Composite supply treatment for used wind mills placed on as-is-where-is basis, with second-hand goods valuation rule held inapplicable.

Sale of installed wind turbine generators on an as-is-where-is basis was treated as a composite supply, with the wind mill as the principal supply, rather than a sale of second-hand goods. Rule 32(5) was held inapplicable because it applies only where the supplier trades in second-hand goods and has not availed input tax credit on purchase; that condition was not satisfied. The exemption notification was also found inapplicable because it covers intra-State supplies received from an unregistered supplier on reverse charge basis, whereas the supplier was registered. The supply therefore fell under the tariff entry for wind mills and was taxable at the applicable wind mill rate.

---

---

Issues: Whether the proposed sale of used wind turbine generators or wind mills with accessories is a sale of second-hand goods covered by Rule 32(5) and the exemption notification, or a composite supply taxable at the rate applicable to wind mills.

Analysis: The transaction was found to be the sale of installed wind mills on an as-is-where-is basis by a person engaged in generation and sale of electricity, not by a dealer in buying and selling second-hand goods. Rule 32(5) applies only where the supplier is dealing in second-hand goods and no input tax credit has been availed on their purchase, so it could not govern the valuation of this transaction. The exemption notification relied upon was also held inapplicable because it concerns intra-State supplies received from an unregistered supplier on reverse charge basis, whereas the applicant was the registered supplier. The sale of the wind mills and accessories was characterised as a composite supply, with the wind mill as the principal supply, and the supply was held to fall under the relevant tariff entry for wind mills.

Conclusion: The supply was held taxable at 2.5% under the CGST regime and likewise taxable at 2.5% under the KGST regime.

---