TaxTMI 
TaxTMI 
2022 (4) TMI 1142
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....er called the Applicant) are registered under GST with GSTIN 33AABCD3577F1ZZ. The applicant has sought Advance Ruling on the following questions:- 1. Whether we are liable to discharge tax liability at 18% on coal handling and Distribution charges collected in respect of supply of coal handling and distribution services rendered as per a work order issued by the customer subsequent to his coal (only) order Or Can we club the aforementioned coal handling and distribution service ordered by customer separately and subsequently with 'supply of coal' to understand that as a composite supply of coal and pay GST at 5%? The Applicant has submitted the copy of application in Form GST ARA - 01 and also submitted a copy of Challan evidencing payment of application fees of Rs. 5,000/- each under sub-rule (1) of Rule 104 of CGST rules 2017 and SGST Rules 2017. 2.1 The applicant has stated that on purchase of coal, the GST is paid at 5% (on intra-State and inter-State supply as the case may be) and on import of coal from overseas market, IGST is paid @ 5%. After coal is imported, the coal is stockpiled at port itself at the designated place for subsequent sale to customers. Vario....
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.... since dynamic search for lower quote for such service in Port carried out by the customers. Further, as per the terms agreed with customer, on placing the order for desired quantity of coal, separate invoices to be raised by the Applicant on a customer for- (a) Price of supply of coal (b) (In the applicable cases, when separate and subsequent order received from customer) Coal handling and distribution charges The applicant has stated that they intend to raise invoice on the customer(s) for the following- (a) Supply of 'coal only1 with GST at 5% (b) Composite Supply of Coal and Coal handling and distribution with GST at 5% (c) (i) Supply of standalone service 'Coal handling and distribution service only with GST at 18% (ii) supply of coal handling and distribution service as per customer's work order therefor subsequent to his coal order with GST at 18% 2.3 On interpretation of law, the Applicant has stated that supply of coal undertaken by them first in response to a purchase order, then in response to a subsequent and separate work order they render coal handling and distribution services. In their understanding, the supply of coal and aforementioned se....
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....nt type of Supply undertaken and reference to related purchase orders The customers prefer following types of supplies from them nowadays, as evidenced by their Orders,- a. Supply of Coal only (no Transportation or other Service is required from applicant) b. Supply of Coal Handling and Transportation Service only (Coal is theirs; they do not want applicant to supply any goods) c. Supply of Coal as well as Coal Handling and Transportation Service,- i. When single and comprehensive order for 'Principal Supply of (Coal) Goods' as well as 'Ancillary Supply of Coal Handling and Transportation Service', we do Composite 'Supply of Coal'; there is no query ii. But, this application refers to the following situation faced by applicant in recent time,- "First the Purchase Order for Supply of Coal only (no service is required from applicant then - just supply & delivery at the Port is the requirement) issued to applicant by the customer and subsequently separate Work Order for Handling and Transportation Service related to the aforementioned coal issued to us by our customer" iii. Thus, the applicant has sought Advance Ruling on the questions raised in ....
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....odus Operandi In case of domestic purchase, the coal is purchased in bulk and stored in applicant's own stockyard. When they receive order from the customer for supply of coal, they do. As already mentioned, all these days they used to get order to deliver the coal at the factory gate of the buyer by a single comprehensive order. We did such composite supply of coal (with Handling and Transportation till factory gate of the buyer - as required in their single comprehensive order). During the recent pandemic, considering the price trend of coal the buyers (of imported coal as well as domestic coal) have started to try their level best to reduce their cost by selecting the low cost Handling and Transportation (price of quality coal is not in their control; hence no query in buying at a right price the coal). Hence, some of the buyers have started to place first a Purchase Order ONLY FOR COAL on the applicant. For Handling and transporting the goods they arrange on their own the service providers. In some cases when they are not able to find out suitable service provider quoting low cost than that of the applicant, they (subsequent to Coal Purchase Order date) come back to app....
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....cant's case. 6. We have considered the application filed by the applicant and various submissions made by them as well as the comments of the Central Tax officers. Applicant is engaged in the business of trading of coal in India, procured by them in the domestic market as well as imported from overseas. They purchase coal by paying 5% GST and import coal by paying 5% IGST. They stock pile the coal at the port at the designated place and subsequently sell it to their customers. Further they render coal handling and distribution services to customers who wish to purchase coal and wish to avail services of loading, unloading of material at site, storage, adequate water sprinkling, custom clearing services, Insurance etc together denoted as coal handling and distribution services. They have come up for ruling in a situation wherein the customer of the applicant first places purchase order for procurement of coal and later intend the applicant to provide the coal handling and distribution service as well. In such a scenario, the first contract is entered into for supply of coal and the second contract for rendering coal handling and distribution is entered into later. Now the appli....
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.... of coal, the buyers, of both the imported as well as domestic coal, have started to try their level best to reduce the cost by selecting the low cost Handling and Transportation; that when the buyers are unable to find suitable service provider quoting low cost of transportation, they come back to the applicant with a separate order for handling and transportation service. The applicant themselves have stated that such supply of coal and Handling and Transportation service rendered through independent contracts do not form part of a composite supply since there is a noteworthy gap in different contracts. They have further stated that they believe that the Coal Handling and Distribution services (SAC-9967 19) shall attract GST at 18%, while the supply of coal (HSN-2701 19 90) shall attract GST at 5%. Hence the issue boils down to deciding whether such independent supply of coal as well as the Handling and transportation services to the same customer will be considered as composite supply or they are independent supplies taxable at applicable rates individually. 7.2 To understand the issue clearly, the legal provisions are examined as under:- Section 2(30) of the GST Act, 2017 def....