"MAHARASHTRA AUTHORITY FOR ADVANCE RULING (constituted under section 96 of the Maharashtra Goods and Services Tax Act, 2017) BEFORE THE BENCH OF (1) Shri B. V. Borhade, Joint Commissioner of State Tax (2) Shri Pankaj Kumar, Joint Commissioner of Central Tax GSTIN Number, if any/ User-id 27AAECN3445K1Z9 | Legal Name of Applicant Fermi Solar Farms Private Ltd. Registered Address/ Address provided | Village Bodhare and Shivapur, Tehsil Chalisgaon, Jalgaon, while obtaining user id Maharashtra, 424101 i Details of application GST-ARA, Application No. 03 Dated 4.12.2017 Concerned officer JAG-BCP-C-002, JALGAON Nature of activity(s) (proposed / present) in respect of which advance ruling sought A Category Service Provision B Description (in brief) The Applicant is engaged in operation of renewable energy power plant projects. These typically include operation of solar power plants set up across |[India for generation and distribution of electricity generat¢d through solar plants. Issue/s on which advance ruling | (v) determination of the liability| to pay tax on any goods required or services or both Question(s) on which advance ruling is | As reproduced in para 01 of the Proceedings below. required PROCEEDINGS (under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) T-ARA-03/2017/B- 0°53 Mumbai, dt. 03 /os/a.cig ON resent application has been filed under section 97 of the Central Goods and Services and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as FY ct and MGST Act”] by Fermi Solar Farms Private Ltd., the applicant, seeking an ing in respect of the following questions : Whether in case of separate contracts for supply of goods and|services for a solar power plant, there would be separate taxability of goods as ‘solar power generating system’ at 5% and services at 18% ? ° Whether parts supplied on standalone basis (when supplied wnous PV modules) would also be eligible to concessional rate of 5% as parts of solar power generation system? e Whether benefit of concessional rate of 5% of solar power geieration system and parts thereof would also be available to sub-contractors? At the outset, we would like to make it clear that the provisions af 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 provisia MGST 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- [A] AS SUBMITTED ALONGWITH APPLICATION “Statement of the relevant facts having a bearing on the aforesaid clarification(s), 1. M/s. Fermi Solar Farms Private Ltd. (hereinafter called as \"Fermi”) is engaged in oj power plant projects. These typically include operation of solar power plants set u and distribution of electricity generated. Fermi is emerging as a leading builder o1 m under the CGST Act / transaction(s) eration of renewable energy across India for generation renewable energy projects. 2. Fermi is established under Independent Power Producer (‘IPP’) category for s¢tting up and sale of power produced from Fermi’s power plant to third party. 3. In setting up of a solar power generation plant, the following steps are involved: © Soil and Topo Survey © Plant coordinate fixing, Boundary fencing and Plant layout © T/L Survey, Piling, Building Construction © Structure erection, inverter erection, equipment foundation * Charging transmission, DC system erection, module mounting © DC cabling © Commissioning of the solar power plant 4. As part of setting up of solar power plants, Fermi enters into contracts with various Project Developing Companies (hereinafter called 'EPC Contractor’) for various activities. Key features of such contracts are as under: (a) The contracts typically include offshore supply, onshore supply and supply of works and services. Goods may be imported or procured locally under such contract (b) Separate contracts are awarded by Fermi for supply of goods and services (c) Further, sub-contractors may also be appointed for civil works by the EPC Contractor 5. As part of the contract for goods, various supplies are provided and majorly the following goods are procured for setting up of the plant: Solar PV Modules Inverters and Inverter Transformer Vy. Tracker Components Se, Module Mounting Structure ~, switchyard Supply ‘© “dransmission Line Supply ) 2 ACIDE Cables +) < Chain Link Fencing 5 tery Charger ? me Ai Transformer D Switchgear and complete switchyard Battery and battery charger SCADA system Module cleaning system Mlumination and ventilation system Earthing system Site enabling facilities Mandatory spares 6. As part of the services contract, various services are provided including the follo Construction of complete buildings including control rooms and inverter rooms, roads and drainage syste All civil and foundation works for switchyard, solar plant and all other equipment Site enabling facilities Leveling and grading Erection, commissioning and testing for solar modules, mounting structures, power transformers, inverters transformers, connectors, earthing lines etc. 7. Please note that the following two scenarios can arise in this context: e Case | - All goods may be supplied by EPC contractor — In such case, e EPC contractor and all goods required are supplied by the contractor (incl e Case 2 — Certain goods supplied by EPC contractor — In such case, modu by Project Developer and balance goods would be supplied by EPC Developer procures/ imports PV modules on its own and only awards cont 8. A diagrammatic illustration of a solar power system is provided. Statement containing the applicant's understanding of rate of tax in clarification(s)/transaction(s) ing: , boundary walls! fencing, bore walls SCADA, complete switchyard, inverter tire contract is executed by ding PV modules). s may be procured directly ‘ontractor (i.e. the Project act for balance goods) respect of the aforesaid 2 1 11 Legal provisions and applicability Rate of solar power generating system Under GST regime, various rates have been prescribed for goods and services. Integrated tax (Rate) (The notification is attached herewith as Annexure —A), di generating systems and parts for their manufacture are taxable at 5%. The relevai ited 28 Jun 2017, solar power it entry reads as follows: - Notification No. 1/2017 — Chapter Heading | Description 84 Or 85 0r94 | Following renewable energy devices and parts for their manufacture a) | Bio-gas plant b) | Solar power based devices ©) | Solar power generating system Wind mills and wind operated electricity generator ‘Waste to energy plants/devices Solar lantern/solar lamp ‘Ocean waves/tidal waves energy devices/plants (0 panels h) | Photo voltaic cells, whether or not assembled in modules or made up in’ Per the above, concessional rate of 5% has been provided to the following (when covered under heading 84, 85 or 94): e PV modules e Solar power generating system — This term has not been defined Parts for manufacture of solar power generating system and PV modules — T! on what would qualify as parts and in such case all goods which qualify as ‘p: system should be eligible for concessional rate of tax 1.2. Rate of services Under GST, service has been defined as anything other than goods and the gener; Concept of composite supply Section 2(30) of CGST Act defines composite supply to mean ‘a supply made by a ti of two or more taxable supplies of goods or services or both, or any combination thereof, which conjunction with each other in the ordinary course of business, one of which is a principal supply’. 