GST CASE DIGEST: Tax Liability on Composite and Mixed Supplies

A Composite Supply under GST would mean a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply.

A works contract and restaurant services are classic examples of composite supplies, however the GST Act identifies both as supply of services and chargeable to specific rate of tax mentioned against such services (works contract and restaurants).

Under GST, a mixed supply means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply.

Composite Supply

Union of India & Anr. Vs Mohit Minerals Pvt. Ltd. Through Director - CITATION: 2022 TAXSCAN (SC) 146

A division bench of the Supreme Court has held that the levy of IGST on the importers as per the notifications of the Central Board of Indirect Taxes and Customs (CBIC) is in violation of Section 8 of the CGST Act.

“This Court is bound by the confines of the IGST and CGST Act to determine if this is a composite supply. It would not be permissible to ignore the text of Section 8 of the CGST Act and treat the two transactions as standalone agreements. In a CIF contract, the supply of goods is accompanied by the supply of services of transportation and insurance, the responsibility for which lies on the seller (the foreign exporter in this case). The supply of service of transportation by the foreign shipper forms a part of the bundle of supplies between the foreign exporter and the Indian importer, on which the IGST is payable under Section 5(1) of the IGST Act read with Section 20 of the IGST Act, Section 8 and Section 2(30) of the CGST Act. To levy the IGST on the supply of the service component of the transaction would contradict the principle enshrined in Section 8 and be in violation of the scheme of the GST legislation. Based on this reason, we are of the opinion that while the impugned notifications are validly issued under Sections 5(3) and 5(4) of the IGST Act, it would be in violation of Section 8 of the CGST Act and the overall scheme of the GST legislation,” the Court said.

“We are in agreement with the High Court to the extent that a tax on the supply of a service, which has already been included by the legislation as a tax on the composite supply of goods, cannot be allowed,” the Court added.

Concluding the order, the Apex Court held that “the impugned levy imposed on the ‘service’ aspect of the transaction is in violation of the principle of ‘composite supply’ enshrined under Section 2(30) read with Section 8 of the CGST Act. Since the Indian importer is liable to pay IGST on the ‘composite supply’, comprising of supply of goods and supply of services of transportation, insurance, etc. in a CIF contract, a separate levy on the Indian importer for the ‘supply of services’ by the shipping line would be in violation of Section 8 of the CGST Act.”

ABBOTT HEALTHCARE PRIVATE LIMITED vs THE COMMISSIONER OF STATE TAX KERALA - CITATION:   2020 TAXSCAN (HC) 256

The Kerala High Court in the case of Abbott Healthcare Pvt Ltd v CST remitted back the matter to Kerala AAR where the Authority did not rule on the issue referred to it for the purpose of seeking a ruling.

The petitioner company is engaged in the sale of pharmaceutical products, diagnostic kits, etc. It places its diagnostic instruments at the premises of unrelated hospitals/laboratories for their use for a specified period without any consideration. The petitioner also enters into Agreements with various hospitals, laboratories, etc., whereunder the arrangement between parties is for supply of medical instruments to the hospital/laboratory concerned, for their use, without any consideration for a specified period and for the supply of specified quantities at prices specified in agreement, through its distributors on payment of applicable GST.

The AAR irrespective of answering on the above lines opined that the petitioner was effecting two supplies, namely, of medical instruments and of reagents/calibrators/disposables to be used along with the instrument. Since the instrument supplied had no utility to the customer unless he also bought the reagents/calibrators/disposables, the supply of the instrument and the reagents, etc. had to be seen as naturally bundled to form a composite supply.

A single-judge bench of Justice A.K. Jayasankaran Nambiar held that the findings as regards a composite supply are whole without jurisdiction. The matter is hence remitted back to AAR for fresh consideration.

It was observed that it is only open to AAR to enquire based on terms of the agreement. In the present case, the AAR went beyond the terms of reference in embarking upon an enquiry as to whether supplies under agreement constituted a composite supply.

In Re M/s Macro Media Digital Imaging Private Limited - CITATION: 2020 TAXSCAN (AAR) 101

In an AAR Ruling of Karnataka Authoiry of Advance Ruling ruled that, the printing of content on the PVC materials of and supply of printed trade advertising material is a composite supply and 12% GST is applicable.

The two-member bench of Manasa Gangotri Kata and Kulinjee Selvaan observed that the primary part is the printed matter on Vinyl (Self Adhesive) when they serve as advertisement materials, the adhesive part is incidental to the primary use of the said goods and therefore in this case the outputs are classifiable under HSN 4911 as ‘Trade Advertisements’.The AAR clarified that the goods on which the applicant provides the printing activities ‘Trade advertisements' are classifiable under Chapter 49 attracting CGST at the rate of 6%.

In Re: M/s. Purple Distributors Pvt Ltd - CITATION:   2023 TAXSCAN (AAR) 120

The West Bengal Authority For Advance Ruling ( AAR ) has ruled that the welding of railway tracks with labour services will be viewed as a composite supply of services and will be beholden to 18% Goods and Service Tax ( GST ).

The bench observed the contention of the applicant that as both the principal contractor and the Indian Railways are registered under the GST Act and the treatment or process of welding has only been carried out on such goods (rail tracks) to convert from SWR to LWR, the said services provided by them would fall under the ambit of job work.The authority observed that the railway tracks, for its permanent characteristic and in absence of mobility like other goods, would be regarded as immovable property and therefore fail to qualify to be goods.

Further noted that the work of conversion of SWR to LWR by Flash Butt Welding process cannot be treated as “job work‟ since to qualify any treatment or process to be job work, the same has to be undertaken on goods only.

The authority highlighted the applicant's assertion that the supply of labour services they provided along with the supply of job work services should be considered as a composite supply because these supplies are naturally combined in this industry, where the job work supply would be the primary supply and the labour supply would be ancillary.

In Re: M/s. Agrawal Buildcon - CITATION:   2023 TAXSCAN (AAR) 115

The Chhattisgarh Authority for Advance Ruling (AAR), ruled that Civil works for construction of Rail Infrastructure for South Eastern Coal fields (SECL) Kusmunda Project is composite supply and attracts 12% GST.

A Two Member Bench of the Authority consisting of Sonal K. Mishra, Joint Commissioner and Rajesh Kumar Singh, Additional Commissioner,observed that “The benefit of entry at Sl.no. of Notification No. 11/2017 would be eligible to M/s Agrawal Buildcon and that the works undertaken by them qualifies as "Composite supply" as stipulated under Section 2 (30) of CGST Act. 2017 as also the said work undertaken satisfies the condition of being 'Works Contract' as per Section 2 (119) of the Act, and if so the applicable rate of GST would be at 12% effective from 25.01.2018.”

In Re: M/s. Eden Real Estates Private Limited - CITATION:   2023 TAXSCAN (AAR) 108

The Authority of Advacne Ruling ( AAR ) has ruled that, Sale of Residential Apartments to Buyers does not include Parking Space in Composite Supply, subject to 18% GST.

The authority observed that the provision of services for the right to use a parking space is a separate supply and should not be perceived as a composite supply of construction of residential apartments. Thus shall be taxable at 18% from the buyers.

In Re: M/s. Gangaur Sweets - CITATION: 2022 TAXSCAN (AAR) 302

The Chhattisgarh bench of the Authority of Advance Ruling ( AAR ) has recently ruled that, Supply and sale of sweets, namkeens, cold drinks and other edible items through restaurant by the applicant attracts GST at 5% [2.5% CGST + 2 5% SGST], on restaurant service and will also be applicable on all such sales from restaurants and that no input tax credit would be available.

The AAR bench of Members Sonal K Mishra and Rajesh Kumar Singh observed that the applicant cannot avail credit on the GST paid on the goods and services used in their said activity in terms of aforesaid notification.It was also clarified that composition tax was not to be collected by the Restaurant from the recipients of supplies.

In Re: M/s. M/s Dee Vee Projects Limited - CITATION:2022 TAXSCAN (AAR) 298

The Authority of Advance Ruling ( AAR ) has ruled that, GST Notification For concessional tax rate of 12% on Composite Supply of works Contract  applies prospectively.

The bench observed that the applicant wrongly interpreted the tax liability at 12% and July as the effective date of the notification issued in August. Even though the tax was 18%, it is applicable till August, 2017. Thus, the notification does not have retrospective effect, it only applies to future payments.

In Re: M/s. HYT ENGINEERING COMPANY PRIVATE LIMTED - CITATION:   2022 TAXSCAN (AAAR) 141

The Appellate Authority for Advance Ruling (AAAR), Uttar Pradesh, while deciding upon an application filed before it, held that supply, installation and commissioning of plant & machinery, mechanical engineering works, electrical works etc., amounts to composite supply of work contract service.

The grounds of the appellant’s appeal being that the AAR has failed to appreciate the fact that the items of plant and machinery supplied, installed and commissioned by the appellant were of permanent nature and that the Indian Railways have no intention to move them from the site in the foreseeable future which is apparent from the definition of the terms “Permanent Works” and “Plant”, as contained in the general terms of the contract agreement entered into by the Joint Venture with the RVNL, the Authority observed as follows :

“We observe that for classifying any contract under works contract the property involved in the same has to be of any immovable nature.”

“Further, immovable property has not been defined under the provisions of GST. However, immovable property stands defined under section 3(26) of the General Clauses Act,1897 to include land, benefits to arise out of land and things attached to earth, or permanently fastened to anything attached to earth. Section 3 of the Transfer of Property Act, 1882 stipulates that unless there is something repugnant in the subject or context, “immovable property does not include standing timber, growing crops or grass”, the Authority added.

Finally, pronouncing its ruling the Authority consisting of S.Kannan, the AAAR CGST Member and Ministhy S, the AAAR SGST Member ruled :

“The work awarded to the appellant is a composite supply of work contract service”.

In Re:M/s SHREE POWERTECH - CITATION: 2022 TAXSCAN (AAR) 282

The West Bengal Authority for Advance Ruling has ruled that the subcontractors are not eligible for GST concession rate on shifting electrical utilities which was a part of highway construction by the main contractor.

