Classification of service— In the instant case, the applicant has filed application for advance ruling and submitted that they had entered into Joint Venture with M/s. Indwell Constructions Private Limited and constituted M/s. INDWELL - HYT (JV).

Rail Vikas Nigam Limited has invited a tender for the Construction of PEB shed, structure, building, water supply arrangement, drainage, sewerage, road works, track works, power supply and general electrical works, OHE works, signal & telecommunication works and supply, installation and commissioning of machinery and plant in connection with setting up of Electric Loco Shed at Saiyedpur Bhitri, Uttar Pradesh.

The JV had made a bid for the tender and the said tender was allotted to the JV. JV had awarded the contract to the JV partners on a back to back basis vide the JV agreement  with the specific execution of the works contract between the partners. Applicant was allocated with the work of supply, installation and commissioning of the plant and machinery, mechanical engineering works, electrical works etc.

The applicant being one of the partners in the JV is engaged in providing works contract service as sub-contractor to JV for original works pertaining to RVNL.

The applicant has sought advance ruling on following question—

a. Whether the works awarded to the applicant is a composite supply of the works contract services?

b. Whether the benefit of Sl. No. 3 (v)(a) of notification no. 11/2017-Central Tax (Rate) as amended vide notification no. 20/2017-Central Tax (Rate) is applicable to the subject works.

The major part of the contract is supply of goods i.e. Machinery and Plant, tools, gauges, instruments, office equipment & furniture and electrical goods. These goods are delivered to the client (JV) by the applicant and such goods are used by the applicant to provide services of installation, testing, commissioning and electrical works. Without supply of these goods, the services cannot be supplied by the applicant and therefore we find that the goods and services are supplied as a combination and in conjunction and in the course of their business where the principal supply is supply of goods. Thus we find that there is a composite supply with supply of goods being the principal supply.

For the goods/services supplied by the applicant to be covered in the works contract, it is necessary that the contracts enumerated therein should relate to immovable property. If the contract is otherwise or if the same results in movables, then it may be a composite supply but-not the works contract.

The activities of installation, commissioning, testing, supplying mechanical work and electrical work are not in respect of immovable property as the Machinery and plant is attached to concrete base to prevent vibration/wobble free operation and preventing vibration/wobble free operation, hence, it does not qualify as works contract

Held that— the works awarded to the applicant is not a composite supply of the works contract services.

The benefit of S. No. 3(v)(a) of notification no. 11/2017-Central Tax (Rate) as amended vide notification no. 20/2017-Central Tax (Rate) is not applicable to the subject works.