TaxTMI 
TaxTMI 
2026 (2) TMI 1249
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....e of supply of Electro Ink supplied along with consumables under the indigo press contract would be the earliest date between the date of invoice or the date of receipt of payment. As regards the value of supply of Electro Ink supply with consumables under the Indigo Press Contract would be the transactions value as reflected in the invoice issued u/s 31(4) of the GST Act. Aggrieved by this order, said applicant filed an application before the Appellate Authority for Advance Ruling (AAAR). The AAAR decided the matter and passed the order on 17.02.2019 and answered the question as below: Appellate for Advance Ruling Authority do not find any reason to interfere with the Order of the Advance ruling authority dated 08.06.2018. Subsequently, Applicant filed a rectification application, highlight that the Appellate Authority had not considered the written submissions and supporting evidence submitted on 11.02.2019. The Appellate Authority decided rectification application on date 04.11.2019 and upheld his order dated 17.02.2019. The applicant was not satisfied with the decision passed by the AAAR and filed petition before the Hon'ble Bombay High Court (Writ Petition no....
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....red in the Applicant's warehouse. Supply Chain and Commercial Arrangements 1.6 The Applicant supplies HP Indigo printers and consumables to authorized resellers, who in turn supply them to end customers. Consideration for these supplies is typically received through periodic invoices raised at a standard "per click" rate, as governed by a Reseller Agreement entered into between the Applicant and the reseller agreement enclosed with this application. 1.7 Billing under this arrangement is on a "per click" basis, calculated monthly based on the series of Indigo press machine, the number of clicks, and the type of print performed. 1.8 In terms of the desired functional objective of printing with respect to the supply of the Kit under the Click Model: - Each element of the Kit is interdependent. - It is only when every element of the Kit functions together in unison that the Printing function can be undertaken. - The quantity of each Element of the Kit as supplied is reflective of the proportionate rate of usage of the Elements of the Kit. The rate of usage is of course distinct for each Element of the Kit. 1.9 The terms of contract between the ....
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....re not supplied as part of the customary set of ElectroInk and consumables in the Click model. The inks supplied under the A-la Carte model are not substitutes for inks supplied under Click Model but are instead an add on to satisfy the requirements of superior high-quality printing. 1.19 Under the A-la Carte model, ElectroInk and consumables are supplied individually to the re-seller at a price, and which are further supplied by the re-seller to the final customer. 1.20 In this connection, we wish to bring to your good self's attention that an end customer could use the "Click" and "A-la-carte" model together and in conjunction with each other. In these cases, the end customer would contract with the re-seller for supply of ElectroInk and consumables in a bundle and additional inks in an a-la-carte model. A standard HP Indigo Digital Printing press comes with 4 ink stations installed by default with an option provided to the customer to add 3 more ink stations. The bundle inter-alia comprises 4 types of ink, i.e. Cyan, Magenta, Yellow and Black, which are 4 standard process inks which may be mixed in different proportions to achieve most colours required for prints. Addition....
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....ion through the aforementioned evidence. ELECTROINK SUPPLIED ALONG WITH CONSUMABLES ARE NATURALLY BUNDLED AND THEREFORE, QUALIFY AS A COMPOSITE SUPPLY UNDER GST 2.2 Under the GST regime, the taxability of a supply involving multiple goods or services, particularly for the purposes of classification and applicable tax rate, is governed by the statutory concepts of "composite supply" and "mixed supply." 2.3 Section 2(30) of the Central Goods and Services Tax Act, 2017 ("CGST Act")/ MGST Act defines a "composite supply" as a supply, having the following essential ingredients: i. two or more taxable supplies of goods or services or both or any combination thereof; ii. such supplies are naturally bundled; iii. supplied in conjunction with each other; iv. supplied in the ordinary course of business; and v. one of such supplies is a principal supply." 2.4 In contrast, Section 2(74) of the CGST Act defines a "mixed supply" as a combination of two or more individual supplies of goods or services made together for a single price, where each of the supplies can be supplied separately and is not dependent on any other. 2.5 From the ab....
