Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 6-9-2018 – It is a general trade practice that a battery is also supplied when one buys an unit of Uninterrupted Power Supply (UPS). A question arose as to whether the supply of UPS along with a battery would amount to a composite contract of supply or it will be a case of mixed supply in terms of section 2(30), 2(74) and section 8 of the CGST Act, 2017. It may to noted that in case of a single supply, the rate of GST as applicable to principal supply is levied whereas in case of a mixed supply of two or more items, the higher of the rates applicable would be levied to the entire mixed bundled of supply as it is not a case of naturally bundled supply. Advance Ruling In Re Switching Avo Elector Power Ltd. (2018) 4 TMI 810 (AAR-West Bengal); the applicant was a supplier of power solution including UPS, servo stabilizer, batteries etc and wanted a clarity on the classification of supply of UPS along with battery. The appli
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tatic Convertors (UPS) III 376A 8506 Primary cells and primary batteries Inserted w.e.f 15/11/17 vide Notification No. 41/2017-Central (Rate) dated 14/11/17 What is UPS and relevance of Battery An UPS 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, super-capacitors 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 power disruption could cause injuries or data loss. The UPS serves no purpose if the battery is not supplied or removed. It cannot function as a UPS unless
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ract within the meaning of section 2 (119) of the GST Act is a composite supply. Steel, cement and other goods and services supplied are inseparable in a contract for civil construction. The recipient has not contracted for the supply of steel, cement or architectural service, but for the service of constructing the civil structure, where all these supplies are inseparable and, therefore, naturally bundled. 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. Further, 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
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N RE: M/S. SWITCHING AVO ELECTRO POWER LIMITED – 2018 (8) TMI 1071 – APPELLATE AUTHORITY FOR ADVANCE RULING, WEST BENGAL confirmed the original advance ruling. As implied, the core issue involved in the appeal was whether UPS supplied with external storage battery was naturally bundled and hence a composite supply under the GST Act, or a mixed supply, as held by the West Bengal Authority for Advance Ruling. It was again reiterated by the applicant that when UPS comprising of static converter and an external battery is supplied it falls under Tariff Head 8504 and is taxable @ 18% under item No. 375 of Schedule III of the GST Act. UPS cannot function without battery as such it is an integral part of UPS and hence it is naturally bundled and supplied in conjunction with each other and hence the supply of static converter along with external battery should be construed as a composite supply and not a mixed supply. Before appellate AAR, the appellant relied upon relevant case laws on classi
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pply thereof attracts tax under GST Act as per rate applicable to goods enumerated under Schedule III of Tax-Rate Notification(s), vide serial No. 375, but the situation changes when storage battery or electric accumulator is supplied separately irrespective of whether under a single contract or a separate contract. AAAR endorsed in full force the ruling AAR- West Bengal, viz, The UPS serves no purpose if the battery is not supplied or removed. It cannot function as a UPS unless the battery is attached. However, what needs to be considered is whether or not these two items are naturally bundled . The stated Illustration to Section 2(30) of the GST Act refers to a supply where the ancillary supplies are inseparable from the principal supply and form an integral part of the composite supply. Note 3 also refers to a composite machine as the one consisting of two or more machines fitted together to form a whole. When a UPS is supplied with built-in batteries so that supply of the battery i
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