1.3 ere is no restriction provided rts’ of solar power generating al rate for services is 18%. able person to a recipient consisting ¢ naturally bundled and supplied in Section 2(90) defines principal supply as “principal supply” means ‘the supply of gopds or services which constitutes the predominant element of a composite supply and to which any other supply forming part of that comp; On a plain reading of the definition of composite supply, it emerges that the fc satisfied for a supply to qualify as a “composite supply”: the supplies being made must be taxable supplies the supplies should be naturally bundled and supplied in conjunction with each other i there must be a principal supply ur understanding in present context he above legal provisions, we understand that in present case, since there are ds and services, the taxability should be as under: I ol power generating system and should be taxable at 5% ° )Co act for goods wherein solar PV modules are not supplied — In such case| éghcessional rate of 5% ‘ontract for services — Entire contract would be service contract taxable at 18 leaning of term ‘solar power generating system’ and applicability when site supply is ancillary” lowing conditions must be the ordinary course of business eparate contracts for supply © Gohtract for goods wherein solar PV modules are also supplied— Entire contract should qualify as supply the goods which qualify as ? Barts of solar power generating system and are covered under heading 84,85 or 94 should be eligible to % all_goods (including PV 2.1 modules) are supplied The term ‘solar power generating system’ has not been defined under GST. So generally are the systems which absorb sunlight and convert it into electricity wh ‘2 power generating system ich can be put to further use. 2.2 Solar power system has been defined under Solar Power —Grid Connected Ground Mounted and Solar Rooftop and metering Regulation -2014 issued by State of Goa. Solar power system as pe connected solar generating station including the evacuation system up to the Grid inter-connection p the regulation means ‘a grid- int 23 Typically, the term system has a wide ambit. As per the Oxford Dictionary, the definition of the term ‘system’ is “a complex whole, a set of things working together as a mechanism or interconnecting netwo defined in Chambers 20th Century Dictionary as “anything formed of parts placed toge| connected whole\". Hence, system typically includes various components/ part assembled together for performing a function. 2.4 Further, under erstwhile law also, solar power generating systems have not be erstwhile excise law, various exemptions were extended to non-conventional en solar power generating systems - List 8 of Notification no.12/2012-Central E: 2.5 Since ‘Solar Power Generating System’ has not been defined in the present la’ ambit of the said system, judicial pronouncement under the Excise law can be ex: ‘ke’. Similarly, the system is ther or adjusted into a regular and which are manufactured/ n defined. However, under rgy devices which included ‘ise, dated 17 March 2012. , in order to understand the mined, 2.6 Reference is made to the judgment of Delhi Tribunal in the case of Rajasthan Electronics & Instruments Ltd. vs. Commr. Of C. Ex., Jaipur wherein it was held that ‘7. The adjudicating authority admitted th is a Solar Power Generating System. We find that other parts are only panel housing consisting 9 fact that Solar Photovoltaic Module controllers and switches, Hence the 3 ay 2.8 2.9 2.10 xis RE 3.1 3.2 E- oy rms of Section 8 of the CGST Act, it has been clarified that a composite su whole system is a Solar Power Generating System and is entitled for the benefit of notification. Therefe by the adjudicating authority is not sustainable. The impugned order is set aside and the appeals are| Further, in the case of Bangalore Tribunal in the case of B.H.E.L. vs. Commissioner was held that “Jn the present case, the appellants have claimed exemption in respect of “inverter charger car generating system. The appellants actually manufactured SPV lantern. The above lantern required ele! Ire, the denial of benefit of notification allowed’. of Central Excise, Hyderabad it ” as solar power tricity for its working. It is possible 10 convert solar energy to electricity with the help of inverter charger manufactured by the appellajis. The Dy. General Manager has certified that the inverter merger constitutes solar power generating system as it performs the funct frequency AC power from Sun-light with, the help of SPV module and supplying it to the compact flu view of the above, expert opinion, we hold that the impugned item can be considered as solar power the benefit of the exemption Notification. Therefore, we allow the appeal with consequential relief.” In M/s, Phenix Construction Technology vs. Commissioner of Central Excise and Service Tax CESTAT-AHM] the question under consideration was whether the structures and initial setting up of solar power plant are eligible for the benefit of Notificatio| ion of generating the required high escent lamp of a solar lantern, In enerating system and is entitled for Ahmedabad-II [2017-TIOL-3281- parts of structures cleared for n 15/2010 -CE. The point of dispute in the said case law was that whether the aforesaid goods would qualifiy as components of the solar power plant. Hon’ble CESTAT has decided that the items required for initial qualify as component, hence the benefit of exemption would extend to such items system. In Jindal Strips Ltd. ys. Collector of Customs, Bombay [2002-TIOL-347-CESTAT-DEL-LB] component means a constituent part or element. It was also observed that “Compo assemblies or assemblies, of which a manufactured product is made up and into which it may be res attachment)\".\"\" Basis the aforesaid judgments, it can be deduced that the components of the essential for setting up of the power plants would also be eligible for the benefit: plant. etting up of the plant would also as solar power generating CESTAT has observed that ent” means one of the parts or sub- ved and includes an accessory (or olar power plant which are provided to the solar power Further, where a contract is awarded as a whole for supply of solar power generation system consisting of various components (as highlighted above), the entire contract should qualify system. This is also supported by the concept of ‘composite supply’ in which ca: principal supply. Composite Supply has been defined as ‘composite supply means a supply made by a taxabli to or more taxable supplies of goods or services or both, or any combination thereof, which are conjunction with each other in the ordinary course of business, one of which is a principal supply: Further, Principal Supply has been defined in Section 2(90) of the CGST Act as of goods or services which constitutes the predominant element of a composite supply and to which al composite supply is ancillary’. Thus, principal supply refers to the supply which is tl mposite supply. tipph ies, one of which is a principal supply will be treated as supply of such prin eA on the above, a conclusion can be drawn that where a contract consist: all ar hich are intended for setting up a solar power plant, the entire conti cg gmp! site supply for which the principal supply is providing a solar power ge! entirg supply contract (which would include PV modules as well as all other ‘approved entire BOQ consisting of various parts e.g. cables, module mounti essential to solar power generating system and hence the concessions applicabl parts. Drawing a corollary, concessional rate of 5% should be applicable on all th by MNRE as well. Taxability of parts of solar power generating system In certain cases, not all parts of solar power generating system are supplied by EP! may be procured separately). For example, PV modules may be procured by the Pri only balance contract is awarded to EPC contractor for supply of remaining goods In such case, even though the entire contract may not qualify as solar power g supplied should be eligible to concessional rate of 5% as the entry covers ‘Ren parts for their manufacture’. A ‘part’ is essentially a section, which, when combined with other sections, make u s a solar power generating e the taxability is as per the person to a recipient consisting of naturally bundled and supplied in “principal supply means the suppb aky other supply forming part of that ie predominant element in a ly comprising two or more ‘ipal supply. of supply of various goods ‘act should be treated as a erating system and hence, oods) should be taxable at in various instances has also g structures, spares, etc. as have been extended to such goods approved under BOQ. C contractors (as some parts pject Developer directly and enerating system, the parts wable energy devices and p a ‘whole system/ product’. In the case of equipment, various parts would combine to make up the whole equipment, which has a specific function. 