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....to a single item but is a combination of multiple taxable goods, all of which are essential for the functioning of the Indigo press. 2.11 Therefore, the supply under consideration clearly involves two or more taxable supplies of goods, thereby satisfying the first statutory test for a composite Supply. Test 2: The Supply of Such Goods or Services is Naturally Bundled 2.12 In this connection, we wish to submit that the term "naturally bundled" is not expressly defined under the GST law. However, its interpretation has been clarified through CBIC guidance and judicial pronouncements, as summarized below: (1) CBIC GST Flyer on Composite Supply and Mixed Supply (hereinafter "GST. Flyer") states that whether supplies are "naturally bundled" depends on normal or frequent practices in the business, industry standards, and customer expectations. Indicators include: • Perception of the consumer • Majority of service providers in the area provide similar bundles • The elements are not available separately • The elements are integral to the overall supply (2) CBIC Education Guide (2012, Service Tax Regime): Althoug....
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.... "majority of service providers in a particular area of business provide similar bundles," and that the elements are "normally advertised as a package." • Copy of the aforesaid Brochures, Pamphlets, and Trade Literature is enclosed with this submission. 2.15 Self-Declaration on the Usage of Standard Inks • The Applicant has provided a self-declaration clarifying the types of inks supplied under the click model and the A-la-carte model. The declaration confirms that standard inks (Cyan, Magenta, Yellow, Black, Orange, Violet, Green) are always supplied as part of the click model bundle, while specialized inks are supplied separately only upon specific request. This demonstrates that standard inks are always supplied together as a bundle, and that the A-la-Carte model is reserved for exceptional, specialized requirements. This supports the view that, in the ordinary course of business, the supplies are naturally bundled. • Copy of the aforesaid self-declaration is enclosed with this submission. 2.16 Declarations from Customers: • Declarations from customers confirm that customers expect and receive the supplies as a bundle, an....
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.... with each other to deliver the print. • The agreement between the Applicant and the reseller further substantiates that the supply of ElectroInk and consumables occurs only when they are used upon the "print" command of the end customer. • The supply of ElectroInk along with consumables is integral to the entire print output process; removal of any element would adversely affect the output. • As per the GST Flyer, a key feature of a composite supply is that its components should not be available separately. The Click Model, both contractually and practically, ensures that the different elements are not available separately. • The concept of natural bundling is dynamic and evolves with business models, industry practices, and customer preferences. For example, hotel accommodation with complimentary breakfast or airline tickets with meals were not always standard but have become so over time. Similarly, the natural bundling of ElectroInk and consumables under the Click model reflects current industry practice and customer expectations. • We wish to illustrate the same through an example as highlighted in the CBIC GST F....
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..... ElectroInk along with consumables are supplied in conjunction with each other: 2.23 In the present case, supply of ElectroInk along with consumables are considered as being supplied in conjunction to each other based on the following facts: • The aforesaid supplies are received by the authorised reseller from the Applicant as a bundle and are as-is supplied to the end customer; • Further, the bundled supply of goods is made at the same point of time and is not split over different time periods; • The billing for such supplies by the Applicant to the authorised reseller and by the authorised reseller to the end customer is also done on a consolidated basis for the entire bundled value of goods consumed and not on per category of goods supplied basis. Supply of ElectroInk along with consumables is in the Ordinary Course of. Business: 2.24 The CBIC GST Flyer outlines several tests to determine whether supplies are made in the ordinary course of business. The present case satisfies each of these, as detailed below: Test as per the GST Flyer Satisfaction in the present case The perception of the consumer or the service receiv....
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....lfilling this test. The elements are normally advertised as a package. • Brochures, pamphlets, and trade literature submitted by us show that the Click Model is advertised as a bundled solution for digital printing needs. The standard offering is the bundled supply; there is no separate marketing of individual consumables under the Click Model. Elements are integral to the overall supply • The CE certificate confirms that all consumables are required together for the printing process; the absence of any one item would prevent the press from functioning or degrade print quality. • The printing process is designed so that all these items are consumed together; they are not optional or substitutable. • Customers confirm that the bundle is essential for their operations and that the supply would not meet their needs if any element were missing. • The elements are integral to the overall supply; removing any would disrupt the printing process, thus fulfilling this test. 2.25 Further, the phrase "in the ordinary course of business" is an intrinsic part of the definition of the term "composite supply", and, is requi....
