2021 (12) TMI 1298 - AAR - GST

Ruling: Mixed Supply of Goods & Services at 18% Tax Rate

In Re: M/s. Resonance Eduventures Limited,

The ruling determined that the supply in question is a mixed supply of goods and services, attracting the highest tax rate of 18%. It clarified that the ... Classification of services - principal supply or not - services of coaching to students which also includes along with coaching, supply of goods/printed material/test papers, uniform, bags and other goods to students - what shall be the value of service provided by Applicant (REL) to students and by channel / network partner to Applicant (REL)? - eligibility of Input Tax Credit - HELD THAT:- In the instant case, supply of a package consisting of coaching service as well as goods/printed material/test papers, uniform, bags and other goods to students when supplied for a single price is constitute a mixed supply as each of these items can be supplied separately and is not dependent on any other. Whether such supply of coaching services shall be considered as composite supply under section 2(30) of CGST Act, 2017? If yes what shall be the principal supply as per section 2(90) of CGST Act, 2017? - HELD THAT:- In the instant case, the applicant along with coaching services provides goods in the form of uniforms, bags, umbrellas, study material etc. These goods and services can be supplied separately and are not dependent on any other. Thus, the Supply in question shall qualify as 'mixed supply'. Further, it is clear that there are supplies of goods as well as services of various classification (i.e. HSN/SAC) having various tax rates which constitutes the predominant element of a mixed supply. Thus, in the present case, the supply is a mixed supply of goods as well as services and highest rate of tax is 18%. Applicant provides coaching services under a new business model through Channel / Network Partners as per sample agreements attached, containing obligations of Applicant (REL) and such channel / Network partners. According to agreement, the channel / network partner provides the services to the students on behalf of Applicant. In such a situation, who shall be considered as supplier of coaching (REL) service and recipient of such service under the agreement? - HELD THAT:- Where coaching services are provided by the applicant to the students, students shall be regarded as 'recipient' as consideration is payable by the students to the applicant. Similarly, Network partner shall be regarded as provider of service to the applicant (recipient). The place of supply in both the cases (i.e. services provided to the students and service provided to the applicant by the network partner). What shall be the value of service provided by Applicant (REL) to students and by channel / network partner to Applicant (REL)? - HELD THAT:- The applicant has been incurring the cost of goods i.e. printed material test papers, uniform, umbrellas, bags and other goods etc.) and service (coaching service etc.) supplied to the students, therefore, in light of Sections 15 of the Act, the values of goods and value of service shall be the value of supply as charged in lump sum amount by the applicant from the students. Whether the Applicant (REL) shall be eligible to avail Input Tax Credit (ITC) for the supplies? - HELD THAT:- Yes, as per Section 16 of the CGST Act, 2017, the applicant shall be eligible to take ITC of the GST paid on goods or services used or intended to be used in the course or furtherance of business subject to the conditions as prescribed and the provisions of the Section 17 of the CGST Act, 2017. Issues Involved:1. Classification of the supply as goods or services.2. Determination of whether the supply is a composite supply under Section 2(30) of CGST Act, 2017.3. Identification of the supplier and recipient in the new business model involving channel/network partners.4. Valuation of the service provided by the applicant to students and by channel/network partners to the applicant.5. Eligibility of the applicant to avail Input Tax Credit (ITC).Detailed Analysis:Issue 1: Classification of SupplyThe applicant supplies coaching services along with goods such as printed material, test papers, uniforms, and bags for a lump sum amount. The ruling determined that this constitutes a 'mixed supply' under Section 2(74) of the CGST Act, 2017, as it involves two or more individual supplies of goods or services provided together for a single price. The tax liability for a mixed supply is determined based on the highest rate of tax applicable to any of the individual supplies. In this case, the highest rate is 18%.Issue 2: Composite Supply DeterminationThe applicant sought clarification on whether the supply of coaching services, which includes goods, could be considered a composite supply under Section 2(30) of the CGST Act, 2017. The ruling clarified that since the goods and services could be supplied separately and are not dependent on each other, the supply does not qualify as a composite supply. Instead, it is a mixed supply, attracting the highest rate of tax at 18%.Issue 3: Supplier and Recipient IdentificationThe applicant provides coaching services through a network of channel partners. The ruling clarified that in this arrangement, the applicant (REL) is the supplier of the mixed supply to the students, and the network partner is the supplier of services to the applicant. The place of supply for goods is determined based on the location where the movement of goods terminates for delivery to the students, while the place of supply for services is determined based on the recipient's location if they are a registered person, or the supplier's location if the recipient is not registered.Issue 4: Valuation of ServicesThe value of the service provided by the applicant to the students and by the channel/network partner to the applicant is determined based on Section 15 of the CGST Act, 2017. The total consolidated amount charged to the students, for which a tax invoice is issued by the applicant, constitutes the value of the mixed supply. This value includes all taxes, duties, and incidental expenses charged by the supplier.Issue 5: Eligibility for Input Tax Credit (ITC)The ruling confirmed that the applicant is eligible to avail ITC on the GST paid for goods or services used or intended to be used in the course or furtherance of business, as per Section 16 of the CGST Act, 2017. This eligibility is subject to the conditions prescribed under the Act and the provisions of Section 17 of the CGST Act, 2017.Ruling Summary:1. The supply is a mixed supply of goods and services, attracting the highest rate of tax at 18%.2. The supply does not qualify as a composite supply but is a mixed supply under Section 2(74) of the CGST Act, 2017.3. The applicant is the supplier of the mixed supply to the students, and the network partner is the supplier of services to the applicant. The place of supply is determined based on the location of goods and the recipient's location.4. The value of the mixed supply is the total consolidated amount charged to the students, as per Section 15 of the CGST Act, 2017.5. The applicant is eligible to avail ITC on the GST paid for the supplies, subject to the conditions of Section 16 and Section 17 of the CGST Act, 2017.