3.3 Compared to a ‘part’, an accessory is essentially a piece which enhances the functionality of equipment and adds 3.4 to the function of the equipment. However, even without the accessory the equip! In the present case, it is not the case that all other goods/ equipment are ancillai essentially for functioning of the solar power plant and hence, should form part of the nt can function on its own. and the same are required ‘solar power generating system. 3.5 Per the above, our understanding is that supply of other parts (apart from solar power generating system) should also constitute as supply of ‘parts of solar power generating system’ which shoul attract concessional rate of 4 3.7 5% (provided they fall within Chapter 84, 85 or 94). Hence, benefit should be avai are supplied (and not supplied together with PV modules) as long as the same qui generating system falling under heading 84, 85 or 94. Reference is also made to the erstwhile excise law, wherein various judgments hi of wind operated electricity generators where it has been held that specific goods would also be eligible for the exemptions extended to the generators as ‘wind ope! © In Gemini Instratech Pvt. Ltd. Vs. Commissioner of Central Excise, Nashik [2014 (300) E involved was whether doors specifically designed to be used with tower on whi generators are installed be eligible for benefit of notification which provides excise duty to wind operated electricity generators and its components and parts theres would also be eligible for the exemption. This was also ratified by the Supreme Ci was whether power cables, earthing cables, wind farmer computer will be elig’ able even if standalone parts jlifies as part of solar power ve been pronounced in case supplied for such generators ated electricity generator’ T 446 (Tri. - Mum)] the issue ich wind operated electricity xemption from payment of f. It was held that such doors urt [2015 (315) ELT A82 (SC)] In Elecon Engineering Co. Ltd. Vs. Commissioner of Customs [1998 (103) ELT 395 (Tri)| fe issue involved in the case ble for benefit of exemption under Notification No. 64/94 — Cus. The Tribunal held that power cables i ie cables together form part of inside cabling of wind turbine controller. Since, control cables are eligi of exemption has to be extended to power cables also In Pushpam Forging Vs. CCE, Raigad [2006 (193) ELT 334 (Tri. - Mumbai)|, the Tribun of windmill tower which is inturn a part of Wind Operated Electricity Genera' and hled to be a part of WOEG, flanges of the tower will be a part of the whole Win In CCE Vs. Megatech Control Pvt. Ltd. (2002 (145) ELT 379 (Tri part of wind operated electricity generators and are meant specifically for win benefit turbine controller, nacelle controller and control tables will be treated as parts/c} electricity generators and will be eligible for exemption. In regard to the above, though there has not been any judgment with respect to le for exemption, the benefit al held that flanges are parts ‘ors. Once tower is accepted Operated Electricity Generator Chennai)], the ar held that control panels are mill and will be eligible for Vide Circular No. 1005/15/2015 - CX dated October 20, 2015, the CBEC had clarified that tower, nacelle, rotor, wind pmponents of wind operated components of solar power plants, on similar lines of the precedents discussed above for wind power, the a of solar power generating system should also be covered under concessional rate of taxes under It is submitted that generation of power by way of solar energy is one of the key pro ST. joters for the Government's ent of India, India’s annual aspiration of ‘Make in India’. The Government has set target of 175 GW of renewable power by 2022 which a 100 GW of solar power. Per “Make In India” website set up by the Gover asi would grow four times by 2017. If the goods supplied under th ower plants is taxed at separate rates applicable on the individual goods, n the developer of the solar power plants. Please note that since electric! T payable on the input side would burden the developer and hence, wo} ether benefit would also be available to sub-contractor 5.2 5.3 In a typical contract structure, the EPC contractor engages various sub-contracto} sub-contractors) who further supply the goods to EPC contractor (and EPC contra Notification no. 1/2017-Integrated Tax (Rate), which provides concessional rat system does not specify the persons who would be eligible for concessional rat contractor or manufacturer/ supplier/ sun-contractor. Since the concessional rate of 5% is provided to renewable energy products and pi contract for construction of it would lead to higher tax ity has been exempted from ld prove detrimental to the solar power generating plants in the country. Accordingly, concessional rate of 5% should also be ial for setting up of the solar 's (manufacturers/ supplies/ tor supplies to SPV). on solar power generating of 5% i.e. developer, EPC rts thereof, the same should be applicable to all suppliers providing such products as long as it can be established (through certification or otherwise) that these are to be used in solar power generation system. This would under erstwhile excise law wherein benefit was extended to sub-contractors also t Taxability of contract for services A separate contract is awarded to the EPC contractor for provision of services whi Construction of complete buildings including control rooms and inverter rooms, roads and drainage system, bo All civil and foundation works for switchyard, solar plant and all other equipment Site enabling facilities Leveling and grading Erection, commissioning and testing for solar modules, mounting structures, power transformers, inverters, transformers, connectors, earthing lines etc. We would like to humbly submit that such contract is a separate contract for servic! also be in line with practice rough MNRE certification, h consists of the following: indary walls/ fencing, bore walls CADA, complete switchyard, inverter es itself and hence, has to be taxed on independent basis. In our understanding, the same should be analyzed ii eel of the contract for goods. Since such contract is standalone contract for services including works, the sa contract service. Works contract has been as “a contract for building, construction, e should qualify as works fabrication, completion, erection, 5 installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or! property wherein transfer of property in goods (whether as goods or in some other form) is involved i commissioning of any immovable the execution of such contract,” 5.4 Works contract has been deemed to be a service under GST and is taxable at 18% typically. In the present case, the above contract on a stand-alone basis should qualify as a works contract servi 6. Conclusion 6.1 Where there are two separate contracts — one for supply of goods to be used in si services, both would be taxed separately Contract for goods should qualify as ‘solar power generating system’ taxable at 5' should qualify as works contract services taxable at 18%. For the contract of goods) provided as part of the contract) , the same should qualify as composite supply ai get covered as part of principal supply of ‘solar power generating system’ and tax: Even where contract of goods do not include all products (such as where PV modi procured by developer on its own) and only balance products are supplied, the g of solar power generating system’ and should be eligible for concessional rate of are covered under heading 84, 85 or 94, 6.2 6.3 6.4 Concessional rate of 5% for supply of solar power generating system or its parts shi contractors.” 03. CONTENTION - AS PER THE CONCERNED OFFICER The submission, as reproduced verbatim, could be seen thus- “M/s Fermi Solar Farms Pvt. Ltd. is engaged in operation of providing the solar p buyers. Fermi Solar Farms Pvt. Ltd enters into two types of agreement with the buyers- 1) Agreement of solar power generating system where supplier supplies solar power generating equipment with int system. 