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....sely clear that the above clause does not impose any condition on the reseller to accept the ElectroInk and consumables as a bundle. The agreement clearly contemplates supply under the ala carte model and the tier model. Where a customer opts for the tier model, the agreement further lays down that such goods purchased under shall be solely used for a given indigo press machine. The said restriction is imposed considering business challenges where different consumables are supplied against different business models. 2.29 Therefore, it is clearly evident that there is no restriction imposed by the Appellant on the resellers to mandatorily accept all products as a bundle, but as a normal business practice and understanding, such goods are procured together. 2.30 The Applicant also wishes to draw reference to the principles adopted by the learned Appellate Authority in the case of M/s Five Star Shipping (2018 - VIL - 21 - AAAR), having appeal number MAH/GST-AAAR-11/2018-19, dated 27 July 2018 against advance ruling number GST ARA-18/2017-18/B-26 dated 18 April 2018, wherein in Para 67 of the order reliance is placed on the market/ industry practices to determine the classificati....
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....ied in Conjunction with Each Other in the Ordinary Course of Business, thereby satisfying the third statutory test for a composite supply. Test 4: One of Such Supply is the Principal Supply 2.35 The Chartered Engineer's certificate confirms that ElectroInk is the predominant element in the process of obtaining a print impression. The consumption pattern shows that ElectroInk accounts for 41% of the value/volume of the bundle, the highest among all components. The self-declaration and customer declarations further confirm that ElectroInk is the main element, with other items being necessary ancillaries to enable its use. 2.36 Under Section 2(90) of the CGST Act and the MSGST Act, "principal supply" is in turn defined as under: ""principal supply" means the supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary;" 2.37 The term predominant element is not statutorily defined. Some guidance has been issued by the GST Authorities as to criterion that can be used such as percentage of value, quantum, role in functionality to determine this issue as del....
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....and design for integrated circuits electronically, testing of software on sample prototype hardware is often an ancillary supply, whereas, chip design/ software development is the principal supply of the service provider. The service provider is not involved in software testing alone as a separate service. The testing of software/design is aimed at improving the quality of software/ design and is an ancillary activity. The entire activity needs to be viewed as one supply and accordingly treated for the purposes of taxation. Artificial vivisection of the contract of a composite supply is not provided in law. 2.37 It is pertinent to note that in each of the clarifications under the Circulars (as tabulated above), the individual supplies are equally important and indispensable, however, these have been declared to be composite supplies. Therefore, any view to the effect that Kit does not constitute a composite supply or that the ElectroInk is not a "principal supply" merely on the basis that all the Elements of the Kit are equally important and indispensable is directly contrary to the binding Circulars, and also amounts to introducing a new concept in interpretation of "composite ....
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....e principal supply inter alia includes:- • Pattern of consumption of supplies made under the Click program for effecting a single print from the Indigo Press Machine, which is as under: S. No. Elements of the Kit Consumption (in percentage) 1 ElectroInk 41% 2 Blanket 16% 3 PIP - Photo Imaging Plate 13% 4 OMP - Other Machine Products 10% 5 BID - Binary Ink Developer 10% 6 Oil 7% 7 Blanket Web 2% 8 Other consumable 1% - Brochures, pamphlets, and other trade literature; - self-declaration on the usage of standard inks; and - declarations as by end customers to confirm the availability of similar models by other competitors; 2.43 In addition to the above, the Applicant further wishes to produce the CE's ING Certificate dated 11th February 2019 which particularly stated that: "The entire printing process is centric to the use and consumption of H.P. Indigo's ElectroInk, to yield the desired print results. Accordingly, based on the consumption pattern of the various elements provided for our consideration and our analysis of the printing process, functional....
