Maharashtra AAR holds that
turnkey Engineering, Procurement and Construction contract for setting up of
solar power plant, would constitute a “works contract” in terms of Section
2(119) of CGST / MGST Act; Rejects applicant’s stand that such transaction
should be treated as “composite supply” u/s 2(30) of CGST Act, inasmuch as
supply of Solar Power Plant does not result into transfer of an “immovable
property”; To understand the meaning of the term “immovable property”, AAR
refers to SC judgments in T.T.G. Industries Ltd. & Solid and Correct
Engineering Works as well as Bombay HC ruling in Bharti Airtel Ltd. and
states, “The principles laid down in the judgments…stand good under all
statutes unlessany specific definition is available under statute…”; Analyzing
the agreement in present case, AAR finds that the owner expects the contractor
i.e. the applicant to perform all activities from engineering, design to
procurement of materials and also perform the testing and commissioning,
and “the liability of the contractor doesn’t end with the procuring of
materials but extends till the successful testing and commissioning of the
system”; Observes, said contract is to develop a 60 MWAC / 81 MWDC solar power
plant for onward sale of power to its customers, therefore such output supply
would involve an element of permanency for which it would not be possible and
prudent to shift base from time to time or locate the plant elsewhere at
frequent intervals; AAR also refers inter alia to definitions of
“Commissioning”, “Government Order”, “Grid” and “Grid Substation” along with
‘Obligations of Contractor’ clause to remark, “After having established
and commissioned such a Project which is connected to a Grid Substation, who
would be taking the Project to a different location. It would be farfetched an
argument that the Project could be shifted to a different location just to
prove that the Project is movable”; Resultantly, observes that since “works
contracts” u/s 2(119) are deemed to be supply of services, the transaction in
instant case would constitute supply of “services” falling in Entry at Sr. No.
3(ii) [Heading 9954 (Construction Services)]; Accordingly, there arises no
occasion to visit the entries prescribing tax rates for ‘goods’ and there would
be no relevance of “principal supply”, observes AAR; As regards liability of
sub-contractors, AAR notes that they either supply goods, viz. renewable energy
products and parts thereof to the contractor or engage in providing certain
portion of contract, but in the absence of documents to establish that
transaction is supply of ‘goods’, refuses to delve into said question :
Maharashtra AAR
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