2) Agreement for engineering and construction services to be provided by supplier to the buyers (1) Fermi Solar Farms Pvt. Ltd supplies following main equipment to set up solar power 1) Solar panel consisting of solar cells. ic. solar photovoltaic cells— 2) Inverter to convert DC power to AC power— 3) HT Switchgear, isolator, cireuit breaker, Auxiliary transformer, main transformer— 4) Transmission line— iRpayjel foundation arrangement 5. Atrangethent of roads and drains. e, liable to GST at 18%, lar power plant and one for '% and contract for services (where PV modules are also id all goods supplied should ble at 5% GST les are not supplied and are jods should qualify as ‘parts '% GST as long as the same ould also be available to sub- wer generating system to the ntion of setting up solar power generatiny generating system. (ty) As per Notification dates 15.11.2017 chapter heading 84,85, or 94 following renewable energy devices & parts for ure are taxed@S% far power generating system ‘wind mills, wind operated Electricity Generator ¢. Waste to energy plants- £ solar lantern/lamp g. Ocean waveltidal waves energy devices h, Photo voltaic cells, whether or not assembled in modules or made up into panels. (IV) Solar power generating system includes (in bracket GST Rates) 1. Solar panels (@5%) 2. Solar battery (@28%) 3. Solar charge controller (@18%) 4. Solar modules (@5%) 5, Inverter (@12%) 6. Cables for connection (@28%) However all these renewable devices & parts for installation of solar power generat as per notification cited supra. But the inverters, cables, batteries will not attract tax raj respective tax rates. (V) After analyzing the agreements signed by Fermi solar forms Itd. With buyer, it is are different. The dealer expects separate consideration from buyer for supply of equi of engineering and construction services. Hence there are two different supply of good: Dealers makes separate agreement for supply of equipment’s of solar power genj engineering and construction service with the buyer. In such situation supplier has to one for supply of goods and other for supply of services. The supplier is expecting st agreement. Again on page No.35 of the agreement. The condition will elaborate the sai equipment /material/items shall be procured by owner &will be handed over to contractor for er Thus as per definition of composite supply as per section 2(30)” though the sup naturally bundled and supplied in conjunction with each other as per agreement both art ing system will be taxed @5% e @5% they will attract their joticed that both the contracts ent, part thereof and supply and services. rating system and supply of raise to separate invoices i.e, arate consideration for each ie facts. It says “All the major ction & commission works. ly of goods and services are different supply made under 6 different agreements. Hence it will not constitute composite supply. The supplier has t each of the agreement as per the terms & conditions mentioned there in. (VI) Therefore, after going through the submission of the dealer, I am of the opin (1) The applicable GST rate for supply of equipment’s for solar power plant will be (2) However for installation and engineering services, the supplier will need to raise s with GST @18%” 04. HEARING The case was taken up for hearing on dt.17.01.2018 and on Prashant Agarwal (Partner, PricewaterhouseCoopers Pvt. Ltd.) atter} contention as made in the written submission. During the hearing on| make to separate invoice for ion that- 5% ‘parate works contract invoice dt.12.02.2018 when Sh, ded and reiterated the dt.12.02.2018, a sample copy of the agreements in such types of contracts was submitted and our attention was invited to various clauses therein. The concerned officer holding the post of Stat} e Tax Officer was absent on both the occasions. However, a written submission has been tendered which has been reproduced above. 05. OBSERVATIONS We have gone through the facts of the case. The issue put befor of a future transaction which would be effected on the lines of sample a been tendered during hearing. It has been submitted by the applicant th: agreements which have been stated to be for - 1. Contract for supply of equipments 2. Contract for supply of services CONTRACT CONTENDED TO BE FOR SUPPLY OF EQUIPMENTS ie us is the classification greement copies as have it the sample agreement arily the way in which transactions of the nature as before us are effected. There are nswer the question, we The title of the agreement says “AGREEMENT FOR SUPPLY OF SOI|AR POWER GENERATING SYSTEM”. A Solar Power Generating System (SPGS) is not available asa sy of various components which are to be assembled, synchronized and, § of the attending requirements, to be tested so as to be made operati stem as such. It consists ubject to the fulfillment re. Despite being so, we would look at the clauses of the agreement to understand the exact nature of the agreement. e WHEREAS: (A) The Buyer desires to set-up and operate solar photovoltaic plants with a total capacity village ____ in the state of Karnataka (the “Plant”). (B) The Buyer has selected the Supplier for the subject project based on the previous er £60 MW (ACY/81 MW (DC) at dentials. The Buyer desires to purchase an end to end solar power generating system with various integral components as defined in schedule A from the Supplier and the Seat uaraeraal to pravifethe'sauexe tie Balke in accordance with the terms and conditions herein specified (C) The Parties are entering into this Agreement to record the terms and condition under which the Supplier shall supply the Equipment, Spare Parts and Materials to the Buyer. 1.1 Definitions \"Access Road(s)\" shall mean all roads and pathways, if any, which leads to the Project Land from the, Buyer is granted Access Rights \"Access Rights\" shall mean the easementary, ownership or other property rights or rights of wa: “Applicable Permits approvals, any valid waiver, variance, franchise, order of or from any Governmental Instrumentality, over the subject matter in question, and in connection with the Scope of Supplies to be performed hereu! time and as listed in Schedule N herein; “Certificate of Commissioning” shall mean plant commissioning certificate issued from competent capacity. Agreement and as specified in Schedule A and Schedule E; “Final Acceptance” means, the date of commencement of commercial operations of the Plant, provid the supply items are pending as on the date of commencement of commercial operations, the Final Accg such pending supplies are completed in accordance with the terms of this Agreement, which date shall to the Supplier; “Plant/s” shall have 60 MW (AC) Solar PV Power Project at , Karnataka; in no event be later than or such other extended date as notified by the Buyer in writing “Plant Site” shall mean all those parcels of land located at district____in the state of Karnataka on which “Scheduled Project Completion Date” shall mean the scheduled commissioning date of the Project the Supplier and which shall inno event be later than ___or such other extended date as notified by th “Scope of Supplies” shall have the meaning set forth in Clause 2.1.1 hereof, “Spare Parts” shall mean the spare parts listed in Schedule E; “sp out in Schedule J; “Subcontracts” shall have the meaning set forth in Clause 3.1 hereof, “Subvendors” shall have the meaning set forth in Clause 3.1 hereof; “Supply Commencement Date” shall have the meaning set forth in relevant Clause hereof, “Supply Schedule” means the schedule set forth in Schedule C hereto as such schedule may be adju: with this Agreement; “Terms of Payment” means the terms set forth in Schedule B hereto for payments to be made by the B| “Variation” means any addition, deletion from, or any other modification to the Scope of Supplies as sy E hereto that requires a change in one or more of the Contract Price, the Supply Schedule or any cordance with the terms of this Agreement; ee ing a Variation and, if required, an adjustment in one or more of the Contract Price, the Sch¢ ichedule or any other amendment of the terms and conditions of this Agreement; (for ‘onshore supplies)/destination port in India for off 3 as as set out in detail in Schedule A and Schedule E as per the Specifications (the “S ~\" with the