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....ue nature and character of the transaction be ascertained, and the transaction be taxed consistent with its true nature and character. [Union of India vs. Playworld Electronics Pvt. Ltd. [1989 (41) ELT 268 (SC)], Sundaram Finance Ltd vs. The State of Kerala [AIR 1966 SC 1178]] 2.49 It is also well settled position that in determining the true nature of a transaction, based on the terms of a contract, the tax authorities must proceed on the basis that the language of the contract indicates the true nature of the contract and the authorities must not go behind the contract ignoring the terms as agreed by the parties. In the present case, this approach is of critical importance on the aspect that parties have agreed that the property in goods only passes when the activity of printing is undertaken. This critical aspect must guide the determination of the true nature of the transaction and the consequential issues of the taxability. 2.50 In the background of the legal provisions and principles as set out in the preceding paragraphs, the two key issues that arise: Issue 1: What is the "supply" in question? Issue 2: Commercially, when and how does the supply occur....
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.... are in the ordinary course of business. The overwhelmingly predominant quantum of supplies 99.14% are in the manner aforesaid and would legally be regarded as being in the "ordinary course of business". In determining the ordinary course of business unusual or exceptional transactions such as to the government do not recharacterize the supplies being made in the ordinary course of business. e. There is a "principal supply", the ink viz. ElectroInk. 2.54 Therefore, all the elements of the definition of a "composite supply" are satisfied in the context of the supply under consideration under the Click model. The application of the definition of a "composite supply" to such transaction necessarily and statutorily precludes the application of the concept of a "mixed supply" to the transaction. 2.55 In view of the facts, submissions, and supporting evidence - including the Chartered Engineer's Certificate (refer Exhibit 6) and the Customer's Certificate/Declaration (refer Exhibit 9) - and in accordance with the direction of the Hon'ble Bombay High Court vide its order dated 16 July 2025 to consider such evidence for the purpose of disposing of the present proceedings, th....
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.... other machine products and ancillaries. All items are independently taxable under GST. Defined as "Imaging Products" and "Supplies" in the Reseller Agreement. Single tax invoice raised for the bundle based on actual consumption (clicks). The supply involves two or more taxable goods, satisfying the first test for composite supply. The applicant has not provided order copy of customer and reseller to ascertain that the ink and other consumables are supplied together. Hence whether two or more taxable supplies are involved cannot be commented AU Test 2: Supplies are Naturally Bundled MUMBAI* "Naturally bundled" interpreted per CBIC guidance and judicial precedents. In the present case, the following documentary evidence are submitted to establish that the supplies are "naturally bundled": CE Certificate: All consumables are required together for the printing process. Brochures, pamphlets, and trade literature: Industry standard is to supply as a bundle under the click model. Self-declaration: Standard inks always supplied as a bundle. Customer declarations: Customers expect and receive supplies as a bundle; industry norm. Single pre-agreed price f....
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....licant has submitted that the supply is in conjunction with each other there is no principal supply and ancillary supply relation is identified as specified in definition of composite supply. Test 4: One Supply is the Principal Supply CE Certificate: ElectroInk is the predominant element in the printing process. Consumption pattern: ElectroInk accounts for 41% of value/volume, highest among components. Self-declaration and customer declarations confirm ElectroInk as main element. Section 2(90) of the Act: Principal supply is the predominant element. CBIC Circulars: Principal supply determined by essential character and functionality. Indian Courts and European Court of Justice ("ECJ") precedents holding that classification needs to be determined based on essential function. Commercial objective: Printing activity centers on application of ink (ElectroInk). ElectroInk is the principal supply, with other consumables being ancillary, satisfying the fourth test for composite supply. The Appellant's argument, which claims that ElectroInk is the main supply simply because it makes up 41% of the total consumption by volume. This argument fails to prove that Electro....
