TMI BlogSUPPLY OF GOODS AND CONSUMABLES TOGETHER NOT A COMPOSITE SUPPLYX X X X Extracts X X X X X X X X Extracts X X X X ..... SUPPLY OF GOODS AND CONSUMABLES TOGETHER NOT A COMPOSITE SUPPLY - By: - Dr. Sanjiv Agarwal - Goods and Services Tax - GST - Dated:- 23-1-2020 - - This write-up is based on advance ruling and its confirmation by Appellate Advance Ruling Authority wherein nature of supply as to whether it is a mixed supply or a composite supply has been interpreted. In the instant case, the assessee was engaged inter alia, in providing printing supplies to be used in HP's Indigo press machines supplied to customers. The HP Indigo machine is based on a unique digital offset colour technology specially designed to cater the printing requirements of large scale print service providers. The HP Indigo printers are significantly different from o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther office and industrial use printers due to the specialized liquid ink (electroInk) being used in its print process. Additionally, ancillaries comprising of oil, binary ink developer, bib, blanket, print imaging plate and other machine products (hereinafter collectively referred as consumables ) are also consumed in the Indigo press machines in the course of effecting prints. The electroInk along with the consumables are directly imported by the applicant from its overseas suppliers at the customs port situated in Mumbai wherefrom the said goods are cleared on payment of applicable customs duties including IGST. The applicant, sought advance ruling in respect of the following questions: Classification of electroInk supplie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d along with consumables under GST; and Determination of time and value of supply of electroInk with consumables under the indigo press Contract. The Authority for Advance Ruling ruled the following: The supply of ElectroInk supplied along with consumable is a mixed supply as defined under section 2(74) of the GST Act and is also a continuous supply of goods as defined under section 2(32) of the GST Act. The time of supply of electroInk 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 electroInk supplied with consumables under the Indigo Press Contract would be the transactio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n value as reflected in the invoice issued under section 31(4) of the GST Act. [AAR ruling dated 08.06.2018, In Re: HP India Sales Pvt. Ltd . 2018 (10) TMI 1515 - AUTHORITY FOR ADVANCE RULING - MAHARASHTRA ]. Being aggrieved, assessee preferred an appeal before AAAR, Maharashtra to the extent such supply of Electroink with consumables is held as a mixed supply, not being naturally bundled in the ordinary course of business, without specific identification of a principal supply. The AAR ruling had erred in concluding that the Electrolnk supplied with consumables is a compulsory bundle of supplies and therefore the supplies are not naturally bundled with each other. The AAAR observed that all the products are equa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly important for the printing to happen. It is not that the printing can take place with only Ink and that the other products are not necessary. One of the major ingredients of a composite supply is that, one of the supplies is a 'principal supply' and the others are subservient or incidental to it. The example given in the CGST Act is that of supply of goods along with freight/insurance where the supply of the goods is the principal supply. Such is not the case here. It cannot be said that the Electroink is the principal supply here and the others like the developer or the Plate are incidental- on the other hand they are equally important to complete the supply. In a supply of goods, the customer agrees to purchase the goods and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen agrees to pay for the insurance/freight and it is not that the supply of goods would not be complete without the insurance/freight but it is rather vice versa. The supply of insurance/freight depends on the supply of goods. In the present case, all the Imaging products are equally necessary and it is not that any one of them is a Principal supply. Therefore, it cannot be said that this is a composite supply where the supply of Ink is a principal supply. The supplies of the Appellant have been held to be a continuous supply by the Advance Ruling authority and while deciding whether the supply is composite or not have done so keeping in mind the continuous nature of the supply. They have stated that each of the supplies has its own p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attern and each of the supplies can be supplied separately as they are not dependent on each other. The AAAR agreed with the same. Under the clauses of the agreement, the imaging products are supplied based on the usage cycle of the Reseller. It may be, that for the first time, the products may be supplied together but it may not happen that the products are supplied together every time. While Ink may be supplied after a 1000 clicks, the others like the plate may be replaced after 2000 clicks. Further, in a composite supply, the two or more taxable supplies have to be naturally bundled and one of the indicators of a 'naturally bundled' supply is that it should be an industry practice. The appellant has given no evidence that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e program given is an industry practice. The fact that the appellant offers his customers the option of a tier programme does not make the same an industry practice. Also, what is more important is that the products are to be used on a HP printing machine and therefore for the best printing, the HP products only have to be used. The fact that this is so does not at all make it a composite supply as it has an element of compulsion in it whereas there is no place for compulsion in a composite supply. The AAAR therefore, declined to interfere with AAR ruling and affirmed the same. [ In Re: HP India Sales Pvt. Ltd . 2019 (8) TMI 30 - APPELLATE AUTHORITY FOR ADVANCE RULING MAHARASHTRA ]. - - Scholarly articles for knowledge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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