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Composite or Mixed Supply, Goods and Services Tax - GST
|Composite or Mixed Supply|
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As per the query it has been mentioned that 2 separate invoices are raised 1 for the Equipment-free of Cost and other for Installation of such equipment therefore, in such case there is no point of Mixed or Composite Supply as Mixed or composite supply concept is considered for the purpose of determination of rate.
Moreover in case one invoice has to raise than equipment cost can be taken as 'Nil' & rate of GST can be taken as rate of installation services.
Doubt with regards to 'barter' as supply and its valuation.
Now can querist argue that the instrument is FOC and not a barter hence there is no consideration.
It is neither a composite supply nor a mixed supply. Better to issue two separate invoices with an intent to avoid tax (legally) on free supply.
Well replied by Sh.Charu Tyagi Ji at the first instance.
To post correct reply at the first instance matters a lot. This is real understanding, interpretation , analysis and drafting on the issue.
However, precaution has to be taken regarding the element of 'barter' (or some other hidden understanding) as rightly advised by Sh. Abhishek Tripathi Ji.
Thank u @Kasturi Sethi Sir
And, For the Purpose of barter it is required to something in exchange and if one has not availed any service or procured any goods from the recipient of equipment there's no point of barter.
Though binding only on the applicant, it is worthwhile to go thru Abbott Healthcare Private Limited AAR & AAAR Kerala.
Dear Sh.Padmanathan Kollengode Ji,
As suggested by you, I have perused AAAR Kerala's Order dated 22.1.22 - 2022 (3) TMI 1204 - APPELLATE AUTHORITY FOR ADVANCE RULING, KERALA. In addition to this, AAR Kerala's Orders dated 14.12.18 - 2019 (3) TMI 833 - APPELLATE AUTHORITY FOR ADVANCE RULING, KERALA & 7.5.21 - 2021 (7) TMI 478 - AUTHORITY FOR ADVANCE RULING, KERALA are also on this very issue against the same applicant. High Court, Kerala has also passed the order dated 7.1.20 - 2020 (1) TMI 338 - KERALA HIGH COURT wherein the case was remanded back to AAR, Kerala.
Although the applicant failed to prove the factum of 'without consideration' yet these orders are very useful for enrichment of knowledge on the issue. One order has held such transaction as composite supply. Each case has different facts and circumstances.
After going through the above orders, the querist or any assessee will be very very cautious while framing terms & conditions of the agreement.
Ld Kasturi Ji,
Very aptly said by you. That is why, I only cited the AAR/AAARs for reference. The Ld. querist can take various cues from the said orders and advice their client to write the agreements/documents accordingly.
Can it be regarded that there is a consideration for the supply of instruments since the agreement itself mentions that the reagents will have to be procured? In such case the supply of instruments will have to be valued at OMV and GST discharged.
THe reagents supplied will be liable at the Transaction value.
These are 2 separte trasnactions happening at 2 different points of time and cannot be regarded as mixed or composite.
Existence of the clause for minimum business for reagents will indicate that the consideration exists for this transaction of supply of instruments
thanks all the experts for their valuable advice.