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2019 (8) TMI 30 - AAAR - GSTClassification of supply of goods - Electrolnk supplied along with consumables - time and value of supply of Electrolnk with consumables under the Indigo press contract - composite supply or Mixed supply - naturally bundling of services. HELD THAT:- The Agreement is between HP and its Reseller and as per the agreement, HP appoints Reseller as an authorized, nonexclusive Reseller for the purchase and resale of Supplies subject to the terms and conditions of the Agreement. As per ‘SUPPLIES’ under Section C, the resellers have a choice to go for ‘A la -carte or the Tier programs. In the definitions, ‘A-La-carte Program’ is defined as a supplies purchase program defined in Section E. Section G of the agreement lays down the main features of the Tier program, where the ‘click’ of the printer is a chargeable unit for a Single Colour Separation transferred onto substrate. Clause 6 of Section G say that ‘HP shall have the right, at its discretion, to recover Supplies on-hand at Reseller’s site in excess of its and its Customers aggregate two months requirements based on the ‘Maximum Usage per Impression’ or delay delivery to Reseller of additional supplies beyond the amounts in excess of two months requirements based on maximum usage Per Impression for Reseller and its Customers.’ - HP supplies Imaging Products to its Resellers based on the Maximum Usage per Impression. As per the appellant, these Imaging products are supplied as a naturally bundled supply in conjunction and therefore are a ‘composite supply’ as per Section 2 (30) of the CGST Act. Mixed supply or Composite supply - HELD THAT:- A composite supply is defined as supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods and 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 the principal supply” - In the present case what immediately comes to mind is that all the products are equally 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 alongwith freight [insurance where the supply of the goods is the principal supply. Such is not the case here. In a supply of goods, the customer agrees to purchase the goods and then 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, we cannot say that this is a composite supply where the supply of Ink is a principal supply.
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