Locomotive parts classified as mixed supply despite individual pricing under section 2(74) CGST/TGST Acts

The AAAR, Telangana held that locomotive parts constituted a mixed supply despite having individual price breakdowns. The authority determined that although goods and services were capable of separate supply, they were supplied in conjunction for a single price per unit as one complete rake set. The delivery schedule required entire set delivery, not individual items, and payment was made for the complete set. The supply did not qualify as composite supply since items were not naturally bundled and no principal supply could be identified. Meeting all prerequisites under section 2(74) of CGST/TGST Acts, the supply was classified as mixed supply.

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Issues Involved:
1. Classification of supplies made by the appellant as composite supply, mixed supply, or normal individual supply under GST provisions.
2. Whether the items related to locomotive parts can be classified under a single HSN Code of 8607.
3. Clarification on the scope of work for a contract with the Karnataka Irrigation Department, whether it constitutes supply of goods or works contract services, and the applicable tax rate.

Detailed Analysis:

Issue 1: Classification of Supplies
Appellant's Argument:
- The appellant argued that the supplies made against the purchase order from Integral Coach Factory (ICF) should not be treated as mixed supply because items are supplied at individual separate prices with individual HSN codes and GST rates. They contended that mixed supply requires items to be supplied for a single consolidated price without individual pricing, which is not the case here.

Appellate Authority's Analysis:
- The authority examined the definition of "mixed supply" under Section 2(74) of the CGST/TGST Acts, which states that mixed supply involves two or more individual supplies made in conjunction with each other for a single price.
- The authority noted that the purchase order from ICF involved the supply of multiple items, including goods and services, for a single price of Rs. 4,77,82,716-00 per set. The items, although listed separately, were supplied in conjunction with each other to function as one complete rake set.
- The authority concluded that the supply met all the prerequisites of a mixed supply since the items were supplied together for a single price and did not constitute a composite supply.

Conclusion:
- The supply provided by the appellant to ICF, Chennai, is classified as a mixed supply. The order passed by the Advance Ruling Authority is upheld on this issue.

Issue 2: Classification Under HSN Code 8607
- The appellant sought clarification on whether all items related to locomotive parts could be classified under HSN Code 8607, considering the end usage of the product.
- The Advance Ruling Authority ruled that the items do not fall under HSN Code 8607.

Conclusion:
- The appellant did not challenge this ruling before the Appellate Authority for Advance Ruling, so no further analysis was provided.

Issue 3: Scope of Work for Karnataka Irrigation Department Contract
- The appellant requested clarification on whether the scope of work for a contract with the Karnataka Irrigation Department could be treated as supply of goods or works contract services and the applicable tax rate.
- The Advance Ruling Authority stated that clarification could not be issued on supplies made in Karnataka.

Conclusion:
- The appellant did not challenge this ruling before the Appellate Authority for Advance Ruling, so no further analysis was provided.

Order:
- The supply provided by M/s Medha Servo Drives Private Limited to M/s Integral Coach Factory, Chennai, is a mixed supply. The order passed by the Advance Ruling Authority is upheld on this issue.
- The subject appeal is disposed of accordingly.

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