terms of this Agreement. The Equipment, Spare Parts and Materials shall be suital as provided in this Agreement. All Equipments, Spare Parts and Materials supplied shall Separate prices are specified for different equipments which are supplied und are supplied together for setting up a solar power generating system. nearest Public Road, over which the y in relation to the Access Roads, means all permits, clearances, authorizations, consents, licenses, lease, ruling, exemption, filing, agreements, or lurt or other body having jurisdiction der as may be in effect from time to Government Authority for complete “Equipment, Spare Parts and Materials” shall mean the equipment and materials and Spare Parts to b¢ delivered by the Supplier under this id that if at any point with respect to iptance shall be the date on which all ¢ intimated in writing by the Buyer “Other Contractors” shall mean other contractors engaged by the Supplier to implement, operate and maintain the Plant: “Plant Completion” shall mean the date of commencement of commercial operations of 60MW-AC capacity of the Plants and which shall q Plant shall be set up; notified in writing by the Buyer to ie Buyer in writing for 60 MW(AC) fication” shall mean the specifications prescribed by the Buyer for the Equipment, Spare Parts ahd Materials as more specifically set- ited from time to time in accordance yer to the Supplier; lecified in Schedule A and Schedule her provision of this Agreement in jation Order” means a written order to the Supplier issued and signed by the Buyer after the execution and delivery of this Agreement luled Project Completion Date, the connection with the supply of jore sane jens aac. App ope of Supplies”) in accordance le and fit for its intended purpose new and without defects. the agreement for commercial fe convenience, However, as a general trade practice all the equipments which are we under the agreement Further, the document in title of the equipment imported and supplied is directly transferred to the Owner by way of High Seas Sale for commercial convenience and in order to avail benefit of concessional concessional rate of customs duty is only available to the project developers. However, and liabilities accruing in relation to all those equipment shall remain with the Suj Project. After the completion of the project, the risk and liabilities are shifted to the Lead of the project, the risk and warranties are shifted to the Owner. Inspection and Expediting The Supplier shall perform all inspection, expediting, and quality surveillance as are customs duty as the benefit of plier till the completion of the Contractor. After the completion ie per this agreement, the risk required for performance of the Supplier’s obligations hereunder. The Supplier’s responsibilities under this Clause shall include, without limitation, inspecting all Equipments, Spare Parts and Materials. 2.1.5 Spare Parts (a) Spare Parts shall be delivered by the Supplier as prescribed per the Supply Schedule, and in accordance with the provisions of this Agreement. (b) If at any time, the Supplier becomes aware that it or suppliers or manufacturers o: manufacture of certain Spare Parts, or is for any reason unable to manufacture or supy shall: (i) immediately provide written notice of such facts to the Buyer and such notice shal the Buyer to order a final batch of the relevant Spare Parts from the Supplier; and in accordance with Schedule E are Parts has discontinued the ly such Spare Parts, the Supplier | be of sufficient detail to enable (ii) if requested by the Buyer to do so, deliver and obtain for the Buyer (at no exp¢nse to the Buyer), all drawings, patterns and other technical information relating to the Spare Parts. (c) The Supplier warrants that all Spare Parts supplied under this agreement will be free ftom defects or deficiencies, 2.2 Commencement of Supplier’s Performance The Supplier shall commence performance of the Supplier’s obligations hereunder on the “Supply Commencement Date”) in a written notice delivered to Supplier (the “Notice t given in Schedule F. This shall be subject to the Buyer releasing the advance as per Supplier acknowledges that time is of the essence for this Agreement and shall pro system including all Equipment, Spare Parts and Materials in accordance with the S 2.3 Compliance with Applicable Laws date that the Buyer specifies (the Proceed”), the form of which is ment terms to the Buyer. The ide the entire solar generating pply Schedule. The Supplier shall comply with and shall cause the entire solar generating system including all Equipments, Spare Parts and Materials supplied hereunder to comply and be capable of complying, Applicable Permits. Supply Schedule The Supply Schedule for supply of Equipment, Spare Parts and Materials in accord: as agreed between the Parties, is set-forth in Schedule C hereof. The equipment covered shore supply and partly on shore supplies as detailed in Schedule A. The Supplier shall be. Schedule thereby agreed and any variation there from shall require the prior written conse Buyer may vary the Supply Schedule on account of occurrence of a Force Majeure Event (thirty) days to the Supplier. In the event of such variation of such Supply Schedule by thi for and shall compensate the Supplier for additional costs agreed in writing by the Buyer Inspection Not A Release Neither the inspection at the port of entry in India or following delivery at the Plant Sil 2.4 2.4. io with all Applicable Laws and nce with the Scope of Supplies, inder the scope will be partly off ligated to adhere to the Supply t of the Buyer. Provided that the r with prior written notice of 30 Buyer, the Buyer shall be liable n account of such change. ¢, no matter whether the Buyer’ s personnel have been present, shall release the Supplier from any of the obligations dr warranties stipulated in this Agreement. SUB-VENDORS Subvendors and Equipment Suppliers All consultants and Subvendors providing Equipment, Spare Parts and Materials to t! with the Supplier in connection with the Scope of Supplies are herein referred to as “Si entered into between Supplier and Subvendors are herein referred to as “Subcontracts”. and participate with the Supplier in appointing Sub-vendors under this Project. In way of written notice, provide the Buyer’s Representative (appointed pursuant to Clause Subvendors (“Notice of Proposed Subvendors”) for the Buyer’s approval, and the ulti “amongst the Subvendors approved by the Buyer to whom they may be subcontracted shal www atracting shall not relieve the Supplier from any of its liabilities or obligatio Supper hall be liable to the Buyer for the acts and omissions of Subvendors and those o} Subveitiag as if they were acts and omissions of the Supplier. Contract Price Assi nsideration to the Supplier for the complete solar power system and parts t! Spare Parts and for performance of all its obligations under the Agreement in Agreement, the Buyer shall pay, and the Supplier shall accept, the contract price as spec! candy be adjusted in accordance with the terms of this Agreement (the “Contract Price”). TI to be inclusive of all Taxes including GST and duties payable under Applicable Laws wit performed by the Supplier under this Agreement. Terms of Payment In the event that the Supplier has completed all its obligations required to be compl the terms of this Agreement but the date of commercial operations of the Plant is no} (thirty) days from the Scheduled Project Completion Date (“Wait Period”), on account of provide Grid Connectivity except if such failure is attributable to a default on part of the under terms of this Agreement, the Buyer shall on the expiry of the afore-mentioned Wi Supplier such amounts of the Contract Price as were due and payable on the start of cot accordance with Schedule B hereof. INDEPENDENT SUPPLIER Supplier as Independent Supplier The Supplier shall be an independent supplier with respect to the Equipment, Spare Parts an| and neither the Supplier nor its Subvendors nor the employees of either shall be deem employees or servants of the Buyer in the performance of the Supplier’s obligations hereu 16. 