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....istinct shelf lives and replacement cycles, as acknowledged by the Applicant, shows that procurement can and does occur independently. Technical interaction within a machine does not establish the supply made by the applicant is composite supply. Further the said certificate does not examine whether the individual items (Electrolnk, photo-imaging plates, blankets, binary ink developer, oil, etc.) are marketable and invoiced separately. Each item carries a separate HSN classification and is traded independently across the industry. Hence, the Chartered Engineer's statement is irrelevant to prove the supplies are naturally bundled in trade. 3.7 It is also submitted that the certificates prepared at the instance of an applicant cannot override statutory definitions. The determination of composite versus mixed supply is a legal question, not an engineering one. As a result, the Chartered Engineer's certificate cannot prove the supply of ElectroInk and alongwith consumables made by the applicant constitute of composite supply. Further, the customer and reseller declarations produced by the Applicant merely express their preference or business convenience in purchasing consumables tog....
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.... In view of the above submissions and the facts and evidence on record, it is respectfully submitted that the supplies are not naturally bundled; no principal supply can be identified; and each item is separately identifiable and marketable; therefore, the transaction squarely falls within the definition of "mixed supply" under Section 2(74) of the CGST Act. Consequently, as mandated by Section 8(b), the highest rate of tax applicable among the constituent supplies shall apply to the entire supply. 3.13 In view of the above facts, a. The Applicant's claim that the supply of ElectroInk Along with consumables such as oil, binary ink developer, blanket, BIB, and print imaging plate constitutes a "composite supply" under Section 2(30) of the CGST Act cannot be accepted. The supply made by applicant may be treated as Mixed Supply u/s. 2(74) of CGST/MGST Act, 2017. b. Considering the Mixed Supply, levy the highest rate of tax as per the provisions of Sec. 8(b) of the CGST /MGST Act, 2017. 4. HEARING Applicant has submitted a letter regarding intimation of matter remanded back for fresh consideration along with order passed by Hon'ble High Court of Bombay and made additional s....
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....that the supply of ElectroInk along with consumables is a mixed supply under Section 2(74) of the GST Act. They also held that the supply is a continuous supply and the time of supply would be the date of invoice or the date of payment, whichever is earlier and the value would be the transaction value as reflected in the invoices issued under Section 31(4) of the GST Act. Being aggrieved by this Order, the applicant filed an application before the Appellate Authority for Advance Ruling. The AAAR vide its order dated 17.2.2019, rejected the appeal and upheld the order of the AAR. The applicant thereafter, filed an application for amendment / rectification of the order of the AAAR under Section 102 of the GST Act. Vide Order dated 04.11.2019, the application for rectification of the order was rejected by the AAAR who held that there was no reason to amend the earlier order dated 17.2.2019. Being aggrieved by the said order of the AAAR, the applicant filed a Writ Petition No. 3842 of 2021 before the Hon'ble Bombay High Court. The Hon'ble Bombay High Court vide its order dated 16.7.2025 remanded back the matter to the AAR directing the AAR to consider the additional evidences in the fo....
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.... are being acquired by the reseller solely for the resale to customers as standalone items for the sole purpose of printing goods for commercial use and shall not be otherwise used or disposed of by the Reseller. HP will not be deemed a party to any agreement between the Reseller and subsequent purchaser or customer. C.3. Purchase of Supplies by Reseller shall be subject to either the Tier or A La Carte Programs set forth in Sections G and H below, and their respective terms and conditions. Reseller may elect to purchase supplies for the different Indigo Press Product Lines under different programs, provided that Reseller shall purchase all of the supplies required by it for each Indigo Press Product Lines under the same Supplies purchase program. This clause signifies the fact that the reseller has the option to purchase the goods under different programs i.e. Tier or A La Carte. However, if he chooses a particular program for any Indigo Press product line, he has to purchase all the supplies for the said product line under the same purchase program. The various Indigo Press Product Lines as disclosed in the Appendix B of the agreement is HP Indigo 3000, 30500, 3500, u....
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.... Carte Program. Thus, the end customer is left with no option but to buy the products under the Tier Program unless the customer agrees to pursue the A La Carte Program for all the presses under its control and use, thereby restricting the use of this program. Clause G: TIER PROGRAM FOR PURCHASE OF SUPPLIES BY RESELLER 1. Definitions: a) Click means a chargeable unit for a single-color separation transferred onto substrate, except in the case of textured effect printing, where it is the action of texturing by applying pressure between the substrate and the mold. A click unit may vary depending on the press model. 2. To the extent Reseller has elected to purchase Supplies under the Tier Program, HP Shall provide Reseller with all its and /or its Customer's needs for supplies for use solely on any Indigo Press(es) owned by the Reseller or its Customers belonging to the Indigo Press Product Line(s) specified in the Order, to the extent that such needs do not exceed HP's Maximum Usage Per Impression of Supplies (as defined and updated from time to time on the my indigo portal). 3. Supplies shall remain the property of HP until utilized in the Presses....
