendent Engineers (T&C), includes the major component of GST on ‘asset transfer’, which is the main question for seeking this advance ruling.
(i) Dismantling the portion of EHV line.
(ii) Construction of new portion of EHV line to substitute this dismantled portion.
(iii) Civil Work (Foundation, Erection of super structures towers/Poles and stringing of conductor arises), is being executed through contractors, who is paying GST applicable to the vendors, supplying the materials required and labour contractors in their invoices/bills; which are paid by applicant directly or by reimbursement to the Contractor.
2. QUESTIONS ON WHICH THE ADVANCE RULING IS SOUGHT:
3. PERSONAL HEARING
In the matter personal hearing was granted to both applicant and RRVPNL on 13.09.2019 at Room no. 2.29 NCRB, Statue Circle, Jaipur. Mr. Keshav Maloo (CA), Mr. Nikhil Jhanwar (CA) 86 Mr. Prashant Verma appeared for Wonder Cement Limited. Mr Virendra Parwal (CA), Mr. Vikas Gupta (CA) and Mrs. Anju Sultaniya (CAO) appeared for RRVPNL. On request of both the parties, second personal hearing was granted on 25.09.2019. During the PH on 25.09.2019, a corrigendum letter dated 24.09.2019 issued by Superintending Engineer, (T 86 C), Chittorgarh, RRVPNL was submitted. Copy of the same was also given to the authorized representatives of the applicant. Mr Keshav maloo requested that he will submit a written submission in respect of corrigendum issued by RRVPNL within a week. Shri Keshav Maloo has submitted the written submission vide letter dated 01.10.2019.
4. COMMENTS OF THE JURISDICTIONAL OFFICER
The jurisdiction officer (Deputy Commissioner, State Tax (SGST), Special Circle-I, Kar Bhawan Todarmal Marg, Civil Lines, Ajmer, Rajasthan 305001) has submitted his comments vide letter dated 09.09.2019 and stated that,
As per definition of Section 7(1) of CGST Act supply includes all forms of goods or services taxguru.in or both such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or of furtherance of business.
Hence WCL’s stance is that he has to bear the overall cost diversification / shifting of transmission lines owned by RRVPNL. There is no consideration or reimbursement flowing from RRVPNL to WCL in this regard such transaction is not a supply thus section 15 of CGST act is not applicable on WCL.
However, basis of RRVPNL’s claim is based on clause 4 of schedule II of the act which reads as follows
Clause 4: Transfer of business asset
(a). Where goods forming part of the asset of a business are transferred or disposed of by or under the direction of the person carrying on the business so as no longer to form part of those asset so whether or not for a consideration, such transfer or disposal is a supply of goods by a person;
However, WCL is of the view that the clause 4 (a) of the schedule II stipulate what constitute transfer of business assets. It states that the transfer or disposal of assets should be treated as supply if the following conditions are to be satisfied.
(I) There should be goods forming part of business assets.
As per sec. 2(52) of CGST Act, 2017-“goods” means every kind of moveable property other than money and security but include actionable claims, growing crops, grass and things attached to forming part of land which are agreed to be severed before supply or under a contract of a supply.
Here the applicant emphasizes that transmission line being an immovable property, cannot be construed as goods to fall under clause 4(a) of schedule II, hence the provision of clause 4(a) of schedule II shall not apply to such transactions so as to treat its transfer as supply of goods.
(II) The assets should be recognized as business asset in the books of WCL
WCL’s view point is that since the shifted transmission lines are already the property of RRVPNL and no future economic benefits associated with these power transmission lines are supposed to flow to WCL by using such transmission package in its production or supply of goods or services, for rental to others, on for the administrative purpose, for more than one period. Hence, WCL cannot recognize these towers as an asset and not being an asset, the question of “transfer or disposal of business asset does not arise”
The applicant claims that even if it is assumed that there is an asset transfer, it is pertinent to note that GST is not levied on transfer of immovable property. According to section 3(2 6) of General Clauses Act, “immovable property shall include land, benefits to arise out of land and things attached to earth or permanently fastened to anything attached to the Earth. The essential character of immovable property is that it is attached to the earth; or permanently fastened to anything attached to the earth to the earth or forming part of the land and not agreed to be severed before supply or under a contact of supply. Furthermore, in the context of GST Act, if the article attached to the earth, is not agreed to be severed before supply or under a contract for supply, it ceases to be goods and for that matter a moveable property. Thus the transmission line and towers being constructed is, an immovable properly and not covered under the definition of goods in GST. From the above discussion it appears that view taken by WCL more appropriate and it appears that there is not asset transfer.
5. FINDINGS, ANALYSIS 8s CONCLUSION:
6. In view of the foregoing, we rule as follows: –
Since the issue raised by the applicant is no more in existence after issuance of Corrigendum by RRVPNL, no advance ruling is given.