The applicant had sought advance ruling as to whether the activity carried out by the applicant falls under Heading 9954: Entry No. 3(iv)(a) of Notification No. 11/2017-CT(R) and liable to tax @ 12%. Which means whether it falls under composite supply and whether the applicant was eligible for GST concession rate.

The West Bengal Authority for Advance Ruling (AAR) of Brajesh Kumar Singh (Joint Commissioner) and JoyjitBanik (Senior Joint Commissioner) observed that providing services of shifting of electrical utilities only could not be regarded as services by way of construction of road and also held that the work undertaken by the applicant would not be eligible to concession under 3(iv)(a) of the Notification No. 11/2017-Central Tax (Rate).

The Authority held that the activities being carried out by the applicant as a subcontractor could not be regarded as a composite supply of works and GST concession as main contractor would not be applicable on the applicant.

In Re: M/s. HYUNDAI ROTEM COMPANY - CITATION: 2022 TAXSCAN (AAR) 239

In the case of Hyundai Rotem Company, the Karnataka Authority for Advance Ruling (AAR) has held that the GST rate is depending upon the nature of activities and separate activities of cost centres can not be termed as composite supply. The applicant is a foreign company incorporated in South Korea, engaged in the manufacture, supply, testing, commissioning and training in respect of rolling stock. The applicant entered into a contract with Delhi Metro Rail Corporation Limited (DMRC) for the design, manufacture, supply, testing, commissioning and training of 504 Standard Gauge Cars (passenger rolling stock) including training of operation & maintenance personnel and supply of spares & manuals.

A Coram of Dr M.P. Ravi Prasad, Additional Commissioner of Commercial Taxes Member (State) and Sri. T. Kiran Reddy, Additional Commissioner of Customs & Indirect Taxes Member (Central) observed that to consider a supply as a composite supply, the supplies should be so integrated that one cannot be supplied in the ordinary course of business without or independent of the other.Further observed that the form of the agreement is not important, but its nature/ substance has to be seen to arrive at the correct conclusions.

The authority ruled that clear-cut demarcation of activities to each cost centre demonstrates the intention of the contracting parties that each cost centre is an independent supply centre undertaking either the supply of goods or the supply of services and held that the supplies made by all the Cost Centres of RS-10 contract of DMRC are not to be considered as 'composite supply'.

In Re: M/s. HIMALAYAN FLOUR MILL PRIVATE LIMITED - CITATION: 2022 TAXSCAN (AAR) 258

The West Bengal Authority for Advance Ruling (AAR) has held that Instant composite supply of service of milling of food grains into flour to Food and Supplies Department, Govt. of West Bengal attracts Nil GST.

The applicant, Himalayan Flour Private Limited has entered into an agreement with the District Controller of Food and Supplies, Government of West Bengal for supply of fortified wholemeal atta. According to the said agreement, the State Govt. (Food & Supplies Department) sends the whole, unpolished food grain to the applicant for crushing and processing it into flour. The applicant returns the flour(atta) packed in the manner as the State Govt. requires by fortifying the crushed grain with the vitamin which is then distributed through the Public Distribution System (PDS) by the State Govt on behalf of Food and Supplies Department, Govt of West Bengal.

The Bench consisting of Brajesh Kumar Singh and Joyjit Banik observed that “The value of goods involved in the instant composite supply thus found to be 21.52% of the total value of supply and thus constitutes not more than 25 percent of the value of the composite supply We, therefore, hold that the instant supply of services by way of milling of food grains into flour (atta) to Food & Supplies Department, Govt. of West Bengal for distribution of such flour under Public Distribution System is eligible for exemption under serial no. 3A of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 since the supply satisfies all the conditions specified in the said entry.”

In Re: M/s. BE WELL HOSPITALS PRIVATE LIMITED - CITATION: 2022 TAXSCAN (AAR) 210

The Tamil Nadu Authority for Advance Ruling (AAR) has held that the supply of medicines and consumables for providing health care services to inpatients are composite supply and attracts Nil rate of Goods and Services Tax.

The Authority observed that the hospital cannot provide health services including diagnostic, treatment surgery, etc. without the help of medicines to be taken during treatment and consumables used during their stay in the hospital. Hence, the supply of medicines and consumables are naturally bundled with the supply of health services, but once the patient is discharged the composite supply comes to an end, and the review of the patient after discharge cannot be considered as part of the composite supply. In the case of outpatients, it is not mandated to procure the pharmacy service from the hospital itself and it is only advisory.

The Coram of Mr. T. G. Venkatesh (Central Tax) and Smt. K. Latha (State Tax) has held that “supply of Medicines and consumables used in the course of providing health care services to in-patients admitted to the hospital for diagnosis, or medical treatment or procedures till discharge is a composite supply of inpatients Healthcare Service, provided the consolidated bill raised in the name of the patient indicates the supply of medicines and consumables during the course of the provision of health care services, as defined in Para 2(zg) of Notification no 12/2017-C.T. (rate) dated 28.06.2017 as amended and Notification No.II (2)/CTR/ 532(d-15) /2017 vide G.O. (Ms) No. 73 dated 29.06.2017 as amended and the same is exempted from CGST and SGST as per Si No 74 of the above notifications respectively”. The Authority further held that such exemption is not available to health care services provided to outpatients who are not exempted under the notification.

In Re: M/s. The Coronation Arts Crafts - CITATION: 2022 TAXSCAN (AAR) 205

The Authority for Advance Ruling (AAR), Tamil Nadu has held that the supply of printed leaflets as per Content supplied by the recipient is a composite supply and attracts 18% Goods and Services Tax.

The applicant, The Coronation Arts Crafts is engaged in printing the content supplied by the recipient using their paper and ink and supplies such leaflet products to the recipient, M/s Hindustan Latex Ltd. (HLL) a government of India enterprise, who in turn supplies the said leaflet product along with their manufactured product.

The Authority observed that in the classification of the supply of printed articles, the predominance element plays an important role in the determination of the classification as a supply of goods or as a supply of service. The predominant activity isprintingthe contents of the customer in the required tangible inputs sourced by the applicant as per the requirement of the recipient, hence the principal supply in the considered transaction is ‘Supply of service’.

The Authority presided by Smt. K. Latha and Mr. T. G. Venkatesh has held that the printing of content provided by the recipient on the paper and materials of the applicant and supply of such printed leaflets to the recipient is a composite supply as defined under section 2(30) of the CGST/TNGST Act 2017 with ‘Supply of service of printing’ as the principal supply. The said supply is classifiable under SAC 9989 with 18% GST.

In Re:M/s. Healersark Resources Private Limited - CITATION: 2022 TAXSCAN (AAR) 198

The Telangana bench of the Authority for Advance Rulings (AAR), while considering an application for advance ruling by a supplier of boarding and lodging to the students undergoing training under healthcare related vocational program, has held that are two distinct supplies in this contract one for accommodation and the other for food.

A bench comprising Mr. S V Kashi Viswesara Rao (State Member) and Mr. B Reghu Kiran (Central Member) has observed that “As seen from the information serviced by the applicant, the rent is fixed at the rate of Rs.3500/- whereas the food is charged at Rs.5500/- as per the head count or actual number of candidates. This means that the price is variable to the extent of food supplied and this is not a single price the customer pays, no matter how much of the package is actually received. For the above reason, the two supplies are not integral to one another.”

Concluding the order, the bench held that “There are two distinct supplies in this contract one for accommodation and the other for food. b. The SAC for supply of accommodation is ‘99631’ and as enumerated at serial no. 14 of Notification No. 12/2017 dt: 28.06.2017 this is exempt in the present case as per day rent is below Rs.1000/-. c. The SAC for supply of food is ‘99633’ and taxable at the rate is: i. 6% CGST & SGST each with ITC upto 14.11.2017. ii. 2.5% CGST & SGST each without ITC thereafter from 15.11.2017 onwards.”

In Re: M/s KPC Projects Ltd. - CITATION: 2022 TAXSCAN (AAR) 189

The Maharashtra Authority of Advance Ruling ( AAR ) has held that 18% GST is applicable on Composite supply under works contract.

The applicant, M/s KPC Projects Ltd., got selected based on their bid by the Uttar Pradesh RajkiyaNirman Nigam Ltd., (UPRNN) a government undertaking for the construction of 200 bedded ESI Hospital in Maharashtra.

The Authority observed that the Notification No. 11/2017 has been further amended by Notification No. 15/2021 and in which the word “a government authority or a government entity” are omitted. Therefore, the impugned service supplied by the applicant to a Government company will not be covered under Sr. No. 3 (vi) of Notification 11/2017.

The Coram of Mr. Rajiv Magoo (Central tax) and Mr. T. R. Ramnani (State tax) has held that “the impugned activity is not covered under Sr. No. 3 (vi) of Notification 11/2017 and therefore the said activity will be covered under the residuary clause (xii) of Sr. No. 3 Notification No. 11/2017 – mentioned above and the rate of GST to be paid by the applicant will be 18% of the taxable value”

In Re: M/s HYT Engineering Company Private Limited - CITATION:   2022 TAXSCAN (AAR) 218

The Uttar Pradesh Authority for Advance Ruling (AAR) presided by Mr. Abhishek Chauhan (Central Tax) and Mr. Vivek Arya (State Tax) has held that services supplied to Rail Vikas Nigam Limited (RVNL) are not works Contract.

The Authority observed that the activities of installation, commissioning, testing, supplying mechanical work, and electrical work are not in respect of immovable property as the Machinery and plant are attached to a concrete base to prevent vibration/wobble-free operation. Hence, the said supply of goods/services by the applicant to JV is not a works contract.

The Authority has held that sl. No. 3(v) of Notification No. 11/2017-Central Tax (Rate), as amended prescribed CGST rate at 6% for the composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017supplied by way of construction, erection, commissioning, or installation, of original works of railways, including monorail and metro which appliesto works contract. And hence the supply entrusted to the applicant by the JV agreement is not a works contract, the applicant is not entitled to the benefit of said notification.

In Re:M/s YVR & Co - CITATION: 2022 TAXSCAN (AAR) 223

The Andhra Pradesh Authority for Advance Ruling has held that the construction of a 20 MT Cold Storage building for the primary processing center under the Mega park scheme attracts 12% GST.

