2018 (5) TMI 1701

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....ts - one for supply of materials at ex-factory price (hereinafter referred to as "the First Contract"), and the other for supply of allied services like transportation, insurance, loading/unloading etc for delivery of materials at the contractee's site (hereinafter referred to as "the Second Contract"). The Applicant states that as per the Second Contract, since they are not a Goods Transport Agency they arrange for the supply and delivery of materials through various other suppliers of these services. The Contractee is charged for these services at a pre-fixed rate, irrespective of the actual cost incurred. However, the Contractee is unwilling to bear the cost of GST on such services provided to them by the Applicant through various Servic....

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....e is exempt. [Reference may be made to Serial no. 18 of Notification No. 12/2017-Central Tax (Rate) dated 28/06/2017 (1136-FT dated 28/06/2017 under State Tax), hereinafter collectively referred to as the "Exemption Notification"]. The Principal Supply being thus exempted, the Applicant should not, according to his interpretation of GST law, be liable to pay tax on the ancillary or incidental services. 4. Serial no. 18 of the Exemption Notification exempts services by way of transportation of goods by road except the services of a GTA. In his written submission the Applicant admits that he is not transporting the goods, but hiring the service of a transport agency. Similarly, he is not providing the insurance service, but buying such ser....

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....t of the Second Contract. There cannot be any 'supply of goods' without a place of supply. As the goods to be supplied under the First Contract involve movement and/or installation at the site, the place of supply shall be the location of the goods at the time when movement of the goods terminates for delivery to the recipient, or moved to the site for assembly or installation [refer to Section 10(1)(a) & (d) of the IGST Act, 2017]. The First Contract, however, does not include the provision and cost of such transportation and delivery. It, therefore, does not amount to a contract for 'supply of goods' unless tied up with the Second Contract. In other words, the First Contract has "no leg to stand on" unless supported by the Second Contract....

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..... However, such default or breach or occurrence in the 'Second Contract', shall not automatically relieve you of any of your obligations under this 'First Contract'. It is also expressly understood and agreed by you that the equipment/materials supplied by you under this 'First Contract', when inter alia transported to site by you under the 'Second Contract' shall give satisfactory performance in accordance with the provisions of the Contract." Second paragraph of Clause 2.2 of the Second Contract says, "Notwithstanding the award of work under two separate Contracts in the aforesaid manner, you shall be overall responsible to ensure the execution of both the Contracts to achieve successful completion and taking over of the Goods under th....

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....o that failure to perform one of the promises does not necessarily put the promises in breach of the entire contract". In terms of this definition, the 'cross fall breach clause', in the present context, settles unambiguously that supply of goods and their transportation to the Contractee's site are not two separate contracts but forms only parts of an indivisible composite contract with 'single source responsibility'. Composite nature of the contract is clear from the clause that defines satisfactory performance of the First Contract (supply of goods) as the time when the goods have been transported to the Contractee's site under the Second Contract. In other words, the First Contract cannot be performed satisfactorily unless the goods hav....