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2019 (11) TMI 1453 - AAAR - GSTWorks Contract or not - execution of Additional Air-conditioning work for the New building of Director of Education at Porvorim, Goa - Sr. No. 3 item no 3 of notification no. 20/2017(Central tax rate) dated 22/08/2017 - Composite supply or not - principal goods involved is Air Conditioner which falls to cover under schedule IV, Sr. No 119 of notification No. 1/2017 (Central tax rate) dated 28/06/2017 - Challenge to AAR decision. HELD THAT:- The fixation of the air conditioner units along with the pipes, though it is undoubtedly a fixture, is for the beneficial enjoyment of the units and in order to use them for cooling, it has’ to be attached to the ceiling. The attachment, in such a case, does not make the air conditioning units a part of the land and as immovable property - the contract submitted is not immoveable property. Also, it is seen that the major part of the contract is supply of goods i.e. VRF Indoor and outdoor units, refrigerant piping, drain piping with insulation, MS parts, cabling etc. The appellant delivers these goods to the site of the client and using these goods the appellant provides services of installation, testing and commissioning of the system. Both the supply of goods and services are dependent on each other and are naturally bundled and done in the course of the business. The AAR has also concluded that this is a composite supply and the principal supply is of goods in the instant case. We agree with the same. The supply of goods and services are conjoint to each other and inter dependent. Moreover, it is an established practice to supply air conditioner units and also provide the installation and therefore it can be construed as naturally bundled and therefore a composite supply, where, needless to say the principal supply is that of goods, which is the air conditioner units. Air Conditioners units fall under Chapter 8415 and are taxable @ 28% and are covered under Schedule IV, Sr no 119 of notification No 1/2017 (CV.T rate) dated 28/06/2017. Hence the principal supply in the composite supply being goods, the appellant is liable to pay GST @ 28% on the whole contract. The contract in the impugned case is though a composite supply not for immoveable property, and therefore does not fall under the definition of ‘works contract’. The principal supply in the case is of Air conditioning units and the entire contract is taxable @ 28% - the order of the Advance Ruling Authority on both the questions upheld.
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