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of <h1>Applicant Denied GST Exemption on Freight Charges in Composite Supply Activities.</h1> <h3>In Re: M/s. Siemens Ltd.</h3> In Re: M/s. Siemens Ltd. - 2021 (47) G. S. T. L. 405 (A. A. R. - GST - Haryana) Issues:1. Applicability of tax exemption on transportation services provided without issuance of consignment note.2. Determination of whether the freight charges covered by the Applicant under the contract will be eligible for exemption from GST.Analysis:1. The Applicant sought a ruling on the transportation services provided under the fifth contract, which included local transportation, installation charges, and training charges. The Applicant engaged a separate GTA for transport services and raised invoices on the consignee for recovery of transportation charges.2. The judgment observed that the six contracts, including the Third Contract for goods supply and the Fifth Contract for services, were interrelated. The fifth contract involved activities beyond transportation, such as port handling, installation, testing, and commissioning, all in connection with goods supplied under other contracts. These activities were considered a composite supply under Section 2(30) of the CGST/SGST Act, 2017, as they were naturally bundled and supplied together.3. Section 8 of the CGST/SGST Act, 2017, states that in a composite supply where one supply is principal, the entire supply is treated as that principal supply. The principal supply, defined in Section 2(90), is the predominant element of the composite supply. Therefore, GST on the activities covered in the fifth contract should be levied based on the principal supply, and the exemption claimed by the Applicant for freight charges was deemed inapplicable.4. The ruling concluded that the Applicant was not eligible for exemption from CGST/SGST on freight charges under the relevant notifications, as GST applied to the composite supply activities under the fifth contract. The judgment ordered compliance with GST regulations as per Section 8 of the CGST/SGST Act, 2017.Judgment:The Applicant is not eligible for exemption from CGST/SGST on the freight charges as per the relevant notifications, as GST applies to the composite supply activities under the fifth contract. Compliance with GST regulations under Section 8 of the CGST/SGST Act, 2017, was ordered accordingly.
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