Page 158 - GSTL_3rd September 2020_Vol 40_Part 1

92 GST LAW TIMES [ Vol. 40
rated the ‘statement of work’ dated 20-5-2017 which encapsulated the works to
be undertaken for completing the data center project on turnkey basis like : De-
sign approval for the complete data center; Civil and Mechanical Works; Supply
of items; loading unloading of items at site; Installation of items; testing and
commissioning of the installed equipment and detailed documentation, namely,
built drawings, operational manuals, warranty and test certificates, detailed
hand over along with training to end customer and providing process flow chart
for maintaining all the equipment.
2.4 Before supplying and subsequently commissioning the equipment,
Applicant was required to undertake civil and mechanical works, namely con-
struction of a civil structure to house the equipment. Applicant also undertook
supply and installation of other ancillary equipment necessary in a civil structure
namely UPS and batteries, fire alarm system, chillers, air conditioners, surveil-
lance systems, etc. All such activities undertaken by the Applicant were required
to set up Data Center, as a whole. Thus, the Contract does not limit itself to mere
supply of equipment but extends to civil and mechanical works, installation, test-
ing and commissioning as well. Thus, the Contract invoices a composite supply
of goods as well as services that are naturally bundled in the course of setting up
of a ‘data center’. The Data Center cannot be shifted to another location without
first dismantling and then re-erecting it at another site.
2.5 The applicant has cited the various provisions and definitions of the
GST Act and stated that : GST is levied on supplies of goods or services or both at
the rate as may be notified by the Government; Supply of works contract shall be
treated as supply of service. Applicant has reproduced relevant provision of No-
tification No. 8/2017-I.T. (Rate), dated 28-6-2017 (“Rate Notification”) and has
stated that analyzing the provisions of the CGST Act and the relevant entries of
the aforementioned Rate Notification, it is pertinent to note that in order to be
eligible to pay GST under the aforementioned entry of the Rate Notification, the
supply of services by the Applicant will have to be in the nature of works con-
tract.
2.6 Applicant has reproduced the definition of ‘Works Contract’ as per
Section 2(119) of the CGST Act, and the various dictionary meanings of the
words/terms used in the said definition and submitted that to qualify as a
‘works contract’, a contract shall not be a contract for mere supply of goods or
supply of services but shall be a composite supply involving supply of both
goods as well as services, which results in the creation or repair/maintenance/
renovation/improvement etc. of an immovable property as a whole.
2.7 Applicant has submitted that they have agreed to complete the pro-
ject on a turn-key, end-to-end basis as is evident from the statement of work dat-
ed 20-5-2017 and all such activities undertaken by the Applicant are required to
set up Data Center, as a whole. Additionally, Cray is required to provide its ac-
ceptance after inspection of services or deliverables as mentioned in the state-
ment of works. Further, the Applicant is required to employ competent and qual-
ified staff for operation/performance of works. The payment on milestone basis
is linked to successful completion of the project i.e. preparation of data center.
Referring to the decision of the Hon’ble Bombay High Court in the case of Na-
tional Organic Chemical Industries Ltd. v. State of Maharashtra, 2012 SCC Online
Bom 2128, applicant has stated that the predominant nature of the services un-
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