GST Ruling: Customized Furniture Supply Classified as Composite Supply of Goods

The case involved determining whether the supply, installation, and fixing of customized furniture constituted a composite supply of goods or a works contract for GST purposes. The authority ruled that the activities did not amount to a works contract as they did not result in immovable property. Instead, it was classified as a composite supply of goods, with the principal supply being the furniture itself. Consequently, the applicable GST rate for the supply of furniture was determined to be 18% under Chapter Head 9403 of the GST Tariff.

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Issues Involved:
1. Whether the work relating to "supply, installation, and fixing of customized furniture in a building" is a composite supply of goods or in the nature of works contract.
2. Applicable rate of GST on the above supply if it is a supply of goods or supply in the nature of works contract.

Issue-wise Detailed Analysis:

1. Nature of Supply: Composite Supply of Goods or Works Contract
- The applicant contended that the contract for supply, installation, and fixing of customized furniture should be considered a works contract as per Section 2(119) of the CGST Act, and thus eligible for a concessional tax rate of 12% as per Notification No. 11/2017-Central Tax (Rate).
- As per Section 2(119) of the CGST Act, a "works contract" involves a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement modification, repair, maintenance, renovation, alteration, or commissioning of any immovable property.
- The authority clarified that the supply, installation, and fixing of furniture do not result in immovable property. The furniture items are manufactured at the supplier's place and installed at the recipient's location, and these items can be moved without damage, thus not qualifying as immovable property.
- The authority concluded that the supply, installation, and fixing of furniture do not fall under the definition of a works contract because it does not result in immovable property.

2. Applicable Rate of GST
- The applicant argued that the supply should be taxed at 12% under the works contract provisions.
- The authority examined the classification of services under Notification No. 11/2017-Central Tax (Rate) and found that the supply in question does not fit under the construction services heading 9954.
- The authority referred to Section 2(30) of the CGST Act, defining "composite supply" as a supply consisting of two or more taxable supplies of goods or services or both, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, with one being the principal supply.
- The authority determined that the supply of furniture is the principal supply, and the installation and fixing are ancillary, making it a composite supply of goods.
- As per Section 8(a) of the CGST Act, the tax liability on a composite supply is determined by the principal supply, which in this case is the supply of furniture.
- The applicable rate of GST for furniture, classified under HSN 9403, is 18% as per Sl.No.438 of Schedule III of the CGST Act.

Conclusion and Ruling:
- The activities of supply, installation, and fixing of furniture cannot be classified under Heading 9954 - Construction services.
- The contract conforms to a composite supply as provided in Section 2(30) of the CGST Act, 2017, where the supply of goods (furniture) is the principal supply.
- The goods shall merit classification under Chapter Head 9403 of the GST Tariff and shall be liable to GST at the rate of 18% applicable at the time of supply.
- The ruling is valid subject to the provisions under Section 103(2) until declared void under Section 104(1) of the GST Act.

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