TaxTMI 
TaxTMI 
2018 (10) TMI 598
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....d medical instruments to unrelated customers like hospitals. labs etc, for their use without any consideration, for a specific period constitute supply? ii) Whether such movement of goods constitutes otherwise than by way of supply under GST? The authorized representative of the applicant was heard. It is stated that the applicant placed its own specified medical equipments to identified hospitals or laboratories by executing an agreement. The applicant placed the equipment in the premises of hospitals or laboratories without receiving any consideration. The employee of the hospitals or laboratories where the equipment is installed has the full right to use the machine during the period of contract. But the title and ownership of the ....
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....ent are available simultaneously. Therefore if an instrument to be placed in a hospital or laboratories, the customer has a monthly minimum purchase obligation to procure specified quantity of the products like reagents, calibrators, disposals etc from the instrument provider. The applicant supplied instrument to the premises of the customer free of cost. This instrument as such has no utility. It became usable only upon using of the products like reagents, calibrators, disposals etc. As far as a customer is concerned, service or functionality of the equipment is available only when both the components come together. Hence. the supply of instrument and reagent is naturally bundled and becomes a composite supply. The medical instrument is....
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....er has a right to use the instrument, during the tenure of contract, physically no consideration is realized from the customer with the objective to avoid payment of tax at higher rate. If any visible rent is realized from customer for the right to use the machine / instrument, the transaction is of supply of service covered under Heading 9973. me transfer of the right to use of any goods for any purpose whether or not for a specified period for cash. deferred payment or other valuable consideration falls under Sl.No, 17 (iii) Heading 9973 of Notification No.11/2017 Central Tax (Rate) dated 28.062017 and attract same rate of tax on supply of like goods involving transfer of title of goods; in the instant case @ 18%. Once the instrument i....
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....ct to a condition that customer shall procure agreed quantity of products as per the scheduled time limit. The customer is also responsible for the Cost of any repairs required in connection with any damage caused to the instrument due to negligence or misuse. The agreement between the parties, established that the supply of two components are indispensable for the fulfillment of contract and getting required output. Hence. the supply of two components based on the strength of agreement qualifies the concept of combination or two or more naturally bundled' supply and becomes composite supply. The supply of instrument and the products to a hospital/ laboratory is for monetary consideration. Being a composite supply, it is the discr....
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....ndent existence severed from the supply of right to use the machine / instrument. Though as per the contract, consideration is charged only in respect of supply of the reagents etc; the consideration charged for the supply of reagents etc is inextricably linked with the supply of the right to use the machine / instrument as the transaction of supply of reagents has no legs to stand without being accompanied by the right to use the machine / instrument. Therefore, the different elements of the transaction as evidenced by the agreement; namely the provision of the right to use the machine / instrument without consideration and the supply of reagents etc for consideration with a Clause that a minimum amount / quantity of such reagents etc s....