The applicant, M/s YVR, and Co. are engaged in construction services in respect of commercial/industrial buildings and civil structures. Certain civil works were awarded to the applicant by Andhra Pradesh Industrial Infrastructure Corporation Limited (APIIC). The applicant had filed an application to ascertain the applicable tax rate on the executed work.

The Authority observed that the APIIC is a Government Entity for the purpose of GST matters. The Authority further observed that the works executed by the applicant are classifiable under SAC Heading No. 9954 under construction services, entry no (ii) of serial No.3 of notification no. 11/2017 Central Tax (Rate) i.e., Composite Supply of Works Contract as defined in clause 119 of Section 2 of Central Goods and Services Act, 2017, and the applicable rate of tax is 18% (9% under Central Tax and 9% State Tax).The Coram of Mr. D. Ramesh, Member (State Tax) and Mr. RV Pradhamesh Bhanu, Member (Central Tax) has held that the Construction of a 20 MT Cold Storage Building for Primary Processing Centre under Mega park scheme classified under V (e) of sl. No. 3 under heading 9954 Construction services of notification No: 11/2017 with applicable rate of tax at 12%.

In Re:M/s. Zigma Global Environ Solutions Private Limited - CITATION: 2022 TAXSCAN (AAR) 225

The Andhra Pradesh Authority for Advance Ruling (AAR) has held that 'Solid Waste Management' service to Governmental authority and Government Entity not exempted.

The applicant, M/s Zigma Global Environ Solutions Pvt. Ltd. (ZGES) is the service provider that offers solutions involving segregation, treatment, recycling of Municipal Solid Waste (MSW) and thus clearing MSW landfills. The applicant was successful in obtaining the 'Bid' called for by the Superintending Engineer, for "Processing and disposal of the legacy municipal solid waste near Kakulamanu tippa, Tirumala through Bioremediation and Bio-mining as is where is basis'.

The Authority observed the Sl. No. 3 (i.e., pure services) and 3A (i.e., Composite supply of goods and services in which the value of supply of goods constitutes not more than 25% of the value of the said composite supply), of Notification No.12/2017 as amended further by Notification No. 16/2021 - Central Tax (Rate) the words "or a Governmental authority or a Government Entity" have been omitted to exclude such services supplied to a Governmental Authority or Government Entity. Thus, services mentioned in Serial No. 3 and 3A provided to Governmental authority and Government Entity shall no longer be exempt from January 1, 2022, and shall attract GST as applicable under Services Rate Notification.

The Coram of Mr. D. Ramesh, Member (State Tax) and Mr. RV Pradhamesh Bhanu, Member (Central Tax) has held that 'Solid Waste Management" services to be provided by the applicant fall under SAC code No.9994 "sewage and waste collection, treatment and disposal and other environmental protection services" and in particular Group 99943-Waste treatment and disposal services" as per Annexure to Notification No.11/2017 Central Tax (Rate) and not exempted under SI.No.3 of Notification No.12/2017 - Central Tax (Rate).

In Re: M/s UTKARSH INDIA LIMITED - CITATION: 2022 TAXSCAN (AAR) 185

The West Bengal Authority for Advance Ruling ( AAR ) has held that the execution work by Railway for dismantling of existing sleeper fixing and/or installation of new H-BeamSteel sleepers is not composite supply of ‘original work’.

The applicant, Utkarsh India Limited, was awarded a contract by EastCoast Railwaysfor execution work for dismantling of existing sleeperfixing and/or installation of new H-BeamSteel sleepers. The application is made before AAR for clarifying whether the execution work amounting to execution of original work and would attract IGST  at12% in terms of Notification No. 20/2017.

The Authority further observed that the applicant doesn’t construct a new bridge nor is the applicant entrusted to lay a new railway track. The applicant, undertakes the work of replacing the old sleepers with new one which essentially requires dismantling as well as removal of existing sleepers first. Further observed that the composite supply of works contract cannot be considered as ‘original work’ in terms of definition given in clause 2 (zs) of Notification No. 12/2017-Central Tax (Rate).

The Authority has held that “the instant supply is found to be a composite supply of works contract as defined in clause (119) of section 2 of the GST Act but the supply cannot be regarded as composite supply of ‘original work’ as defined in clause 2 (zs) of Notification No. 12/2017-Central Tax (Rate). The instant supply, therefore, shall not be covered under serial number 3(v) of Notification No. 20/2017 Integrated Tax (Rate), as amended, to attract tax @ 12%.

In Re: M/s Rahul Ramachandran (Inspire Academy) - CITATION: 2022 TAXSCAN (AAR) 177

The Maharashtra Authority of Advance Ruling ( AAR ) has held that service provided by Educational Institution to its students and staff attracts Nil rate of GST.The applicant, M/s Rahul Ramchandran (Inspired Academy), engaged in the business of selling stationery, educational books etc. mainly to school students. This application is pertaining to their new business under the Trade name “Nashik Cambridge Pre-School”, with an intent to supply pre-school education service against fees, necessary goods to its students without any consideration, transportation service to its students and staff and canteen facility to its staff.

The Authority observed that the applicant provides services by way of pre-school education and as per 2(y)(i) of definition entry 66 of Notification No. 12/2017 the “Nashik Cambridge Pre-School”, can be considered as an ‘Educational Institution’. Since it is considered as an Educational Institution, services provided by it to its students and staff attracts Nil rate of GST.

The Coram of Mr. Rajiv Magoo (Central tax) and Mr. T. R. Ramnani (State tax) has held that “we therefore hold that, the service provided by the “Nashik Cambridge Pre-School” to its students, faculty and staff is covered under Sr.66 of Notification No. 12/2017. Furthermore, “Nashik Cambridge Pre-School” is also entitled to Nil rate of tax as per Sr. 66 of Notification No. 12/2017, on supply of pre-school educational services to its students against a fee; on supply of transportation services to its pre-school students without consideration; on supply of transportation services to its pre-school students for some consideration; on the supply of transportation supply to its faculty and staff for some consideration; on supply of some goods to its pre-school students without consideration and on supply of canteen service to its faculty and staff for some consideration”.

In Re: Devendran Coal International Private Limited - CITATION: 2022 TAXSCAN (AAR) 174

The Tamil Nadu Authority for Advance Ruling has held that sale of coal’ and coal handling and distribution service are not composite supply and attracts 5% and 18% GST respectively.

The applicant, Devendran Coal International Pvt. Ltd., is engaged in the business of trading of coal in India, procured by them in the domestic market as well as imported from overseas. Further they render coal handling and distribution services.

The Coram of Sri T.G.Venkatesh, I.R.S. and Smt. K. Latha observed that the whole supply of coal and the Handling and Transportation services are two supplies rendered at different times. They are two individual supplies which are not rendered in conjunction with each other and have to be treated as independent and separate supplies only. Hence further observed by the Authority that the Supply of coal is liable for 5% GST and the supply of service handling and distribution is liable for 18% GST.

The Authority ruled that “‘sale of coal’ by the applicant and subsequent supply of coal handling and distribution service ordered by a customer separately is not a composite supply. Applicant is liable to discharge GST on Coal Handling and distribution charges collected at the applicable rates for such independent supply”.

In Re: M/s Mahalaxmi BT Patil Honai Constructions (JV) - CITATION: 2022 TAXSCAN (AAR) 165

The Maharashtra Authority for Advance Ruling ( AAR ) has held that the composite supply of works contract not covered under the term “Earth Work”.

The M/s Mahalaxmi BT Patil Honai Constructions Joint Venture (JV) engaged in construction of infrastructure projects, was formed to undertake construction of Jeur Tunnel under Krishna Marathwada Irrigation Project. The said JV consisting of three members M/s Mahalaxmi Infraprojects Pvt. Ltd, M/s BT Patil and sons Constructions Pvt. Ltd and Honai Constructions. The work order consists of Earth Work such as excavation for Tunnel, removal of excavated stuff, fabrication, transporting, providing steel support, rock bolting, reinforcement, fixing of chain link, cement concerting, providing drainage arrangement etc. wherein total earthwork is approximately 91% and construction work is around 9% wherein transfer of property is involved.

The Tribunal has observed that to fall under the Sr. No. 3A, the primary requirement is that the supply should be in the form of a composite supply of goods and service. But the impugned activity is a composite supply of works contract as defined in clause (119) of section 2of the CGST Act. Being a composite supply of works contract the impugned activity cannot be covered under Sr. No. 3A.

The Coram of by relying the decision of Appellate Authority in Soma Mohite Joint Venture case has held that the impugned is not covered under Sr. No. 3A of Notification No. 12/2017-CT as amended and hence the contract not covered under the term “Earth Work”.

In Re: M/s Temple Packaging Pvt. Ltd.. - CITATION: 2022 TAXSCAN (AAAR) 105

The Daman and Diu bench of the Appellate Authority for Advance Ruling ( AAAR ) has upheld the order of AAR and held that 18% GST applicable on printing of Pamphlet & Leaflet falls under category of supply of service.

Due to the ambiguity after the vide circulars of CBIC on 11 /11/2017 and 27/01/2018 divergent practice was prevailing in the industry where some of the manufacturers cleared it as goods on payment of 5% GST under CHS 4901 and some of the manufacturers cleared it under the category of goods on payment of 12% GST under CHS 4911 to avoid risk of recovery of differential amount of GST at later stage. The appellants are engaged in supplying printed leaflets to customers located in SEZ and also in physical export/deemed export against EPCG/advance license. While affecting zero rated supply to SEZ units or against own EPCG license the appellants were facing difficulty to account for against export obligation as they needed to fulfill the export obligation by delivering as goods under CHS No. 4901. Because of this uncertainty regarding taxability on supply of leaflets, the appellant preferred an application before the Advance Ruling Authority seeking clarification on that the printed leaflet supplied by the applicant falls under the category of supply of goods falling under CHS No. 4901 and not as a supply of service under SAC No. 9899.

The AAR passed an order stating that printing of Pamphlet and leaflet falls under the category of supply of service falling under SAC No. 9989 and attracts 18% GST. Aggrieved by the view of AAR, the appellant approached AAAR.

