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2019 (3) TMI 833

o whether any new arguments or facts have been brought on record by the Appellant, during the personal hearing, which would require the modification of the Advance Ruling Order of the original authority in the instant case. The submission on merits, including the concomitant facts, made during the Personal Hearing and presented as a summary of the agreements entered into by the relevant parties have already been discussed in detail by the original authority and we do not find any reason to modify the Order. - A thorough perusal of the facts of the said case, make it evident that it is not pari-materia, either on facts or on law, with the matter under consideration of this authority. In brief, the appellant has failed to provide any fresh cogent arguments or new evidence to further their case to modify the ruling of the advance ruling authority in the instant case. We are of the opinion that the ruling of the original authority that the placement of the specified medical instruments in the instant case constitutes a composite supply is legally correct and proper. - The appeal is disallowed. - ORDER No. AAR/04/2018 - 14-12-2018 - Pullela Nageswara Rao, IRS Chief Commissioner .....

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challan, this clarification was sought. 4. The Authority for Advance Ruling had deliberated on the issue raised and after hearing the authorized representative of the applicant elaborated as follows: 5. The applicant is providing two components to the respective hospitals or laboratories. One is the medical instrument and the other one is the products like reagents, calibrators, disposals etc., to be used in that machine. The terms and conditions of the agreement reveal that it is an indivisible contract for the supply of instrument and the products to be used in the instrument. The customer can avail the service provided by the applicant only, if both the instrument and reagent are available simultaneously. Further, if an instrument is to be placed in a hospital or laboratories, the customer has a monthly minimum purchase obligation to procure specified quantity of the products like reagents, calibrators, disposals etc., from the instrument provider. 6. The applicant supplies instrument to the premises of the customer free of cost. This instrument as such has no utility. It becomes usable only after using the products like reagents, calibrators, disposals etc. As far as a custome .....

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ted 28.06.2017 and attract same rate of tax on supply of like goods involving transfer of title of goods; in the instant case @ 18%. 9. Once the instrument is installed in the premises of a hospital, the hospital reserves the full control and right to use the equipment by applying the products like reagents, calibrators, disposals etc., supplied by the applicant. Neither the instrument nor the products like reagents, calibrators, disposals etc., provided by the applicant has any independent use or existence. Hence it is an undisputed fact that, the supply of instrument and the products are conjoined and interdependent, which constitutes a composite supply. The objective of creating a colourable business frame never alters the characteristics of combination of goods or utilities to provide specified service. In order to obtain the required service of diagnosis, the hospital / labs require two unique components such as instrument and the products like reagents, calibrators, disposals etc., By the combination of these two components, the desired output is generated and hence these two components are inter-dependent and not separable. As both these components are naturally bundled, the .....

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the liability to pay the deficit amount. 12. The Advance Ruling Authority concluded that the essential nature of the transaction as evidenced by the agreement is the right to use the machine / instrument and the supply of goods, namely; reagents etc., are only incidental or ancillary to the right to use of the machine / instrument. The supply of goods namely reagents etc., have no independent existence severed from the supply of right to use the machine / instrument. Though as per the contract, consideration is charged only in respect of supply of the reagents etc., the consideration charged for the supply of reagents etc., is inextricably linked with the supply of the right to use the machine / instrument as the transaction of supply of reagents have no legs to stand without being accompanied by the right to use the machine / instrument. Therefore, the different elements of the transaction as evidenced by the agreement; namely the provision of the right to use the machine / instrument without consideration and the supply of reagents etc, for consideration with a clause that a minimum amount / quantity of such reagents etc., shall be procured are integral to an overall supply name .....

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nity very much and therefore it is prayed that the matter be remanded back. Further, the A.AR had not given us any opportunity to make any submission on the issue of composite supply. Therefore, there was a violation of natural justice as the issue was decided without hearing us. For this reason also the matter should be remanded back. With respect to the submissions on merits, we would also like to summarize the agreements discussed during the hearing, as under: 1. As part of its business activity, to execute the aforesaid placement of instruments, the Appellant inter-alia enters into Reagent Supply and Instrument Use Agreement ("the Agreement") with various hospitals, labs etc., 2. Under the said Agreement, specified medical Instruments are provided by the Appellant to the unrelated hospitals, etc., for their uses for a specified period without any consideration. The instruments are placed at the unrelated Hospital/ Lab's premises for uses by them. The ownership in the instruments continues to be with the Appellant only and all rights, title and interest in the instruments are owned and vested with the Appellant, all the time during the period of uses. 3. In summary .....

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he Advance Ruling Authority in the ruling portion, inter aha, stated that; "the placement of specified medical instruments to unrelated customers like hospitals, tabs etc., for their use without any consideration, against an agreement containing minimum purchase obligation of products like reagents, calibrators, disposals etc., for a specific period constitute composite supply. On perusal of the advance ruling order, it reveals that the original authority has discussed the matter in detail before arriving at the said conclusion, where it is held that the placement of goods in the hospitals, labs etc., as in the instant case is indeed a supply and a composite supply to be specific. This categorical clarification has answered the first question raised by M/s. Abbott Healthcare Pvt. Ltd. in the advance ruling application. c) In light of the categorical ruling as mentioned supra with respect to the nature of the supply in the instant case, the second question raised by M/s. Abbott Healthcare Pvt. Ltd., before the original authority does not have any relevance as the matter with respect to the movement and subsequent placement of goods, as envisaged in the instant case, has already .....

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