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.... "Composite supply" means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply. Illustration-Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply. We find that the following conditions have to be met by any supply of goods or services in order to be considered as a composite supply. i. The supply should be made by a taxable person to a recipient. ii. The supply should be taxable supplies of goods or services or both, or any combination thereof. iii. It should be naturally bundled. iv. It should be supplied in conjunction with each other. v. The Supply should be in the ordinary course of business vi. One of the supplies should be a principal supply. In order to examine whether the goods supplied by the applicant can be considered to be a compo....
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....ing free of cost per day. Such service is an ancillary service to the provision of hotel accommodation and the resultant package would be treated as services naturally bundled in the ordinary course of business. • Other illustrative indicators, not determinative but indicative of bundling of services in ordinary course of business are - There is a single price or the customer pays the same amount, no matter how much of the package they actually receive or use. - The elements are normally advertised as a package. - The different elements are not available separately. - The different elements are integral to one overall supply - if one or more is removed, the nature of the supply would be affected. "No straight jacket formula can be laid down to determine whether a service is naturally bundled in the ordinary course of business. Each case has to be individually examined in the backdrop of several factors some of which are outlined above." 5.7.2 In order to examine whether the goods are naturally bundled, it is necessary to . identify the various goods which are bundled together. It is seen that the applicant ....
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....y' is as under: As per Merriam Webster 1. By Nature: By natural character or ability. Naturally timid. 2. According to the usual course of things; as might be expected. 3. a: without artificial aid. 4. With truth to nature: realistically 5. Without special intervention: in a natural manner. As per English Oxford Dictionary. 1. In a normal manner; without exaggeration or effort. 2. Act naturally. 5.7.4 From the aforesaid meaning of the word naturally and applying its meaning to the present context, we find that the goods should be bundled in such a manner that the bundle of goods aids in the activity of printing, bundling within itself, all the components necessary for the said purpose. Nothing more or nothing less shall be permissible as incorporation of anything in addition to that which is absolutely necessary or anything short of what is necessary for the printing process on the printing presses of the customer would render the bundle as an 'artificial' or a 'special' bundle, which has been done for the specific purpose of the seller, to achieve sales of particular products by forcefully bundling....
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....of consumables for printing but are machine parts used on the machines during the time of printing. Further, certain printing inks which are also necessary in an offset printing press and certain other operating parts have been excluded from the package. It is not the case of the applicant that these inks and parts are not necessary for the purpose of printing and therefore, exclusion of these inks also point to the fact that the bundle of goods supplied by the applicant is not naturally bundled but an artificial bundling or a special bundling created by the applicant. 5.7.5 We find that the applicant has submitted and relied upon certificate/declaration submitted by the customers who use these bundled goods in their printing presses. They have submitted certificates from Matha Digital Colour Lab dated 9.2.2019. In the said certificate, the customer confirms that certain types of inks which are required by them in the offset printing process are not covered under the click model and the same has to be procured by them from the reseller under the A La Carte model as per requirements. Further, the said customer also states that similar bundles under the click models are also suppl....
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....elf provides an option to the customers to purchase all these goods in an A La Carte Mode and therefore, requirement of supplying them as a bundle to the customer to enable him to achieve the said print is not essential, unnecessary or only optional. Just because all the consumables are required to be consumed together at the same time for effecting the desired output does not mean that it is necessary to be sold as a bundle or the said packaging in the bundle form is a naturally bundled package. It is not the case that no other component or consumable will be required other than that is in the bundle supplied by the applicant to achieve the printing process. This package may enable the said process to a large extent but it is nothing but an artificial or specifically bundled package of goods rather than naturally bundled goods. 5.7.7 We further find that the applicant has relied upon industry literature to demonstrate that the 'click model' is the standard industry practice for supply of consumables for digital presses, both in India and globally. They have argued that this demonstrates that other suppliers also supply consumables as a bundle and charge of a per click model. Th....