While upholding the order pronounced by the AAR the Coram of Ms. Seema Arora. Member (Central Tax) and Shri Gaurav Singh Rajawat, Member (State Tax), held that “the supply made by the applicant is a composite supply, the same has also be accepted by the appellant in their grounds of appeal. Now as per Section 8(a) the taxability in the case of composite supply comprising two or more supplies, one of which is a principal supply shall be treated as a supply of such principal supply. Thus ascertaining as to what constitutes a Principal supply plays a determining role in classification of the supply”.

In Re: M/s Kernex TCAS JV - CITATION: 2022 TAXSCAN (AAR) 120

The Telangana bench of the State Authority for Advance Rulings (AAR) has held that the activity of executing a contract for design, supply, installation, testing and commissioning of onboard train collision avoidance system (TCAS).

The applicant, M/s. Kernex TCAS JVis executing a contract for South Central Railways for TCAS,is seeking clarification regarding the classification and tariff on TCAS equipment in Railways.

"Composite supply” means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply.

Relying on the above definition, the bench observed that “as seen from the above definitions a composite supply is essentially a naturally bundled supply where two or more different supplies invariably exist along with each other. As against this a mixed supply is a bundled supply is not a bundled supply where the goods/services though supplied together are distinct and separately identifiable. However, a supply can be a mixed supply only if it is a single price.”

While concluding the order, the bench added that “further Para 6 of the Schedule II to the CGST Act, 2017 states that composite supply involving works contract as defined under clause 119 of Section 2 of CGST Act and supply of food, drink etc., shall be treated as services. Therefore a composite supply involving goods and services other than the above will be assessed as a naturally bundled supply and will be taxed at the rate applicable to the principal supply therein. Therefore in view of the above discussions the supply made by the applicant against the counter offer of the South Central Railway is a composite supply and the rate of tax applicable is the rate at which the principal supply has to be taxed i.e., Electrical signalling equipment with HSN code ‘8530’.”

In Re: M/s Kapil Sons - CITATION: 2022 TAXSCAN (AAR) 126

The Maharashtra Authority of Advance Ruling (AAR) has ruled that road tunnelling work by way of drill and blast technique is a composite supply.

The applicant, M/s Kapil Sons is registered under GST and engaged in drilling and blasting works at various sites using Industrial explosives and other materials. Government of Maharashtra entrusted Maharashtra State Road Development Corporation Limited (MSRDC), a corporation fully owned by Government of Maharashtra, the development, operation and maintenance of Two Tunnel (Two Tubes of four lane each) for Missing Link under Capacity Augmentation Of Mumbai to pune Expressway in Mumbai.

The coram of  Rajiv Magoo and T.R.Ramnani has ruled that the main contractor has been given a contract by MSRDC to construct tunnels for Mumbai Pune Expressway and accordingly, the main contractor has subcontracted the tunneling work to the applicant by way of drill and blast technique of tunneling. In the subject case, the work is for construction of tunnels which can be considered as immovable properties belonging to the Government of Maharashtra. Further as per the work order submitted by the applicant, it clearly appears that the impugned activity carried out by the applicant can classified as composite supply of works contract for construction of tunnel. This would answer the first question raised by the applicant.

“The impugned activity carried out by the applicant is a composite supply of works contract for construction of tunnel and is covered under Entry 3(iv) of Notification No. 11/2017-CT (Rate) dated 28.06.2017,” the AAR said.

In Re: M/s The Erode City Municipal corporation - CITATION: 2022 TAXSCAN (AAAR) 110

The Tamil Nadu Appellate Authority of Advance Ruling (AAAR) has ruled that GST not payable on Rent for lockers provided in bus stands by a Municipal Corporation.

The Appellant, Erode City Municipal Corporation is a “Municipality” as defined in clause (e) of article 243P of the Constitution. They are rendering taxable services (viz) renting of immovable property service, mandap keeper service and are doing the functions entrusted to a municipality under twelfth Schedule to Article 243W of the Constitution.

“In respect to the question pertaining to whether the charges obtained for the service of road cutting for the purpose of laying cables by telephone companies alongside roads on contract basis is a composite supply, the question is answered in affirmative. Though two charges are collected by the appellant for road cutting and annual rent for cables running across the road, it can be seen that unless road is cut, cables cannot be laid and mere road cutting without laying of cables is useless. Therefore, both the services have to run in tandem with respect to the telephone companies and the methodology of collection of money is immaterial to the fact of the activities of road cutting and laying of cables, which is indeed a composite supply, it must also be noted that this is a factual question and is restricted to the particular activity of road cutting followed by laying of cables by telephone companies and therefore, the same is not to be extended to all the types of road cutting activities,” the AAAR further added.

In Re: M/s Shiv Flour Mill - CITATION:  2022 TAXSCAN (AAR) 151

The West Bengal Authority of Advance Ruling (AAR) has ruled that GST exemption on composite supply of less than 25% of service of milling of food grains into flour to Food & Supplies to West Bengal Govt. for distribution under the Public Distribution System.

The applicant has sought the advance ruling on the issue Whether the instant composite supply of service by way of milling of food grains into flour to Food & Supplies Department, Govt. of West Bengal for distribution of such flour under Public Distribution System is eligible for exemption under entry No. 3A of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 and What shall be rate of GST on such milling, if it does not fall under entry No. 3A.

The  coram of Brajesh Kumar Singh and Jyoti Banik ruled that value of supply shall be the consideration in money and shall also include all the components towards non-cash consideration, as discussed. This composite supply of services by way of milling of food grains into flour (atta) to Food & Supplies Department, Govt. of West Bengal for distribution of such flour under Public Distribution System is eligible for exemption under entry serial no. 3A of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 only when the value of goods involved in such composite supply does not exceed 25% of the value of supply.

“If the value of goods involved in such composite supply exceeds 25% of the value of supply, the supply shall attract tax @ 5% (CGST @ 2.5% + WBGST @ 2.5%) vide entry serial No. 26 of the Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 [corresponding State Tax Notification No. 1135-FT dated 28.06.2017],” the AAR said.

In Re: M/s Shapoorji Pallonji and Company Pvt. Ltd - CITATION: 2021 TAXSCAN (AAR) 105

The Karnataka Authority of Advance Ruling (AAR) ruled that 12% GST on setting up of FGD plant and 18% GST on Operation & Maintenance of the  Flue Gas Desulphurisation (FGD) plant.

The applicant, M/s Shapoorji Pallonji and Company Pvt. Ltd. submitted that they are engaged in the construction business and providing works contracts services to various customers including the Government, Public Sector Undertakings, Government Entities and Private Sector entities. The applicant got the order from M/s Raichur Power Corporation Limited , on winning the tender, for setting up of Wet Limestone Flue Gas Desulphurisation and operation & maintenance of the said plant. The applicant stated that they have initiated the work for setting up of the FGD plant; received the mobilization advances from M/s RPCL & discharged GST at rate of 12% on the said advances.

The coram of Dr. M.P.Ravi Prasad and T.Kiran Reddy held that the combined service of setting up of Wet Limestone FGD plant and operation & maintenance of the said plant cannot be considered as a composite supply.

In Re:M/S Healersark Resources Private Limited - CITATION: 2021 TAXSCAN (AAR) 110

The Karnataka Authority of Advance Ruling (AAR) ruled that no GST payable on accommodation service provided to Apollo Med Skills.

The applicant has sought the advance ruling on the issue of the applicable GST SAC and GST rate for the supply of service described in this application. Is it a composite supply or a mixed supply? Whether the service is exempted vide Notification No. 12/2017-CT (Rate) dated June 28, 2017.

The coram of Dr. Ravi Prasad and T.Kiran Reddy held that the applicable GST SAC for the supply of service described in this application is 9963. It is neither a composite supply nor mixed supply but two separate supplies. The accommodation service (SAC 99632) provided by the applicant to AMSL is exempted vide Notification No.12/2017-CT (Rate) dated 28-06 2017 as the declared tariff of a unit of accommodation is below one thousand rupees. But the service provided by the applicant through supply of food (SAC 99633) attracts GST at the rate of 5% as per Sl.No. 7(ii) of Notification No. 11/2017-Central Tax(Rate) dated 28.06.2017 as amended by Notification No. 13/2018-Central Tax(Rate), dated.26.07.2018.

In Re: M/s Time Education Kolkata Private Limited - CITATION:  2021 TAXSCAN (AAR) 126

The Telangana Authority of Advance Ruling (AAR) ruled that Supply of artwork along with advertisement space amounts to supply of ‘Other advertisement space’ and 18% GST is payable.

The coram of Raghu Kiran and S.V. Kasi Visweswara Rao ruled that the selling of space for advertisement in print media (SAC 998362) is taxable at the rate of 2.5% under CGST & SGST respectively. As against this the service for ‘Sale of other advertising space or time’ is enumerated as 998366 in the SAC given in the annexure to the notification. This is not specifically mentioned in the serial no. 21 of the above notification. Clearly this service will fall under item (ii) of serial no. 21 i.e., other professional, technical & business services taxable at the rate of 9% under CGST & SGST respectively.

“The applicant is supplying (2) different services and each is attracting different tariffs under this notification. Therefore the question of deducing a composite supply from the combination of drafting a design and incorporating a space does not arise. Hence where only space for advertisement and print media is supplied (SAC 998362) the rate of tax applicable is 2.5% under CGST & SGST respectively and where they are supplying ornate space it shall be treated as other advertisement space falling under item (ii) of serial no. 21 and accordingly will attract tax @9% under CGST & SGST respectively,” the AAR observed.

In Re: M/s Arinem Consultancy Services (P) Ltd - CITATION: 2021 TAXSCAN (AAR) 139

The Uttar Pradesh Authority of Advance Ruling (AAR) ruled that no GST payable on Services rendered  under the Contract with State Urban Development Agency, Uttar Pradesh (SUDA) and Pradhan Mantri Awas Yojana (PMAY).