16.1 in: Suipplie shall continue to remain solely liable to the Buyer for performance of its oie e Supplier under a subcontract bvendors” and such agreements he Buyer shall fully cooperate is regard, the Supplier shall, by 2 hereof) with a list of proposed ate decision of the Person from. be that of the Supplier. under this Agreement and the ions under this Agreement. The the employees and agents of the ereof to be provided hereunder ccordance with the terms of the fied in Schedule B as such sum je Contract Price shall be deemed respect to the obligations to be ted till Final Acceptance under achieved within a period of 30 failure on part of the Buyer to ipplier to perform its obligations it Period, be obliged to pay the ercial operation of the Plant in } Materials and each part thereof, d to be agents, representatives, jer, or any part thereof, or in any manner dealt with herein, Similarly, neither the Buyer nor its Subvendors nor the employe¢s of either shall be deemed to be agents, representatives, employees or servants of the Supplier in the performance of the Buyer’s obligations hereunder, or any part thereof, or in any manner dealt with herein. The Buyer shall not have the right to ¢ontrol or any actual, potential or other control over the methods and means by which Supplier or any of its agents, representatives, the Subvendors or employees conducts its independent business operations. The Parties covenant and agree that in the performance hereunder, they shall not perform any act or make any representation to any person to the effect that it is or any of its agents, representatives or Subvendors, is the agent of the other Party. 9 19.14 Title to the Equipment, Spare Parts and Material (a) Title Title to the Equipment, Spare Parts and Materials and the Scope of Supplies in whole Shall pass to the Purchaser from Supplier either at the ship’s rail at the port of loading or on the high seas. Provided that the Buyer is in compliance with his payment obligations specified under t used in connection with the Solar Power Generating System and which will become a Contract, title to all Equipment manent part of the System shall pe vest in the Buyer when any such payment due to the Supplier as per the agreed payment im is affected. 19.18 Liability of Supplier Notwithstanding anything contained herein, the Supplier shall be liable for, inter liquidated damages, performance guarantees, etc,, with respect to the Plant Completio the Equipments, Spare Parts and Materials supplied under this Agreement. SCHEDULE- A SCOPE OF SUPPLIES 1, GENERAL 1.1. The broad scope of Supplies covered under this Agreement is described herein below. T! project generating system shall include design, engineer, manufacture, inspection; sho of Equipments, Spare parts and Materials forming part of solar power generating s the solar power generating system being provided and would not be used separately, . In respect of equipment and systems listed below, all items required to make the equip: all respects are deemed to be included whether or not these items are specifically me: . The Supplier shall provide the erection procedures/manuals for the equipment being sup} procedure / manuals document shall be submitted within 15 (fifteen) days of signing this ag MAJOR EQUIPMENT, SPARE PARTS AND MATERIALS LIST. The list of equipment and material to be supplied under the terms of the Agreement sha following: Complete supplies required for the construction of the 60MW AC/81 MW DC Solar PV p: supplier. The major areas are covered here below. However, it is understood and agreed but required for the completion of the project shall be in the scope. OFFHORE SUPPLIES: - Delivered at Destination port in India a. Solar Modules, which are an assembly of solar cells that helps in converting solar po’ constitute more than 60% of the solar power generating system, hence, qualify as one SPP — Delivered at Project Site directly by way of High Seas Sale ONSHORE SUPPLIES: - Delivered at Project site (these supplies constitutes ~20-30% of t Module mounting Structure nnectors and Y connectors Pie fbricated Inverter Rooms (if applicable) Powe} Transformers Gomi slete Switchyard, Bay extension and remote end works as applicable. Inyter Transformers iiliary Transformers 10 kV Transmission line as per connectivity approval SCB, PV connectors HT & LT Switchgears, HT & LT power and control Cables (AC as well as DC and communication cables), Illumination and ventilation system Supply required for AC BoS and DC BoS. Earthing system ( maintenance free) Scada system along with SLDC telemetry arrangements. Lightening Protection through ESE. Battery and battery charger. Module cleaning system Site enabling facilities including porta cabin, security cabin ete Supply items required if any for civil works for the entire plant Mandatory Spares for all electrical items as per list to be agreed later. . ‘The list of Spare Parts to be supplied under the terms of the Agreement shall be as detaile: be deemed to form a part of the Scope of Supplies. Exact division between offshore and o1 during engineering phase. TERMINAL POINT: Karnataka Power Transmission Company Limited 110kV Switchyard The list of Spare Parts to be supplied under the terms of the Agreement shall be as detailed in| deemed to form a part of the Scope of Supplies. All the design documents and drawings for the plant shall be submitted for Buyers approv approve or communicate observations within 5 days. If there is no communication wi /drawings shall be deemed to be approved and Supplier will go ahead with engineering an: SCHEDULE- B 2. TERMS OF PAYMENT. of a4 ays in respect of any guarantees, and responsible to the Buyer for scope for providing the solar testing, packing and shipment stem. These are integral parts of ent and/or system complete in mined in the Agreement. lied, The “preliminary” erection ireement. Il include but not limited to the ‘oject shall be in the scope of the at any item not listed out below, into electricity. Solar modules the most significant parts in the ¢ entire system) in Schedule E hereto and shall hore items also will be finalized Schedule E hereto and shall be hl by the Supplier. Buyer shall hin 5 days, these documents procurement. Payment terms will be as per agreed BBU (Billing Breakup) and as mentioned below: Si|_Milestone Description [% | Detail Condition description [15%| A. Within 10 days of issue of contract Against submission of Corporate contract t__| Advance 10% | B (a) Proportionately on Submission and approval of L1 Schedule & BBU. 2__| On receipt of material at site _{70%| Proportionately on dispatch of material at site as per agrehd BBU against MDCC B__| on successful Plant Completion5% | on successful Plant Completion SCHEDULE- J SPECIFICATIONS Specifications/ Design Basis for various equipments shall be mutually agreed between Su early engineering period. However, Supplier agrees and confirms that all equipment shall be a practice and shall conform to relevant IEC/IS. SCHEDULE - N LIST OF APPLICABLE PERMITS The parties having the primary responsibility to obtain permits / approvals from appropriate aut! Part A: Buyer Permits 1. Import Export Certificate (IEC) 2. KPTCL approval for power evacuation 3. GST Registration Part B: permits to be obtained by the Supplier 1. Local transportation approvals 2. Permission for movement of capital goods pplier and Buyer during the per latest engineering/industry jorities are listed below. A perusal of the above clauses from the agreement leads us to ir/ferences thus - The agreement very clearly mentions that the Buyer desires to pur¢ hase an end to end solar power generating system with various integral components as defined in schedule A from the Supplier. Thus, the Buyer has expressed a clear intent to pu enerating system with the various components and not the comp 2. a shat pe submitted for Buyers approval by the Supplier. Buyer sh 2 | * He) ) dee == but there is design and engineering work even before the supply 3. Further, we see that there is Schedule J which says that Specificatioi rchase the solar power onents merely. refer to this Schedule A, it says that “All the design documents and drawings for the plant 1 approve or communicate ions within 5 days. If there is no communication within 5 days, these documents /drawings shall be to be approved and Supplier will go ahead with engineering and procurement.” This clause to supply equipments f equipments. ‘s/Design Basis for various equipments shall be mutually agreed between Supplier and Buyer duting the early engineering period. Thus, the Supplier's involvement in the project is from the stage and not merely for supplying the equipments. 