2018 (4) TMI 810 – AUTHORITY FOR ADVANCE RULING , WEST BENGAL – 2018 (13) G. S. T. L. 84 (A. A. R. – GST), [2018] 2 GSTL (AAR) 64 (AAR) – Classification of supply – UPS along with the battery – Mixed supply / Composite supply – naturally bundled – whether such supplies can be treated as Composite Supply within the meaning of Section 2(30) of the CGST/WBGST Act, 2017? – Section 97 (1) of the GST Act – Held that: – The contract for the supply of a combination of UPS and battery, if not built as a composite machine, is not indivisible. The recipient can split it up into separate supply contracts if he chooses. The goods supplied in terms of such contracts are, therefore, no longer naturally bundled and cannot be treated as a composite supply.
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If a combination of goods that does not amount to a composite supply is being offered at a single price, such supplies are to be treated as mixed supplies. Mixed supply is defined under section 2(74) of the GST Act as one where “two or more in
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is admissible on this issue under Section 97 (1) of the GST Act. 2. The Applicant also declares that the issue raised in the application is not pending or decided in any proceedings under any provisions of the GST Act. The concerned officer, in his written response, raises no objection to the admission of the application. The application is, therefore, admitted. 3. For the purpose of taxation under the GST Act classification of the goods involved (UPS and battery) the classification of the goods has been determined in terms of Notification No. 01/2017-Central Tax (Rate) dated 28/06/2017 (1125-FT dated 28/06/2017 of the WBGST Act, 2017; (hereinafter referred to as the State Tax ), as amended vide Notification No. 41/2017-Central Tax (Rate) dated 14/11/2017 (2019-FT dated 14/11/2017 of the State Tax) (hereinafter collectively referred to as the Rate Notifications on Goods ). Schedule Serial No. Tariff Head Description Remarks IV 138 8506 Primary cells and primary batteries Omitted w.e.f
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mposite machine as the one consisting of two or more machines fitted together to form a whole. Such machines, as well as other machines designed for the purpose of performing two or more complementary or alternative functions, are to be classified as if consisting only of that component or as being that machine, which performs the principal function. 6. Applicability of Note 3 to Section XVI of the Tariff Act (hereinafter referred to as Note 3 ) is, however, not absolute, but subject to the context in which it is being applied. In the present context, Note 3 is applicable subject to the definitions of composite supply and its taxability under Section 8(a) of the GST Act. Section 2(30) of the GST Act defines Composite Supply as a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or 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 o
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rgeable batteries, flywheel energy storage, capacitors etc. are examples of accumulators. In common usage in an electrical context, an accumulator usually refers to a lead-acid battery. Hereinafter, the battery referred to by the Applicant as being supplied along with UPS will refer to these accumulators. 8. A UPS is classified under Tariff Head 8504. It is an electrical apparatus that provides emergency power to a load when the input power source or mains power fails. A UPS differs from an auxiliary or emergency power system or standby generator in that it provides immediate protection from input power interruptions by supplying energy stored in batteries, supercapacitors or flywheels. The on-battery runtime of most UPS is relatively short but sufficient to start a standby power source or properly shut down the protected equipment. A UPS is typically used to protect hardware such as computers, data centres, telecommunication equipment or other electrical equipment where an unexpected
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28/06/2017 (1125-FT dated 28/06/2017 of the State tax). 10. But a standalone UPS and a battery can be separately supplied in retail set up. A person can purchase a standalone UPS and a battery from different vendors. The applicant himself admits that he supplies the battery and UPS as separate machines as well as UPS with battery. It is, therefore, obvious that the UPS and the battery have separate commercial values as goods and should be taxed under the respective tariff heads when supplied separately. 11. The question, however, is what should be the tariff head when the UPS and the battery are supplied as separate goods, but a single price is charged for the combination of the goods supplied as a single contract. The UPS and the battery, being supplied as separate goods, no longer form an integral part of a composite machine, but it remains to be discussed whether or not under these circumstances they may be considered as naturally bundled . The applicant insists that as the battery
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ination of goods that does not amount to a composite supply is being offered at a single price, such supplies are to be treated as mixed supplies. Mixed supply is defined under section 2(74) of the GST Act as one where two or more individual supplies of goods/services or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply . The stated Illustration to Section 2(74) of the GST Act refers to a package of items which can be supplied separately and are not dependent on each other, but for the instant purpose are being packaged together. 13. Based on information furnished by the Applicant and the Purchase Order supplied by them as Sample of the Billing done by them it is seen that though UPS and Battery are two different and independent items, they are billed together and a single peice is quoted for the sale. In view of the foregoing we rule as under RULING The supply of UPS and Battery
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