The coram of Vivek Arya and Abhishek Chauhan ruled that the Services rendered under the contract with State Urban Development Agency, Uttar Pradesh (SUDA), and for PMAY are in relation to functions entrusted to Municipalities under Article 243W and to Panchayats under Article 243G of the Constitution of India.  Such services would qualify as Pure Service (excluding works contract service or other composite supplies involving supply of any goods)” and accordingly exempt from the payment of GST duly covered in SI. No 3 of Notification No. 12/2017-Central Tax (Rate) dated 28 June, 2017 issued under Central Goods and Services Tax Act, 2017 (CGST/Act), and corresponding notifications issued under Uttar Pradesh Goods and Services Tax Act, 2017 (UPGST Act).

In Re: M/s ADITHYA AUTOMOTIVE APPLICATIONS Pvt Ltd - CITATION: 2021 TAXSCAN (AAR) 140

The Uttar Pradesh Authority of Advance Ruling (AAR) ruled that activity of bus body building is supply of goods and services depending on the principal supply.

The applicant, Adithya Automotive Applications Pvt. Ltd. is engaged in the body building and mounting of body on the chassis of different models of Tippers, Tankers, Trucks and Trailers. The applicant receives chasis of these items from TATA Motors and other customers on the basis of returnable challan. The applicant has described the manufacturing process as under Fabrication of steel sheets, hollow steel pipes, Round Steel pipes, angles and Channels of steel according to desired / required size. Assembly/ joining of the above-mentioned fabricated pieces of iron and steel by way of welding with help of welding electrodes (copper coated wire) to give a shape of Tipper body. Mounting/fixing of the assembled structure of the Tipper body on the chassis by welding with the help of welding electrodes and also in certain places with nuts and bolts.

The Coram of Vivek Arya and Abhishek Chauhan ruled that in the case of bus body building there is supply of goods and services. Thus, classification of this composite supply, as goods or service would depend on which supply is the principal supply which may be determined on the basis of facts and circumstances of each case.

“We find that all inputs required for fabrication of vehicle-body (Tippers, Trailers, Truck, Tankers) on chassis are procured by the applicant and fabricated vehicle-body mounted on the chassis is supplied by the applicant. Therefore, in the instant case, it is a supply of body of the vehicle and the activity of fitting/mounting of vehicle-body on the chassis is an ancillary activity to the principal activity of supply of vehicle-body. Hence, in terms of the clarification issued by the CBEC vide Circular No. 34/8/2018-GST, dated 1-3-2018, the impugned activity is a composite supply, with principal supply being supply of body of the vehicle,” the AAR ruled.

In Re: M/s Medha Servo Drives Private Limited - CITATION: 2021 TAXSCAN (AAR) 145

The Telangana Authority of Advance Ruling (AAR) ruled that 18% GST on Design, supply, installing, testing & commissioning of train collision avoidance system in locomotives.

The applicant, Medha Servo Drives are manufacturers of electronics equipment for locomotives and coaches for Indian Railways and Metro Railways. They have submitted that they have entered into contract with south central railway for design, supply, installing, testing & commissioning of train collision avoidance system in locomotives. That as per the agreement they have to supply multiple items and provide services including annual maintenance services with the service code 9954.

The coram of Raghu Kiran and S.V. Kasi Visweswara Rao held that the applicant against the letter of acceptance(LOA) of the South Central Railway is a composite supply and the rate of tax applicable is the rate at which the principal supply has to be taxed i.e. Electrical signalling equipment with HSN code ‘8530’. This commodity was made taxable at the rate of 9% under CGST & SGST respectively vide Notification No. 41/2017 dated: 14.11.2017. Therefore the supply of Train Collision Avoidance System (TCAS) is taxable at the rate of 9% under CGST & SGST respectively.

In Re: M/s GOLDEN HATCHERIES - CITATION:   2021 TAXSCAN (AAR) 161

The Karnataka Authority of Advance Ruling (AAR) ruled that 18% GST on EPC contract for construction of poultry farm with all equipment.The applicant, Golden Hatcheries is engaged in Poultry farming and involved in breeding of Parent birds (Mother Birds) which lay fertile eggs and these eggs are subjected to hatching process through hatching machine and the said offspring is called Commercial Broiler chick.

“The Transfer of poultry farm equipment and others involved execution of composite supply of works contract on immovable property for the construction of poultry farm house is classified under HSN 9954,” the AAR observed.

In Re: M/s GEW (INDIA) PVT LTD. - CITATION:2021 TAXSCAN (AAR) 165

The Karnataka Authority of Advance Ruling (AAR) ruled that no separate GST registration in Karnataka required, for the supply of service, can raise invoice by charging IGST from their registered office.

The Applicant, GEW (India) Pvt. Ltd. is a company, got a sub-contract work from M/s L86T, claimed to be a works contract, for erecting steel structure cast and bolted on the ground in the civil foundation, at the site at Karwar, Karnataka. The scope of the contract involves Procurement of structural steel from approved suppliers such as SAIL/JSPL/Tata, Fabrication at GEW India factory premises, at Noida, as per the drawings, Transportation of material, and erection at Karvar site.

The applicant received a work order from L 86T (Larsen 86 Toubro) to execute the works contract at Karwar job address LE200893-Seabird package MWC04-Larsen 86 Toubro Ltd., Inside Naval Base, Karwar, Near Manzi’ Creek, Chendia PO, Uttara Kannada district, Karwar, Karnataka vide the work order. The supply is in the nature of composite supply of goods and services involving supply, erection, and installation of steel after fabrication used for harboring/anchoring of ships and classified as service under SAC 995416.

The coram of M.P.Ravi Prasad and T.Kiran Reddy ruled that the applicant need not obtain separate registration in Karnataka, for the supply of services and can raise the invoice by charging IGST from their registered office at Noida, UP, with the place of supply as Karnataka.“Since the applicants are neither having nor intending to have any establishment at the site at Karwar, Karnataka, they cannot obtain ISD registration for the site at which they are delivering service,” the AAR said.

In Re: M/s Masterly Kolkata Facility Maintenance Pvt Ltd - CITATION: 2021 TAXSCAN (AAR) 189

The West Bengal Authority of Advance Ruling (AAR) ruled that the supply of cooking gas through pipelines from gas banks is a Composite Supply.

The coram of members Brajesh Kumar Singh and Joyjit Banik observed that the applicant is providing facility and property management services to each and every apartment owner of the project. This service includes maintenance and repair services related to the supply of cooking gas through the pipeline and is also applicable to the apartment owner who is not availing of the pipeline gas supply. So, when an apartment owner intends to get a supply of cooking gas through a pipeline, she/he will be provided the same along with the services for which she/he has already been paying to the applicant. So, the supply of cooking gas through the pipeline is inextricably linked with facility and property management services as provided by the applicant.

“In spite of issuance of separate invoices as “GAS CHARGES BILL” for consumption of gas, supply of gas through the pipeline is found to be naturally bundled with facility and property management services and are supplied in conjunction with each other. The instant supply, therefore, shall be treated as „composite supply‟ as defined under clause (30) of section 2 of the GST Act where the principal supply is facility and management services,” the AAR said.

In Re: M/s NBCC(INDIA)Limited - CITATION: 2021 TAXSCAN (AAAR) 109

The Odisha Authority of Advance Ruling (AAR) ruled that the Work Contract Given to NBCC by IIT constitutes a ‘Composite Supply Contract’.The applicant, M/s NBCC (INDIA) Limited is a Government of India Enterprises under the aegis of Ministry of Urban Development, Government of India.

The AAR ruled that,“The turnkey project works executed by M/s. NBCC (India) Ltd. is a “works contract” in terms of clause 119 of Section 2 of CGST/OGST Act, 2017 and ought to be treated as a composite supply as per clause 30 of Section 2 of CGST/OGST Act. Composite supply work contracts are treated as a supply of service under Schedule II para 6 of the CGST/OGST Act. Therefore, we are not inclined to accept the decision of the Authority for Advance Ruling that the works contract entrusted to Applicant M/s. NBCC (India) Ltd. cannot be termed as composite supply,.

In Re: M/s Tirupati Construction - CITATION: 2021 TAXSCAN (AAR) 229

The Gujarat Authority of Advance Ruling (AAR) ruled that GST payable on development & construction of sports complex for Ahmedabad Urban Development Authority (AUDA).

The applicant, M/s. Tirupati Construction has submitted that the activity of “construction of sports complex” is a supply of service within the meaning of Section 7(1)(a) of the CGST Act, 2017 read with Section 2(102) of the said Act. The said supply of service is an intra state supply within the meaning of Section 8(2) of the IGST Act, 2017 and is chargeable CGST under Section 9 of CGST Act, 2017 and SGST under Section 9 of CGST Act, 2017.

The coram of Members Sanjay Saxena and Arun Richard observed that the commercial uses of an already existing Sports complex at Bopal location as detailed in previous pages. We note the chargeable bookings and their rates, the non refundable nature of bookings too. With the plain reading of the inclusive definition of the word ‘business’ in CGST Act with the nature of commercial activities in which AUDA is involved as evidenced with the above illustration, with nothing to dissuade us from what is a glaring and clear illustration of activity of AUDA w.r.t. a sports facility already existing.

In Re: M/s.vijayavahini Charitable Foundation - CITATION: 2021 TAXSCAN (AAR) 245

The Andhra Pradesh Authority of Advance Ruling (AAR) ruled that 18% Goods and Service Tax (GST) is payable on Drinking water supply through mobile tankers.

The coram of D.Ramesh and A.Shyam Sundar ruled that the principal supply is the supply of purified water whereas the service component of distribution through mobile units is the ancillary service. The purified water is eligible to tax at the rate of 18% as it is not fit for exemption under serial no.99 of notification No. 2/2017- Central Tax (Rate) dated June 28, 2017.

"It is invariably a composite supply and the rate of tax of purified water prevails, being the principal supply. The said supply is not covered under exemption and taxable at 18 percent," the AAR noted.

The AAR has ruled that since the Vijayavahini Charitable Foundation is supplying purified water, it is not fit for GST exemption.

In Re: M/s.BINDU PROJECTS & CO - CITATION: 2021 TAXSCAN (AAR) 250

The Karnataka Authority of Advance Ruling (AAR) ruled that 12% GST is applicable on services of repairs, maintenance, renovation, and alterations of residential complexes meant for Railway employees.

