2018 (10) TMI 1515 - AAR - GST

GST Classification: ElectroInk Supply as Mixed and Continuous Supply

In Re : HP India Sales Private Limited

In Re : HP India Sales Private Limited - 2018 (18) G.S.T.L. 658 (A. A. R. - GST) Issues Involved1. Classification of ElectroInk supplied along with consumables under GST.2. Determination of time and value of supply of ElectroInk with consumables under the indigo press contract.Detailed AnalysisIssue 1: Classification of ElectroInk Supplied Along with Consumables Under GSTArguments by the Applicant:- The applicant contended that the supply of ElectroInk along with consumables constitutes a 'composite supply' under GST, where ElectroInk is the principal supply.- They argued that the supplies are naturally bundled and supplied in conjunction with each other in the ordinary course of business.- The applicant cited Section 2(30) of the GST Act, which defines a composite supply as one that is naturally bundled and supplied together, with one principal supply.- They provided details of the HP Indigo Supplier Reseller Agreement to support their claim that the supplies are naturally bundled and necessary for the operation of the Indigo Press.Arguments by the Department:- The department argued that the supplies do not meet the criteria for being naturally bundled.- They noted that the consumables have different lifespans and are not necessarily supplied together.- The department emphasized that the supplies can be ordered separately, indicating that they are not naturally bundled.- They concluded that the supply should not be considered a composite supply and should be taxed according to their separate HSN codes.Ruling:- The Authority concluded that the supplies are not naturally bundled as required for a composite supply.- The different consumables have separate lifespans and can be supplied independently.- Therefore, the supply of ElectroInk along with consumables is classified as a 'mixed supply' under Section 2(74) of the GST Act.Issue 2: Determination of Time and Value of Supply of ElectroInk with Consumables Under the Indigo Press ContractArguments by the Applicant:- The applicant contended that the supply qualifies as a 'continuous supply of goods' under Section 2(32) of the GST Act.- They argued that the goods are supplied on a recurrent basis, and the invoice is raised periodically based on the number of clicks made by the customer.- The applicant cited the terms of their contract, which stipulate that the goods remain the property of the applicant until utilized and invoiced.Arguments by the Department:- The department acknowledged that the supply is made on a regular basis and involves periodic invoicing.- They emphasized that the supply should be considered complete when the goods are removed from the applicant's warehouse, regardless of the billing method.Ruling:- The Authority agreed that the supply qualifies as a 'continuous supply of goods' under Section 2(32) of the GST Act.- The time of supply is determined by the earliest of the date of invoice or the date of receipt of payment, as per Section 12(2) of the GST Act.- The value of supply is the transaction value as reflected in the invoice issued under Section 31(4) of the GST Act.Conclusion1. Classification: The supply of ElectroInk along with consumables is a mixed supply under Section 2(74) of the GST Act and also a continuous supply of goods under Section 2(32) of the GST Act.2. Time and Value of Supply: The time of supply is the earliest of the date of invoice or the date of receipt of payment. The value of supply is the transaction value as per the invoice issued under Section 31(4) of the GST Act.