Composite supply

[mathur ramachandran]

Sir,

My client is in the business of running a Commercial Training and Coaching centre in Kerala for students enrolled for chartered Accountancy courses in India and England. They are charging course fee for which invoice is raised against the students. They are also supplying study materials to students for which invoice is raised separately. Study materials being printed books fall under ‘NIL’ rate or ‘0%’ rate. The books are purchased from a vendor from outside the state and they charge no GST on their bills, the materials being ‘NIL’ or ‘0%’ rated.

Now the GST department has issued a notice saying that the separate billings for course fee and printed books have to be seen as composite supply and thus has demanded GST for sale of the aforesaid books also.

Please advise me as to the maintainability of the said notice.

Thanking you

Ca M S Ramachandran

91-9447776812

[KASTURI SETHI]

In my view, the department's view is correct. The supply of coaching/training service and the supply of study material are naturally bundled. Without study material, coaching/training is not possible. These cannot be separated. It is a composite supply irrespective of issuance of separate bills for both supplies.

[Chandani Nawalkha]

Are they also supplying such books to other third parties who are not their students ?

If yes than the transaction can be argued to fail the test of being naturally bundled.

[KASTURI SETHI]

As per the query, the service supplier is supplying study material to the students. It is implied that The students are not outside the coaching centre.

[Alkesh Jani]

Shri

I agree with the views of Shri Kasturiji Sir, it can be said to be naturally bundled and it is also common trade practice.

[VaibhavKumar Jain]

As mentioned in query "the books are purchased from a vendor from outside the state and they charge no GST on their bills, the materials being ‘NIL’ or ‘0%’ rated."

Hence, if the books are specially prepared /designed for the Coaching Centre and not for public circulation, then it falls under composite supply and accordingly taxed @18% considering supply of coaching services being the principal supply.

Otherwise, supply of books can be treated as supply of books and taxed accordingly.

Thanking you,

Gopabandhu Mishra

9977297015

[KASTURI SETHI]

Well explained by Sh.Jain and Sh.Mishra.

[Chandani Nawalkha]

In re M/s Keysight Technologies International India Pvt. Ltd. (Advance Ruling No. HAR/HAAR/R/2018-19/39 in Application No. 39/2018-19) = 2020 (1) TMI 633 - AUTHORITY FOR ADVANCE RULING - HARYANA

In the instant case, the supply is made by a taxable person and the number of supplies are also multiple. But as discussed earlier, the supply of electricity to the extent of it being supplied through grid is exempt from GST and, therefore, the condition of two or more taxable supplies is not satisfied.

See if this can help.

[Pavan Mahulkar]

Issue is decided in AAR Kerala

M/s Logic Management Training institute P Ltd.. = 2020 (8) TMI 680 - AUTHORITY FOR ADVANCE RULING, KERALA

Whether there is any tax liability on the applicant for selling text books to its students. The sale of text books to the students will attract GST as per the schedule of rates notified under Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017.

AI Summary

Composite supply: bundled coaching and study materials treated under principal supply principle, affecting GST treatment. Whether coaching services and separately billed study materials supplied together to students form a composite supply governed by the tax treatment of the principal supply. Commentators argue the items are naturally bundled and commonly traded together, but note key factual distinctions - supply to third parties or sale of standard books may preclude composite characterization, while specially prepared materials for enrollees support composite treatment.