The applicant, Bindu Projects is a registered person under the provisions of the Central Goods and Services Tax Act, 2017 as well as the Karnataka Goods and Services Tax Act, 2017 engaged in executing works contract services to South Western Railways.

The AAR observed that as far as the question of rate of tax, it is submitted by the applicant that a contract is a single contract and it consists of multiple works. On the question of whether this contract amounts to a composite supply or mixed supply or a bunch of separate supplies, it is seen that the same cannot be a composite supply of works contracts as there is no principal supply and the works are not. naturally bundled. It cannot be a mixed supply also because the valuations of each of the supply of works are valued separately and they would amount to separate contracts. Hence, there is no common price for all the contracts. Hence it can be safely decided that each of the works mentioned in a schedule is a separate contract in itself and this is bolstered by the fact that the works are not in the same place and also are different in nature.

In Re: M/s. Malankara Orthodox Syrian Church Medical Mission Hospital - CITATION: 2021 TAXSCAN (AAR) 276

The Kerala Authority of Advance Ruling (AAR) ruled that GST exempted on composite supply of healthcare services and the other incidental supplies.

The applicant, M/s. Malankara Orthodox Syrian Church Medical Mission Hospital is supplying medicine, implants, and other supplies to their patients during the course of treatment who are admitted as inpatients and who are not admitted but undergoing treatment in their hospital as outpatients. They are supplying medicines only to patients who are registered in their hospital as a patient against prescription from their treating Doctors. The patients have the option to purchase medicine and other supplies from outside pharmacies, subject to quality assessment by the hospital. In certain cases where choices are available as brand or type (for example metal implant vs. titanium implants), the patient is at liberty to choose out of the available items and the bill will be prepared accordingly. This is not applicable in the case of ‘all-inclusive packages. The applicant is issuing tax invoices as per the GST law for the supply of medicines and other supplies through the pharmacy to both inpatients and outpatients. They are also disclosing the GST included in the MRP in the tax invoice for the supply of medicines and they are paying the tax to the Government as per the requirements of GST law.

The coram of Joint Commissioner of Central Tax, Shiva Prasad, and Additional Commissioner of State Tax, Senil A.K.Rajan ruled that in the case where a package is offered to the patient which covers the treatment, required medicines, required supplies, etc for a consolidated amount. This amount was prefixed by the hospital with respect to the treatment of a particular disease or surgery and charged to patients irrespective of the type and quantity of medicine, supplies, etc issued to patients. It is a composite supply of which the principal supply is healthcare services and the other supplies are only incidental or ancillary to the supply of healthcare services. Therefore, the supply of medicines, implants, and other items to the inpatients admitted to the hospital for treatment as per the package offered by the applicant is a composite supply where the principal supply is healthcare services falling under SAC 999311 which is exempted as per entry at Sl No. 74 of Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017.

In Re: M/s. ST. THOMAS HOSPITAL - CITATION: 2021 TAXSCAN (AAR) 283

The KeralaAuthority of Advance Ruling (AAR) ruled that no GST payable on Composite supply of healthcare services.

The applicant has sought the advance ruling on the issues whether the medicines, surgical items, implants, stents and other consumables used in the course of providing health care services to inpatients admitted to the hospital for diagnosis, or medical treatment or procedures would be considered as “Composite Supply” of health care services under GST and consequently can exemption under Notification No.12/2017 Central Tax (Rate) dated 28.06.2017 read with Section 8(a) of GST be claimed, Whether the supply of food to all the inpatients would be considered as “Composite Supply” of health care services under GST and consequently can exemption under Notification No.12/2017 Central Tax (Rate) dated 28.06.2017 read with Section 8(a) of GST be claimed.

The coram of Joint Commissioner of Central Tax, Shiva Prasad and Additional Commissioner of State Tax, Senil A.K.Rajan ruled that the supply of medicines, surgical items, implants, stents, and other consumables to inpatients admitted to the hospital for diagnosis, or medical treatment or procedures is a composite supply where the principal supply is healthcare services falling under SAC 999311 which is exempted as per entry at Sl No. 74 of Notification No.12/2017 Central Tax (Rate) dated 28.06.2017.

“The supply of food to inpatients admitted to the hospital for diagnosis, or medical treatment or procedures is a component of the composite supply where the principal supply is healthcare services falling under SAC 999311 which is exempted as per entry at Sl No. 74 of Notification No.12/2017 Central Tax (Rate) dated 28.06.2017,” the AAR ruled.

In Re: M/s HYT SAM INDIA (JV) Hiregange & Associates - CITATION: 2021 TAXSCAN (AAAR) 104

The Tamil Nadu Appellate Authority of Advance Ruling (AAAR) while upholding the ARR’s Ruling held that 12% GST on supply of machine, plant, and equipment including commissioning of spares, erection, commissioning of all civil structures, supply of electrical equipment.

The applicant has sought the advanced ruling on the issue  whether the works awarded to the applicant is composite supply of services, whether the benefit of sl.No.3(v) of notification no.11/2017- Central Tax (Rate) is applicable to subject works.

The AAR ruled that with respect to supply of machine, plant and equipments including commissioning of spares in Schedule 1, erection and commissioning of all civil structures in Schedule II, supply of electrical equipment including commissioning of spares in Schedule III, the same is a composite supply of works contract for original works pertaining to railways and is taxable at 6% CGST as per sl. No. 3(v)(a) of Notification No. 11/2017-C.T.(Rate) dated 28.06.2017 as amended.

The AAR further ruled that the supply in the agreement for wet leasing of Robotic spot welding machine and laser cutting and welding machine as per Schedule V(a) &V(b) are composite supply of services and not Works Contract' and therefore not eligible for serial no. 3(v)(a) of the notification.

In Re: M/s.Pioneer Bakers - CITATION:   2021 TAXSCAN (AAR) 315

The Odisha Authority of Advance Ruling (AAR) ruled that the Supply of items such as birthday stickers, candles, birthday caps, snow sprays does not qualify as Composite Supply.

The Applicant, Pioneer Bakers is a registered Partnership Firm and has been operating under the Brand name of “Go cool” since the year 1997. It has established itself as a brand in the field of bakery items and especially in cakes. Further, it has several outlets operating in the state of Odisha and offers a wide range of goods and services in the business of bakery items.

The Authority observed that supply of items such as birthday stickers, candles, birthday caps, snow sprays, etc related items which are essentially used in birthday celebration can not be classified as Composite Supply defined under Section 2 (30) of the CGST Act, 2017 and Section 2 (30) of the OGST Act, 2017 wherein the principal supply of goods consists of bakery items, chocolates while the supply of services includes the supply of air-conditioned place to sit and to celebrate a birthday.

“The sale of handmade chocolates which are manufactured in the workshop of the Applicant and are utilized for the purpose of providing other services such as shakes, brownies and are also retailed by packing in different containers as per the choice of the customer will be covered under the under the restaurant services,” the AAR ruled.

The AAR added, items such as birthday stickers, candles, birthday caps, Balloon, Carry Bags, snow sprays, etc, we observe that the said related items are being purchased and sold as such without any further processing in the restaurant. These items are not articles of foods and drinks and are covered under goods. The sale of such bought-out goods as such is not a service but a sale of goods. Entry No. 7 of Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017 relating to the supply of goods.

The AAR held that the supply of the items namely chocolate, cookies which are prepared in the nearby workshop of the Applicant and then processed/customized in the outlets of the Applicant before selling to the customers from the premises of the Bakery shop of the Applicant qualifies as ‘composite supply’ under Section 2(30) of the CGST Act. The said composite supply shall be deemed to be a supply of service as per Entry 6(b) of Schedule II to the CGST Act and more specifically the ‘Restaurant Service’ and rate of tax is 5% without any input tax credit.

In Re: M/s.Kunal Structure India Private Limited - CITATION:   2021 TAXSCAN (AAR) 314

The Gujarat Authority of Advance Ruling (AAR) ruled that 12% GST on Service of Work Contract provided by the sub-contractor with effect from 25 January, 2018.

The coram of Sanjay Saxena and Mohit Aggarwal noted that vide Notification No. 01/2018-CT (Rate) dated January 25, 2018 a new entry no. 3(ix) was inserted in the principal rate Notification No. 11/2017- CT (Rate) dated 28.06.2017 vide which “Composite supply of works contract as defined in Clause (119) of Section 2 of the Central Goods and Services Tax Act, 2017 provided by a sub-contractor to the main contractor providing services to the Central Government, State Government, Union territory, a local authority, a Governmental Authority or a Government Entity” was made taxable at the rate of 12%.

The AAR ruled that the GST rate 12% prescribed under Sr. No. (ix) vide Notification No. 01/2018-CT (Rate) dated 25.01.2018 is effective from the date of issue of said Notification i.e. January 25, 2018.

In Re: M/s Swapna Printing Works Private Limited - CITATION: 2020 TAXSCAN (AAR) 102

The West Bengal Authority for Advance Ruling (AAR) held that supplies of composite printing services to a recipient located in India are taxable and cannot be considered as export services.

The Authority said that the 'recipient' is, therefore, so defined as to make separation impossible between the person to whom the supply is made and the one liable to pay the consideration and when no consideration is involved, the recipient can only be the person to whom the service is rendered. The person who receives the supply in India should, therefore, be considered as the recipient, being inseparable from the foreign buyer as far as the Applicant's supply is concerned.

The WBAAR ruled that the composite printing service to the recipient located in India. Such supplies are not, therefore, the export of services within the meaning of section 2(6) of the IGST Act,2017  is taxable.

In Re: M/s Pattabi Enterprises - CITATION: 2020 TAXSCAN (AAR) 103

The Authority of Advance Ruling ( AAR ), Karnataka has ruled that the supply of 'access cards", and similar material printed by the applicant with the contents supplied by the recipient of supply are classifiable under SAC  9989 and liable to tax under CGST at 9%, KGST at 9% and at 18% under the IGST Act.

The Applicant is engaged in the printing industry and is also a manufacturer of cartons, corrugated boxes, paper folders, sleeves, other packaging containers, labels, tags, pamphlets, booklets, brochures, leaflets and similar printed matter on order. Content to be printed is supplied by the customer and all the raw materials required for printing belong to the applicant. The content is printed and supplied.