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....ustomer can opt for A La Carte Model and purchase these goods separately and does not have to follow the method of buying the goods in a bundle. In such a scenario, he will have to pay separately for each of the products so purchased by him. Thus, these goods are available separately also under the A La carte Model. Thus, the only difference in procuring these goods is the pricing - there is a fixed price per print for the click model OR the price of the consumables has to be paid independently for each of the goods purchased irrespective of the number of prints achieved. Thus, it is not a case that the goods are not available separately and can only be purchased in a bundle. 5.7.9 One another indicator whether the goods supplied are naturally bundled in the ordinary course of business is that the consumer will pay the same price irrespective of the quantity of the goods he receives or uses. In the instant case, it is seen that there is a Maximum Usage Limit laid down in the agreement. Clause G(2) of the agreement mentions that the reseller has elected to purchase the supplies under the tier program, the applicant shall provide reseller with all its needs for supplies for use so....
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....tive for their purposes. Such a bundling cannot be treated as naturally bundled but as a specific bundling/artificial bundling of various consumables such as inks, other consumables and machine parts by the applicant. It is only when there is an integrated nexus between the supply of two goods in such a manner that the supply of one good becomes a necessary concomitant for the supply of other goods. In such cases, the supply of such goods would be treated as being bundled in the ordinary course of business. In the instant case, there is no such integrated nexus or situation where printing ink cannot be supplied but with those consumables. Printing Ink can be supplied separately and is being supplied separately. Similarly, all other components can be supplied separately and there is no necessity that the said goods should only be supplied in a bundle. We find that it is not the case in hand that consumables are so integrated that they cannot be sold, except in conjunction with each other. 5.8 The goods are supplied in conjunction with each other:- The applicant has argued that the click model represents the standard and predominant method of supply for the applicant and nearly 99....
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....ing used, it is possible that during the billing period only half of the life span of the plate is completed and the remaining half will be billed only in the next billing period. 5.8.2 We also find that some of the goods in the bundle such as other machine parts are not similar to the consumables such as ink and imaging plates contained in the bundle. In fact, such machine parts are parts of printing machine, which may have to be replaced periodically, due to higher wear and tear. However, they cannot be considered to be consumables in the printing process. The printing process described by the Chartered Engineer does not provide any role to such other machine parts in the normal printing process 5.9 One of the goods in the bundle must be the principal supply:- The CBIC flyer mentions that in the case of naturally bundled supply, one of the supplies will be the principal supply and the other elements supplied will be ancillary to the principal supply. All the illustrations mentioned in the CBIC flyers clearly demonstrate this concept of principal supply and ancillary supply. 5.9.1 We find that the applicant has argued that the ElectroInk is the principal component of the ....
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....rocess as explained in the writeup provided by the applicant regarding the printing process of a HP Indigo Press is compared with the process mentioned by the Chartered Engineer, it is clear that the process mentioned by the Engineer is a feeble attempt to establish that the entire printing process is dependent on the printing Ink and that it is playing the predominant role in the entire process. However, we find that all the elements supplied such as PIP Imaging Plates, Binary Ink Developer, Blanket, Blanket Web, Printing Ink etc., play an equally important role in the printing process. One element cannot be picked up and held to be the principal supply. The Chartered Engineer in his Certificate testifies as under:- "Functionally the print shall not be available to the customer unless all the goods are used in the prescribed manner to take the print out. To conclude, all Indigo Press Consumables are necessarily required to be consumed together at the same time for effecting the desired output." Thus, it is clearly revealed from the printing process as given in the writeup regarding HP Indigo Press printing process and the aforesaid statement of the Chartered E....