4. We find the definition of “Other Contractors” which is defined t engaged by the Supplier to implement, operate and maintain the Plant. the Supplier would implement, operate and maintain the Plant. ‘Pl. engineering and design mean other contractors This clause shows that nt’ is defined as “Planv/s” shall have 60 MW (AC) Solar PV Power Project at __, Karnataka. Thus, the agreement does not stop at supply of equipments but extends to implementation, operation an When the Supplier is to implement, operate and maintain the Pl. mi such a contract be termed as a contract merely for ‘supply of soo i d maintenance, as well. t, on what basis could 5. There is a clause which says that the Supplier acknowledges that t me is of the essence for this Agreement and shall provide the entire solar generating system including all Equipment, Spare Parts and Materials in accordance with the Supply Schedule. The agreemen clauses reveal that the contract is certified to be completed only after the system has been put into place. One can also see that the risk and liabilities accruing in relation to all the equipment shall remain with the Supplier till the completion of the Project. Thus, it can be seen that though it has been contended that the agreement is for supply of equipments, it actually is a contract for the supply of the entire solar power generating system which yequires the Supplier to provide goods as well as services to the Buyer. 6. The payment for this agreement also helps us to understand the nature of the agreement. We see that the payment is linked to the successful completion of| the Project. This should not have been the criterion if the contract was for supply of ‘goods’ only. We are convinced that the impugned contract is for supply of a solar power generating system, as a whole, and in addition, further responsibility in respect of execution and implementation of the Project/Plant is also proposed to be undertaken by the Supplier as per terms and conditions of the contract submitted before us. Having) “24. We have heard learned counsel on both sides and we have perused the entire record. We which have been cited across the bar. The applicants executed the said agreement dated Novem the performance of work of laying HDPE pipe for transportation of natural gas as specified in clause 3. It would be necessary to quote clause 3 “scope of work” as the interpretation of the sai certain clauses in the __agreement that the Supplier would supply only the equipments or goods would not change the ional Organic Chemicals 54 VST 271 wherein on Basis of clauses in the agreement before the Hon. Court, a decision has been delivered thus -~ have also perused the judgments er 23, 1994 with Assam Gas for he “scope of work” as set oul in clause along with other clauses’ would determine the nature of the contract, namely, whether the said contract was an indivisible inter-State works contract or a contract to supply pipes and a contract to lay down the pipes as per the requirement of Assam G| “3, scope of work The scope of this contract includes supply of HDPE pipes of various sizes (as mentioned in annex cleaning/clearing of ROW, hauling and stringing of pipes, trenching (minimum depth will be 0.9 mtr. From crossing, river crossing etc, Supply and installation of marker posts, constructions of valves chamber: constructions of PRS including supply of brick, cement, M.S. rod, M.S. door, safety vatve, control valves, A is’. 1) and all HDPE on line fittings, he top of the pipe to ground surface), including supply of all materials, DCO valves, M.S. piping and other welding, laying testing of pipeline as per specifications, road crossings and restoration of the surface of the ie to its original condition, Nullah small items, testing of lines at 6 kg/sq.cm. and commissioning of the whole system as per specifications. A including testing and commissioning of the above job shall have to be supplied by the contractor and the c R.O. Supply of all on line non-HDPE materials, MS line from trunk line Tee point to PRS station with av. 25. We have perused the clause 3 “scope of work”. We have also perused the other clauses part of the judgment and in particular clause 9 “payment terms”, clause 15, clause 21 and cla annexure | by which the parties had agreed to the rates forming the consideration in the contra relevant clauses, we are inclined to observe that the said agreement between the applicants and th and it could not be divided into two parts, namely, contract to supply the pipes and a contract t of HDPE pipes was an integral part of the performance of the contractual obligation by the appli were required to lay dowon the tranches and lay down the pipes which would be reaching at site. In order to comply with the equipments involved for execution impany will be liable for clearance of ve, flange only.” thich are referred to in the earlier se 23. We have also perused the . After having gone through the Assam Gas was a works contract lay down the pipelines. The use ‘ants inasmuch as the applicants 12 contractual obligation cast on the applicants, the applicants were required to do various acts set out in clause 3 “scope of work” ultimately to see that the HDPE pipes are laid for transportation of natural gas. In our view applicants could not be divided into two parts, namely, supply of pipes and laying down the pi the clause 9 clearly indicates that the applicants were entitled to get money from Assam Gas di various acts required to be done for the successful fulfilment of terms of the contract. The mobilization of advance to the extent of 10 per cent of the contract value on furnishing of bank gi for equal amount with the work order. Clause 9 refers to the term “contract value” and in our vi clearly indicates that the consideration payable to the applicants was to be calculated as a whol the respondents. If at all the contract was intended to be divided into two parts, the said paymen| the applicants would be entitled to get cost of the pipes on delivery of required quantity of pi the acts to be committed by the es. The payment terms set out in ending upon the perfonnance of plicants were entitled to have arantee from a nationalized bank 0 use of this term contract value and not in parts as suggested by terms would have indicated that es to be used for the purposes of laying the pipes. In substance, the payment terms set out in the said agreement speak in favour of the applicants that the contract was to be read as an inter-State indivisible works contract. Clause 21 specifically mention # applicants on a turnkey basis. The use of the term “turnkey basis” would clearly indicate that transaction as a whole and not as a transaction which could be divided into two parts as has su; 26. Having considered the various clauses of the said agreement, we are in agreement tI learned advocate Mr. Joshi appearing on behalf of the applicants that the transaction between was indivisible inter-State works contract. 27. We have considered the argument advanced by learned advocates on both sides with refé lat the work was awarded to the ie parties intended to look to the ested by the respondents. at the submissions advanced by ¢ applicants and the Assam Gas rence to the contents of annexure the applicants would be charged. 