The authority observed that the involvement of rights to stay in the temple precincts attached to the card and other involvement of privileges can only be issued by the recipient of supply of 'Access Cards', the same is to be treated as Composite supply with the supply of services being the principal supply.

The coram further observed that Section 8(1)(a) of the Central GST Act mandates that in case of a composite supply comprising of two or more supplies, where one of these supplies is the principal supply, such composite supply shall be treated as a supply of such principal supply. The supply made by the applicant thus amounts to a supply of service and not the supply of goods, as envisaged by the applicant.

In Re: M/s Sakshi Jhajh araa - CITATION: 2020 TAXSCAN (AAR) 104

The West Bengal Authority for Advance Ruling (AAR) held that the composite supply of crushing the food grains belonging to the State Government and delivery of the crushed grains will be exempted as provided the proportion of the packing materials in the composite supply in value terms does not exceed 25%.

The Applicant intends to supply to the State Government the service of crushing food grains. The Government will send to the Applicant the whole, unpolished food grain for processing. The Applicant will return the grain after crushing. The processed food grain will be used for distribution through the Public Distribution System (hereinafter PDS).

Section 98T (1) of the GST Act elaborates as these functions are in the nature of public welfare service that the governments on their own, and sometimes through governmental authorities/entities, do provide to the citizens. When the activity is in relation to any such function, the supply to the governments or governmental authorities/entities or local authorities is exempt from paying GST under Sl No. 3 or 34 of the Exemption Notification, provided it is either a pure service or a composite supply, where supply of goods does not constitute more than 25% of the value.

The Authority observed that the Service Tax exempts "services provided to the Government, a local authority or a governmental authority by way of water supply, public health, sanitation, conservancy, solid waste management or slum improvement and up-gradation."

The bench further observed that the Applicant's supply can be related to distribution through PDS, which is covered under Entry No. 28 of the Eleventh Schedule of the Constitution. lt will be an activity in relation to a function entrusted to a Panchayat under article 243G of the Constitution, and its supply to the State Government should be exempt under Sl No. 3A of the Exemption Notification, provided the proportion of the packing materials in the composite supply in value terms does not exceed 25%.

In Re:M/s Nagpur Integrated Township Pvt. Ltd - CITATION:   2020 TAXSCAN (AAAR) 103

The Maharashtra Appellate Authority for Advance Ruling (AAAR) has held 18% Goods and Services Tax (GST) applies to the construction of flats to be given on lease.

The appellant wishes to submit that since the provisions of CGST Act, 2017 and the rules and notifications issued thereunder are in parametric to corresponding provisions in the Maharashtra SGST Act, 2017 and the rules and notifications issued thereunder, the provisions of CGST law alone are referred to in this appeal, which would imply reference to corresponding provisions under the SGST law also unless specified.

The Appellate Authority for Advance Ruling (AAAR) observed that the transaction between the developer and the lessee is taxable under Goods and Services Tax (GST) and that it is a composite supply of works contract in relation to the construction of a complex, building ie, flats which are intended to be handed over to the buyer and will attract tax at the rate of 18 percent.

In Re:M/s Macro Media Digital Imaging Pvt. Ltd - CITATION:   2020 TAXSCAN (AAAR) 104

The West Bengal Appellate Authority for Advance Ruling (WBAAAR), Kolkata has held that printing trade advertisement content provided by the customer and supplying such printing materials will not amount to the supply of goods hence it will come under the purview of Service.

While dismissing the petition WB AAAR concluded that the service of printing is the predominant element of the composite supplies and the purchase order no as mentioned description as service— "Digital Printing — Outdoor".

While disposing of the matter, the authority observed, "it is clear beyond doubt that what the Appellant supplies are nothing but service. Hence, we find no basis in the argument of the Appellant that it supplies goods only."

In Re: M/s Volvo-Eicher Commercial Vechicles Ltd - CITATION:   2020 TAXSCAN (AAAR) 102

The Karnataka Appellate Authority of Advance Ruling (AAAR), while setting aside the ruling of the AAR ruled that the warranty services with Volvo bus supply are composite supplies.

The Authority for Advance Ruling (AAR) vide order held that the applicant is providing a composite supply of goods and services to the customers wherein the principal supply is that of goods or services depending on the nature of the individual cases. The transaction is an intra-State or inter-State transaction (but not export transaction) depending on the place of supply. Since this transaction is not an export of services, the transaction is not a “Zero-rated Supply” under the IGST Act.

The Appellate Authority consisting of members D.P. Nagendra Kumar and M.S. Srikar set aside the order of the AAR and held that the activities performed by the Appellant with regard to repair and servicing of Volvo vehicles for Indian customers during the warranty period are an activity amounting to a composite supply of goods and service for Volvo Sweden with the principle supply being a supply of service. The recipient of the supply of service is Volvo Sweden.

In Re:MFAR HOTELS & RESORTS PRIVATE LIMITED - CITATION:   2020 TAXSCAN (AAR) 106

The Tamil Nadu Authority of Advance Ruling (AAR) ruled that 18% GST is applicable to the supply of soft beverages or aerated water by the restaurant.

The applicant, MFAR Hotels & Resorts Private Ltd. has stated that they own and manage the Hotel and resorts. They offer a variety of services to their customers such as rooms and suites, banquet, dining, spa, etc. Their hotels are located in the prime urban cities of Chennai and Ernakulum. They sell Tobacco (Cigarettes), soft beverages to the guests. They supply Non-GST items of liquor to the guests and provide free supply of food to their employees.

Firstly, what is the rate of tax applicable on the supply of Soft Beverages (Aerated Water) and Tobacco (Smokes) when these items are supplied independently and not as composite supply in the restaurant.

In other words what is the rate of GST if these items alone are supplied and not along with food as Composite supply to the guest.

The two-member bench of Manasa Gangotri Kata and Kulinjee Selvaan ruled that the supply of soft beverages/aerated water, whether in person or room service, by the restaurant located in the premises of the hotel of the applicant is taxable to CGST at the rate of 9% as per Notification No. 11/2017-C.T. (Rate) dated 28.06.2017 and SGST at the rate of 9% as per Notification No. as per Notification No.II (2)/ CTR/ 532(d­14)/2017 dated 29.06.2017 as amended.

In Re:M/s ST ENGINEERING ELECTRONICS LTD - CITATION:   2020 TAXSCAN (AAR) 109

The Tamil Nadu Authority of Advance Ruling (AAR) ruled that 12% GST applicable on Composite supply of works contract for construction, erection, commissioning, or installation of original works pertaining to Metro.

The applicant sought the advance ruling on the issue whether rate of tax at 6% CGST, available to Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017 provided by way of construction, erection, commissioning, or installation of original works pertaining to Metro, vide- Notification No. 11/ 2017 amended vide Notification No.1/ 2018- Central Tax (rate) dated 25th January 2018 is applicable to a sub-contractor (Applicant) rendering the services.

The two-member bench of Manasa Gangotri Kata and Kulinjee Selvaan ruled that considering all the submissions and that the application is pending before this authority for long, we find it appropriate to hold that the benefit of the entry at SI.No. 3(v) will be applicable to the applicant subject to the works undertaken by them being ‘Works Contract’ as per Section 2 (119) of the Act and the applicable GST is at the rate of 12% effective from January 25, 2018.

In Re:M/S Bharathiyar University - CITATION:   2020 TAXSCAN (AAR) 113

The Authority of Advance Ruling (AAR), GST applicable on composite supply of sale of application, registration, inspection, etc with ‘affiliation’ of the said institution/ course as the ‘Principal supply’.

The applicant, Bharathiyar University is said to engaged in activity to affiliate colleges to university as affiliated, professional or post graduate colleges; to approve colleges providing course of study for admission to the examinations for titles and diplomas of the University; and to designate any college as an autonomous college with the concurrence of the Government.

The coram consisting of Kurinji Selvaan and B. Senthilvelavan the composite supply of sale of application, registration, of course, inspection, etc. with the ‘Principal Supply’ of ‘affiliation’ provided by the Bharathiar University to its constituent colleges (viz) Self-financing and management colleges for which they collected  Application Form fees; Application Fees;  Inspection fees; Affiliation Fee for each course; Affiliation Fee for each additional section; Initial Affiliation fee to start an institution; Permanent Affiliation fee to the College; 8. Continuation of affiliation for each course; Increase in intake for each course for permanent basis processing fee and Penal fee for receipt of late application is not exempted vide SI.No. 66 of notification No. 12/ 2017-C.T.(Rate) dated 28th June 2017.

In Re: M/s. Air Control and Chemical Engineering Co. Ltd - CITATION:   2021 TAXSCAN (AAR) 321

The Gujarat Authority of Advance Ruling (AAR) ruled that 18% GST is applicable on “Supply, Testing and Commissioning of 160 TR Chilled Water Plant”. The applicant has sought for an advance ruling in respect of the clarification in details is sought with regard to the GST rate applicable regarding the “Supply, Testing and Commissioning of 160 TR Chilled Water Plant to Naval Dockyard (Visakhapatnam).

The coram consisting of Sanjay Saxena and Mohit Aggarwal ruled that the “Supply, Testing and Commissioning of 160 TR Chilled Water Plant” to Naval Dockyard (Visakhapatnam), is a composite supply with the principal supply of goods viz. ‘160 TR Chilled Water Plant’/ ‘Chiller’ falling under Chapter sub-heading No. 8418 10 10 and the applicant is liable to pay  28% GST till July 26, 2018, and 18% from July 27, 2018, on said complete supply of goods and services.

The AAR while addressing another issue ruled that the “Supply, Testing and Commissioning of 160 TR Chilled Water Plant” to Naval Dockyard (Visakhapatnam), is a composite supply with the principal supply of goods viz. ‘160 TR Chilled Water Plant’/ ‘Chiller’ falling under Chapter sub-heading No. 8418 10 10.

“No exemption Notification issued under GST, which provides GST exemption in respect of Supply of 160TR Chilled Water Plant in question to the Naval Dockyard, Visakhapatnam, an Indian Naval Ship Repair Organisation of Indian Navy,” the AAR said.

