TaxTMI 
TaxTMI 
2021 (8) TMI 360
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....ence to both CGST Act and TGST Act. 3. It is observed that the query raised by the applicant falls within the ambit of section of the GST ACT read with 20(xviii) of the IGST Act, 2017. The Applicant enclosed copies of challans as proof of payment of Rs. 5,000/- for SGST and Rs. 5000/- for CGST towards the fee for Advance Ruling. The Applicant has declared that the questions raised in the application have neither been decided by nor are pending before any authority under any provisions of the GST Act. The application is therefore, admitted. 4. Facts of the Case: M/s. SHV Energy Private Limited are suppliers of LPG to domestic and industrial users. In the application they have submitted that they enter into LPG supply agreement with industrial users for longer period ranging from 5 to 10 years. They setup a structure called manifold at the premises of the recipient for supply of LPG. This manifold consists of LPG cylinders, regulators, primary piping, pressure regulator systems,- etc., the ownership of the structure lies with the applicant. The purchaser pays rental charges at the rate of Rs. 5,000/- per month for this structure. Since setting up of this system involves substant....
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....LPG to their industrial customers and for this purpose they have erected a supplier gas system which is a movable property. That they can supply of LPG only through this structure. That they would like to ascertain if the 'lease rentals' form a component of composite supply, wherein the principal supply is supply of LPG. 2. That they are entering into an agreement with their customers for lifting a specific quantity of LPG. Whenever the customer defaults to lift the minimum quantity they are levying 'Take or Pay charges' on such defaulters. That they would like to ascertain if the 'Take or Pay charges' form a component of composite supply, wherein the principal supply is supply of LPG. In the additional grounds submitted at the time of hearing the authorized representative made additional submissions in order to buttress their contentions as follows: a. That they primarily supply LPG to industrial consumers and in order to facilitate them SGS supply system is installed in the premises of their consumers. b. That LPG is sent to the consumers premises in form of liquid and the apparatus installed by them vaporises it into gaseous form, c. That the SGS cannot be install....
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.... the TGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the TGST Act. 1. The applicant is in the business of sale of LPG to industrial customers. 2. They have installed Supplier Gas System (SGS) consisting of 30 Nos of LPG cylinders, Regulators, Primary pressure regulating systems, Vaporizers etc. 3. As seen from the agreement a minimum quantity of LPG has to be necessarily purchased by the buyer. And if such minimum amount is not purchased they shall pay by way of commitment charges i.e., 'Take or Pay' Charges at the rate of Rs. 2900/MT of such shortfall in quantity. This amount Shall be paid once in a quarter. 4. As seen from the Section 2(31) of the CGST Act, monetary value of any act or forbearance constitutes consideration of supply. Therefore the above commitment charges are taxable under GST Act. 5. Now the applicant wants a clarification as to whether the sale of LPG, lease of SGS manifold and 'Take or Pay' Charges together form a composite supply and if they form a composite supply whether LPG is the pri....
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....or this minimum without taking immediate delivery("pay"). 'Take or Pay' clauses in a contract ensure compensation for the seller in the event buyer does not purchase a specified quantity of goods or services in the course of a continuous supply. The Hon'ble Courts of India in a catena of cases held that 'Take or Pay' charges are meant to compensate for breach of a contract. Further the illustration in the definition clarifies the context of composite supply. As seen from the illustration the supply of service i.e., insurance and goods go alongside each other. The Hon'ble Supreme court of India in a catena of case law has ruled that illustrations in a statute are part of the statute and help to elucidate the principle of the Section (Dr. Mahesh Chandra Sharma Vs Smt. Raj Kumari Sharma - AIR 1996 SC 869). Therefore a composite supply should be similar to a supply mentioned in the illustration to the definition in Section 2(30), where two or more taxable goods or services are supplied along with each Other to constitute a composite Supply. 'Take or Pay' contract is a contact which requires the buyer to either purchase and receive a minimum amount of product at a set or pay for this ....