2020 (4) TMI 868

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....t he is engaged in the business of manufacturing power packs and supplying installation and commissioning service. 3. The applicant has sought advance ruling in respect of the following questions: 1. Whether the supply of powerpacks, freight and insurance service and commissioning/ installation services as per the Purchase Order 08/16/2730/1838/f dated 05.11.2016 has to be treated as "Composite Supply" as defined in section 2(30) of CGST Act, 2017 read with section 8(a) of CGST Act, 2017 or freight and insurance service and commissioning / Installation can be treated independent of supply of power packs given that installation and commissioning takes place after 4-5 months of supply of power packs. Installation and commissioning invoice can be only raised after obtaining confirmation from the customer that the Installation and Commissioning has been completed and a Completion Certificate to that effect has been issued. 4. The applicant furnishes some facts relevant to the stated activity. a. The applicant states that he is engaged in manufacture of power packs classifiable under HSN Code Chapter 86 and also in activity of installation and commission....

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....allation charges under SAC 9954 in the invoices they have charges 18% IGST. The applicant has produced the copies of the invoices raised. 5. Regarding the grounds, the applicant submits as under: a. In the said Purchase Order placed by Integral Coach Factory, Chennai to supply Power Packs and Installation & Commissioning of the same in HS SPART, there is a component of 'supply of goods' and a component of 'supply of service'. The value for such supply of goods and services are also separately mentioned in the said Purchase Orders. b. There is doubt that such supply of Power Packs and the related freight service and transit insurance are naturally bundled supply, as they are supplied in conjunction with each other in the ordinary course of business. Therefore, such supply of Power Packs with freight & insurance has to be treated as "composite supply" in terms of section 2(30) of COST Act, 2017. In the said supply, the Power Pack being the principal supply, the GST rate applicable to principal supply has to be applied for the purpose of levying GST in terms of section 8(a) of CGST Act, 2017. c. Since such supply of Power Packs and installation & commissi....

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....ately • The different elements are integral to one overall supply - if one or more is removed, the nature of the supply would be affected. h. The applicant also submits that in the given facts there is separate value for 'supply of power packs' and 'installation and commissioning service' invoices are also required to be raised separately on completion of such supplies; the applicant normally will not advertise such 'supply of power pack' and installation and commissioning service' as package; the element of 'supply of power pack' andelement of 'supply of installation and commissioning' are separately available in the said purchase orders; and the 'supply of power pack' and 'supply of installation and commissioning' of the same are not integral to one overall supply. Without 'installation and commissioning service', the 'supply of power packs' can be affected. i. The applicant states that in view of the above submissions, as per the purchase orders the supply of power packs with freight and insurance services supplied by the applicant has to be treated as "composite supply" and "supply of installation and commissioning service" as independent supply o....

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....ly between the supplier and the recipient. They are as under: a. Supply of power packs b. Freight and insurance related to the power packs c. Supply of Installation and Commissioning service. The applicant himself has stated in para 4 of Annexure C of his submissions that the installation and commissioning can be carried out by the recipient either by themselves or they can avail the services from any other supplier of service. Hence it is clear that the supply of the installation and commissioning is not a part of the supply contract of power packs and hence is an independent service, in case that contract of installation and commissioning is also given to the applicant. 8.4 Hence, the supply of installation and commissioning service would be and independent service and is not a part of the composite supply. The rate of tax applicable to the installation and commissioning service needs to be applied for such supply of service. We are not going into the applicable rate of tax as it is not a part of the question before this Authority. 9. Regarding the other two components, the Purchase Order is verified and found that the terms of conditions state....