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....he printing ink or that supply of printing ink would become useless unless it is supplied along with a Photo Imaging Plate or Binary Ink Developer. Those items can be procured independently and used in the printing presses. In fact, the applicant themselves provide such an option to the customers. 5.9.4 To support their claim, the applicant has cited various illustrations mentioned in the CBIC Flyers and Circulars in respect of composite supply. One such illustration is as under:- If the nature of services is such that one of the services is the main service and the other services combined with such service are in the nature of incidental or ancillary services which help in better enjoyment of a main service. For example, service of stay in a hotel is often combined with a service or laundering of 3-4 items of clothing free of cost per day. Such service is an ancillary service to the provision of hotel accommodation and the resultant package would be treated as services naturally bundled in the ordinary course of business. In the aforesaid illustration, it is clear that hotel accommodation is the main and principal supply whereas supply of food, laundry etc., is the ....
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....sable. It is not the case that ElectroInk is the principal supply and since it is being supplied, the other consumables also need to be provided. The other components of the supply are not ancillary or incidental to supply of Ink. In fact, if the applicant had provided printing press along with the consumables as a package, that would have been considered a composite supply with the printing press being the principal supply and the consumables being ancillary or incidental. However, in the present bundle, none of the elements can attain the status of principal supply nor can any element push other goods to the status of ancillary or incidental. Similar is the case of the illustration of Health Care Services and food and medicines provided with such services as mentioned in Circular No. 32/06/2018 GST dated 12.2.2018. In the said case Health care services provided Clinical Establishments will include food supplied to patients. Food supplied is part of the composite supply and Health care service is the principal component of the composite supply. Food supplied is ancillary to providing the healthcare and therefore the said services have been considered as composite supply. 5.9.6 ....
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....Further, an ancillary supply within a 'composite supply' can be identified on the basis of the following factors:- a) It is a means of better enjoying the dominant thing supplied, and is not an aim in itself for the recipient/customer or b) It is necessary or contributes to the supply as a whole, but cannot be identified as the dominant part of the supply; or c) It contributes to the proper performance of the contract to supply the dominant part; We find that in the instant case, all the consumables such as Photo Imaging Plate, Binary ink developer, Blanket, blanket web, imaging oil, etc., have a specific role in the printing process. They cannot be considered to be ancillary to the printing ink. These components/ consumables have a distinct and specific role in the printing process and is not ancillary or supportive role to the use of printing ink. All the consumables are equally important none of the components contribute to the proper performance of the contract to supply the dominant part. It is not the case that printing ink cannot be supplied unless these consumables are also supplied with the ink. The very fact that other inks are supplied, stan....
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....a Mixed Supply under the provisions of Section 2(74) of the CGST Act, 2017. Section 2(74) reads as under:- "Two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply. Illustration.- A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drinks and fruit juices when supplied for a single price is a mixed supply. Each of these items can be supplied separately and is not dependent on any other. It shall not be a mixed supply if these items are supplied separately" In the instant case, we find that the goods supplied by the applicant do not qualify as a composite supply in view of the fact that the goods are neither naturally bundled nor is there any specific goods which can be considered as principal supply. We find that it is a combination of various consumables and machine parts used in the printing industry being supplied for a single price. Such combination of goods would constitute a supply of goods which can be considered as 'Mixed Supply'. 5.11 In view of the ....
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....articular customer multiple times in a month, in separate consignments, this would consist continuous supply. 2. Under a Contract - Supply has to be under a contract. The contract need not be express or in writing. It may be stipulated from the conduct of the parties. 3. Whether or not by means of a wire, cable, pipeline or other conduit - Though the statute has used terms as wire, cable, pipeline or another conduit, they are merely illustrative. Even if, the supplier delivers goods to the recipient through other means that would constitute a continuous supply. 4. Supplier invoices the recipient on a regular or periodic basis - Which means, invoice need not be raised after every consignment. The periodic billing is permitted. In the instant case, we find that the goods are being supplied on a continuous basis in accordance with the terms of the contract and that billing for the goods is done on a periodic basis. On going through the agreements between the applicant and the reseller, it is clear that the contract is for supply of a bundle of goods on a continuous basis, the invoices for which will be issued periodically i.e. on the 15th day of the end o....