![GST AAAR's Order for M/s HYT Engineering Company Private Limited](https://blog.saginfotech.com/wp-content/uploads/2022/11/gst-aaar-order-for-ms-hyt-engineering-company-private-limited.jpg)
The Uttar Pradesh Appellate Authority of Advance Ruling (AAAR) ruled that the setting up of an Electric Loco Shed for the Railway constitutes a composite supply of work contract service.
The two-member bench of S. Kannan and Ministry S. found that the project of installing an electric loco shed at Saiyedpur Bhitri, Uttar Pradesh meets the conditions of it being an immovable property.
The petitioner entered into a joint venture with M/s Indwell Constructions Private Limited and constituted M/s Indwell-HYT JV. The Joint Venture (JV) which was provided work concerned for Construction of the PEB Shed, structure, water supply, drainage, sewerage, road work, track work, power supply, general electric work, OHE works, signal & telecommunication work, commissioning of machinery and plant in connection with the setting up of an electric loco shed at Saiyedpur Bhitri, U.P. by Rail Vikas Nigam Limited (RVNL).
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According to the petitioner, JV would award the contract to JV partners continuously with the precise execution of the work contract between the partners. As per the J.V. Agreement, the petitioner was allotted the supply of work, installation, and commissioning of the plant and machinery, mechanical engineering works, electrical works, etc.
The petitioner asks for an advance ruling on the problem if the work allotted to the petitioner does come under the composite supply of work contract service.
AAR ruled that the work allotted to the petitioner does not come beneath the composite supply of work contract service.
The petitioner opposed, AAR does not appreciate the concern, and the items of the plant and machinery supplied, installed, and commissioned by the petitioner are of permanent nature. The Indian Railways do not have any purpose of moving them from the site in the foreseeable future, which is obvious in the terms of “Permanent Works” and “Plant” as managed in the General Terms of the Contract Agreement entered in via RVNL.
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AAR mentioned that for classifying the work contract the property engaged in the contract should have immovable in nature. The Immovable property does not being described in the GST provisions. But the movable property would be described under section 3(26) of the General Clauses Act, 1897 to engage the land, the advantage of the land along with the things attached to the earth or permanently fastened to anything attached to the earth. Standing timber, growing crops, and the grass is not regarded as “movable property.”
The AAR found, the essential character of “immovable property”, is attached to the earth, permanently fastened to anything attached to the earth or forming part of the land, and not agreed to be provided prior to the supply or under a supply contract.
AAR order would have been set aside and ruled that the contracts comprise the transfer of the property in goods associated with the supply of the services, which renders to the inevitable closure that it is a case of a work contract, covered under section 2(119) of the CGST Act, 2017.