1. By said annexure I, parties had arrived at an understanding as to at what rate the job done by The arguments advanced by learned advocate Mr. Sonpal that the cost of the pipe was separately shown cannot be accepted to holid that the pipes were merely sold to Assam Gas. If that would have been the understanding betipeen the parties, the terms of the annexure I would have been different inasmuch as the installation rate rupees per meter would not have been quoted to form apart of the total amount payable in respect of a particular description of a pipe. Annexure I also indicates the expected quantity of pipes which would be required for the purposes of laying down the pipeline as per the terms of the agreement. The amount of money payable was dependant upon total quantity of pipes which would be used to create the pipelind, Same is the case as regards the various items which are mentioned at Sr, No. 2 to 7 in annexure I. We are, therefore, inclined td accept the submission of learned advocate Mr. Joshi that monies payable to the applicants were in regard to the work to be cairied out in its entirety. Learned advocate Mr, Joshi's submission with reference to the raising of invoices is required to be accepted to hold that the transaction between the applicants and Assam Gas was indivisible for the purposes of determining the liability under the said Act. A typical invoice at page 47 raised by the applicants was so as to comply with the provisions of the excise duty provisions; Similarly, a typical invoice being commercial invoice raised by the applicants is produced at page 50. Th advocate Mr, Joshi that the applicants were obliged to raise the invoice at the time: of taking out th; to comply with the excise duty provisions is required to be accepted. The said invoice at page icles mentioned in the invoice are for home consumption. This would mean that the said a ~ agreement The fact that the said invoice was raised in the name of Assam Gas clearly indicate: invoiceweR to be used in performing the contract. It is pertinent to note that the applic 2 ? j Sinan ‘no tax being works contract”. In our view, this endorsement would support th Sivoices 0 raised to y —pspetines. In our view, the authorities below erred in placing reliance on the invoices which we comply with the excise duty provisions.” argument advanced by learned pipes out of the factory prentises 7, specifically mentions that the ticles were not to be sold in the licants to comply with the said that pipes mentioned in the said ints have specifically passed an stand of the applicants that the ‘aid invoices appear to have been contract with Assam Gas. The said commercial invoices would cants on account of performance in annexure I. In substance, the jounts for the installation of the raised by the applicants to only Coming to the facts of the present case, a reading of the preserit agreement leads us to infer that though the Buyer intends to purchase the solar power gener: by devising certain clauses, it is sought to bring about a splitting up of t the system, as a one whole, into a purchase of goods and a purchase o! (i system as a whole, e intended purchase of services. However, the intended purpose to present the agreement as a contract for supply of goods ONLY has not achieved the desired purpose. The agreement is for supply of an effectively running solar power plant. The agreement clauses reveal that the Supplier is involved in th early engineering period to procurement and implementation stage. process right from the We have seen that the payment for this agreement is also linked to the successful Plant completion. If the agreement was for supply of materials ONLY, there should have arisen no occasio} n to link the payment to 13 the completion of the Project. What more do we need to prove that the impugned agreement contended to be for supply of goods is actually a works contract involving engineering, design, procurement and commissioning of the solar power plant. Having satisfied ourselves that the impugned agreement is a agreement, we look at the definition of ‘works contract’ under the pr ‘Works contract’ is defined in clause (119) of section 2 of the GST Act as tually a works contract visions of the GST Act, “works contract” means a contract for building, construction, fabrication, completion, erection, el or fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property (whether as goods or in some other form) is involved in the execution of such contract; jerein transfer of property in goods It can be seen that works contract involves activities of building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, ee renovation, alteration or commissioning. However, these activities are in terms of an immovabl highlight in the definition. We have known a ‘works contract’ in the activities as building, construction, manufacture, processing, fabrication, erection, install property. This is the Sales Tax regime to be lation, fitting out, improvement, modification, repair or commissioning of any movable or immovable property. Thus, activities in relation to movable and immovable property were covered earlier whereas the 5ST regime requires it to be restricted to immovable property only. In contracts of such a nature, the liability of the contractor doesn’t end with the procuring of materials but it extends till the successful testing and commissioning of the system. The transaction is a ‘works contract’ is a ‘works contract’ in terms of the GST Act. The term ‘imm eit i ‘property’ 4One such decision is T.T.G. Industries Ltd. v. CCE, (2004) 4 SC “at the ets of the case - 7 SY facts of the case are not in dispute. The appellant Company pursuant to the acceptai “agréement with M/s SAIL, Bhilai Steel Plant for design, supply, supervision of erection and comm mudguns and tap hole-drilling machines required for Blast Furnaces Nos. 4 and 6 of Bhilai imported several components and also manufactured some of the components at their factory These components were transported to the site at Bhilai where the manufacture and commissioni place. It is undisputed that duty was paid in respect of the components manufactured at its wor! paid on manufacture of the aforesaid mudguns and drilling machines which were erected and c' We can now look at how the judgment has been delivered - “8. In their reply to the show-cause, the respondents explained the processes involved, the man assembled and erected as also their specifications in terms of volume and weight. It was explain: machine is to drill hole in the blast furnace to enable the molten steel to flow out of the blast fui further processing. After the molten material is taken out of the blast furnace, the hole in the wa by spraying special clay. This function is performed by the mudgun which is brought to its positi. exerting a force of 240-300 tons to fill up the hole in the furnace. The blast furnace in which th vessel of 1719-cubic-metre capacity and the size of its outer diameter is 10.6 metres, and the hei degrees centigrade is fed into the blast furnace at various levels to melt the raw materials. With heat, the blast furnace is lined with refractory brick of one-metre thickness. Thus, the drilling m one-metre thickness of the refractory brick lining. The drilling machine as well as the mudgun an described as the cast house floor which is in the nature of a concrete platform around the furn| height of 25 feet above the ground level. On this platform concrete foundation intended for housii are erected. The concrete foundation itself is 5-feet high and it is grouted to earth by concrete foul the base plate on the said concrete platform by means of foundation bolts. The base plate is 8 but it is for us to decide vable property’ has not fined under the GST Act. However, there are a plethora of judgments of the Hon. uprekié Yourt and the Hon. High Courts which have helped understand the term ‘immovable ¢ 751. We shall first look of its tender, entered into an issioning of four sets of hydraulic teel Plant, For this purpose, it Marai Malai Nagar, Chennai, ig of the aforesaid machines took hop in Chennai, but no duty was missioned on site.” iT in which the equipments were that the function of the drilling nace for collection in ladles for I of the furnace has to be closed and locked against the wall for inputs are loaded is a massive At 31.25 metres. Hot air at 1200 view to protect the shell against ‘hine has to drill a hole through erected on a concrete platform ice. The cast house floor is at a ig drilling machine and mudgun dation. The first step is to secure mm mild sheet of about 5 feet 4 S=