Page 229 - GSTL_21st May 2020_Vol 36_Part 3

2020 ] IN RE : SIEMENS LTD. 475
That the First Contract including on-shore Ex works supply of all
equipment and materials cannot be executed independent of the Second Contract
which is for the on-shore supply of services. It is further observed that there can-
not be any ‘supply of goods’ without a place of supply. As the goods to be sup-
plied under the First Contract involves movement and/or installation at the site,
the place of supply shall be location of the goods at the time when movement of
goods terminates for delivery to the recipient or moved to the site for assembly
or installation refer to Section 10(1)(a) and (d) of the IGST Act, 2017. The First
Contract however does not include the provision and cost of such transportation
and delivery. Therefore, it does not amount to a contract for ‘supply of goods’
unless tied up with the Second Contract. The First Contract has ‘no leg’ unless
supported by the Second Contract.
That although awarded under two separate contract agreements, clauses
under both of them make it clear that notwithstanding the breakup of Contract
Price, the contract shall, at all times, be construed as a single source responsibility
and the applicant shall remain responsible to ensure execution of both the con-
tracts to achieve successful competition. Any breach in any part of the First Con-
tract shall be treated as a breach of the Second Contract, and vice versa.
That the two contracts are linked by a cross fall breach clause deeming
that any breach in either of the contracts is to be considered to be a breach of the
other contract as well. Thus, it provides the recipient with an absolute right to
either terminate both the contract or claim damages accordingly. That the ‘cross
fall breach clause’, settles unambiguously that supply of goods, their transporta-
tion to the contractee’s site delivery and related services are not separate con-
tracts, but only form parts of an indivisible composite works contract supply, as
defined under Section 2(119) of the GST Act, with single source responsibility.
That the composite nature of the contract is clear from the facts that first
Contract cannot be performed satisfactorily unless the goods have been trans-
ported and delivered to the contractee’s site. The two contracts for supply of the
goods and allied services are not separately enforceable. The recipient has not
contracted for ex-factory supply of material, but for the composite supply, name-
ly Works Contract for Supply for VSC based HVDC Terminal and DC XLPE Ca-
ble System. Reliance was placed on decision of Hon’ble SC in case of M/s. Indure
Ltd. v. CTO in Order dated 20-9-2010 in C.A. No. 1123 of 2003 and also on AAR
Order No. GST-ARA-36/2017-18/B-43, dated 4-6-2018 in case of Shri Dinesh Ku-
mar Agarwal.
It is held that the first and second contracts have cross fall breach clause
and thus, are in nature of ‘Composite Supply of Works Contract’, therefore
should be taxable @ 18%.
30. Aggrieved by the order of Maharashtra Authority for Advance Rul-
ing, the appellant has filed present appeal before us. Appellant has further stated
that, he could not submit the appeal application online as the status of order is
not yet updated on GST portal and hence is filing the application manually.
Observations
31. In this matter, the core issue raised before us is related to the ap-
plicability of exemption from levy of tax as provided under Entry Sr. 18 of Noti-
fication No. 12/2017 of CGST Act, on the transaction of supply of transportation
services to PGCIL under service contract (i.e. Fifth contract). Before deciding the
applicability of notification entry, it is necessary to examine the terms of con-
GST LAW TIMES  21st May 2020  229