In Re: M/s.Stovec Industries Ltd - CITATION:   2021 TAXSCAN (AAR) 322

The Gujarat Authority of Advance Ruling (AAR) ruled that the Contract provide particular services to customers of SPA in India amounts to composite supply.

The applicant, M/s. Stovec Industries Ltd. is the supplier of products in the textile and graphics printing market and engaged in manufacturing Rotary screen printing machines and also offers products for conventional and digital engraving methods.

The coram consisting of Sanjay Saxena and Mohit Aggarwal ruled that the specified transaction of the Applicant is a composite supply of service as per the Central Goods and Services Tax Act, 2017.

The AAR ruled that the specified transaction of the Applicant is categorized as an “intermediary” as per Section 2(13) of The Integrated Goods and Service Tax Act, 2017.

The AAR ruled that the specified transaction does not qualify to be “Export of service” as per Section 2(6) of The Integrated Goods and Services Tax Act, 2017.

In Re: M/s.Surya Roshni LED Lighting Projects Limited - CITATION:   2021 TAXSCAN (AAR) 323

The Orissa Authority of Advance Ruling (AAR), ruled that the Capital Subsidy received on 90% of Project Capital Expenditure is liable to Goods and Service Tax (GST).

The applicant sought the advance ruling on the issue whether Capital Subsidy (90 percent of Project Capital Expenditure) received by the Applicant as per SIOM Agreement and Escrow Agreement from Odisha Government/ULBs for the Green Field Public Street Lighting System in the State of Odisha is not liable to GST and if liable to GST, then at what rate of GST.

The coram of G.K. Pati and Dilip Satpathy ruled that Capital Subsidy (90 percent of Project Capital Expenditure) received by the Applicant is liable to GST. The GST will have to be paid on the goods at the appropriate rate after classification under the appropriate heading.

The AAR further ruled that the supply being undertaken or proposed to be undertaken by the applicant would qualify to be a supply of 'composite supply' in terms of the definition under Section 2(119) of the Central Goods and Services Tax Act, 2017, where the principal supply is the supply of goods and is not the supply of service'.

In Re: M/s.RDL-ZYCHL-JV - CITATION:   2021 TAXSCAN (AAR) 307

The West Bengal Authority of Advance Ruling (AAR) ruled that 5% GST is applicable on composite supply of works contract to the Wular Conservation and Management Authority as it is a Governmental Authority.

The applicant sought the advance ruling on whether Sl No. 3 (vii) of Notification No. 08/2017– Integrated Tax (Rate) dated June 28, 2017, as amended from time to time, applies to the above supply.

The coram of Susmita Bhattacharya and Parthsarthi Dey clarified that Entry No. 3 (vii) of the Notification provides that a supply is taxable at the rate of 5% if the contract is a composite supply of works contract as defined under section 2(119) of the GST Act, involving earthwork exceeding 75% of the contract value and the recipient is the Central Government, State Government, Union Territory, a government authority or a government entity.

In Re: M/s Uttar Pradesh Power Transmission Corporation Limited - CITATION:   2021 TAXSCAN (AAR) 308

The Uttar Pradesh Appellate Authority of Advance Ruling (AAAR) ruled that Deposit work by Uttar Pradesh Power Transmission Corporation is a part of the transmission and distribution of electricity, so it is a composite supply.

The appellant, Uttar Pradesh Power Transmission Corporation Limited was incorporated in 2006 and notified as the state transmission utility of Uttar Pradesh, vide Notification No. dated 18th July 2007 and entrusted with the business of transmission of electrical energy to various licensees within the State of Uttar Pradesh.

The AAAR observed that the services provided by the appellant are in nature of composite supply in terms of Section 8 of the CGST Act, 2017 and Transmission and distribution of electricity being the principal supply.

In Re: M/s Bishops Weed Food Crafts Pvt. Ltd - CITATION:   2021 TAXSCAN (AAR) 309

The Karnataka Authority of Advance Ruling (AAR) ruled that the leasing of property for use as residence along with basic amenities, covered under accommodation services under GST.

The applicant has sought the advance ruling on the issue whether leasing of property for use as residence along with basic amenities would qualify an composite supply under Section 2(30) of the Karnataka Goods and Services Tax Act, 2017.

The coram of Dr.M.P.Ravi Prasad and Mashood Ur rehman Farooqui ruled that Leasing of property for use as residence along with basic amenities", in the instant case, is covered under accommodation services, as ruled in the preceding paras, falls under SAC 996311 and hence would qualify as composite supply under Section 2(30) of the CGST/KGST Act, 2017.

In Re: M/sKou-Chan Technologies Pvt. Ltd - CITATION:   2021 TAXSCAN (AAR) 312

The Karnataka Authority of Advance Ruling (AAR) ruled that 5% GST is applicable on pick-up charges paid to the owner/driver.

The applicant, M/s. Kou-Chan Technologies Pvt. Ltd., is a Private Limited Company registered under the Goods and Services Tax Act, 2017 and proposes to operate a mobile-based taxi aggregation service, on a pan-India basis under the trade name “DYUT RIDES”.

Firstly, do the various supplies (of the Applicant, the Vehicle Owner, the Driver and the Associate partner together) mentioned supra qualify as ‘Composite Supply.

The coram of Dr. M.P.Ravi Prasad and Mashood Ur Rehman Farooqui held that the various supplies of the applicant, the vehicle owner, the driver, and the associate partner together do not qualify as Composite supply.

In Re: M/s. Bharat Earth Movers Limited - CITATION:   2021 TAXSCAN (AAR) 313

The Karnataka Authority of Advance Ruling (AAR) ruled that the supply made by Cost Centers of Bharat Earth Movers Limited is composite supply.

The applicant, Bharat Earth Movers Limited is a Public Sector Undertaking, engaged in manufacture of a wide range of products to meet the needs of mining, construction, power, irrigation, fertilizer, cement, steel and rail sectors.

The applicant has sought advance ruling on the issue whether the supplies made by Cost Centres C,D, E and G are independent supplies of goods and services (as applicable) or composite supply with principal supply of goods.

The coram of Dr. M.P.Ravi Prasad and Mashood Ur Rehman Farooqui held that the supplies made by the applicant under Cost Centres C, D, E and G form a composite supply and since the supply of intermediate cars is the principal supply, would be treated as the supply of intermediate cars as per section 8 of the CGST Act, 2017 and section 12 of the CGST Act, 2017 is applicable to the issues related to the time of supply.

In Re:M/s Shalby Limited - CITATION:   2020 TAXSCAN (AAR) 103

The Gujarat Authority of Advance Ruling (AAR) ruled that the medicines, consumables, and implants used as health care for diagnosis or treatment of patients are a "Composite Supply”.

The applicant, M/s. Shalby Limited, established by Dr. Vikram I. Shah in 1994 in Ahmedabad, Gujarat, operates a chain of multispecialty hospitals across India, holding an aggregate bed capacity of over 2000 hospital beds. Shalby’s recognition as a multispecialty tertiary hospital chain in the Indian healthcare industry was envisioned by its founder Dr. Vikram Shah - CMD, who has been felicitated by Ethicon India for the development of the ‘OS Needle’.

The applicant has sought the advanced ruling on the issue whether the medicines, consumables and implants used in the course of providing health care services to in-patients for diagnosis or treatment for patients opting with or without packages along with allied services i.e. (room rent/food/doctor fees Etc.) provided by hospital would be considered as "Composite Supply and accordingly eligible for exemption under the category "Health Care Services”.

The Coram of Sanjay Saxena and Mohit Aggarwal ruled that the medicines, consumables, and implants used in the course of providing health care services to in-patients for diagnosis or treatment for patient opting with or without packages along with allied services i.e. (room rent/food/doctor fees Etc.) provided by the hospital is a "Composite Supply”. Supply of inpatient health care services by the applicant hospital as defined in Para 2(zg) of the Notification No.12/2017-Central Tax (Rate) dated June 28, 2017, as amended, is exempted from CGST as per Sl. No. 74 of the above notification.

In Re:M/S ABB lndia Ltd - CITATION:   2020 TAXSCAN (AAR) 115

The Authority of Advance Ruling (AAR), West Bengal ruled that 12% of GST is applicable on the composite supply of work contract for Metro & Monorail.

An application was filed by the applicant namely ABB lndia Ltd., it was observed that the composite supply of works contract, as defined under section 2(119) of the Goods and Service Tax (GST) Act, supplied by way of construction, erection, commissioning, or installation of original works pertaining to railways, including monorail and metro, is taxable at 12% rate.

The Authority of Advance Ruling (AAR) consisting of the members Susmita Bhatacharya and Parthsarthi Dey held that the composite supply of works contract, as defined under section 2(119) of the Goods and Service Tax (GST) Act, supplied by way of construction, erection, commissioning, or installation of original works pertaining to railways, including monorail and metro, is taxable at 12% rate.

Therefore the authority affirmed that the Applicant is making a composite supply of works contract taxable under Entry No. 3 (v)(a) of Notification dated June 28, 2017 as amended, being erection, commissioning and installation of original work pertaining to railways, including metro.

In Re:M/S San Engineering & Locomotive Company Ltd - CITATION:   2020 TAXSCAN (AAR) 117

The Karnataka Authority of Advance Ruling (AAR) ruled that the Supply of power packs, freight & insurance charges would form a part of the value of supply of power packs. The supply of commissioning or installation services supplied by the applicant are independent services and are not covered undersupply of power packs.

The applicant sought the advance ruling on the issue that Whether the supply of power packs, freight and insurance service, and commissioning/ installation services as per the Purchase Order has to be treated as "Composite Supply" as defined in section 2(30) of CGST Act, 2017 read with section 8(a) of CGST Act, 2017 or freight and insurance service and commissioning or Installation can be treated independently of the supply of power packs given that installation and commissioning takes place after 4-5 months of supply of power packs.

The authority consisting of members Dr. M.P. Ravi Prasad and Mashood Ur Rehman Farooqui ruled that the Supply of power packs, freight & insurance charges would form a part of the value of supply of power packs. The supply of commissioning or installation services supplied by the applicant are independent services and are not covered under the supply of power packs.

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