Non-natural bundled supply of services for a single consolidated
rate be considered as “Mixed Supply” - Gujarat Appellate Authority for Advance
Ruling (GAAAR)
Advance
Ruling Authority: Gujarat Appellate Authority for Advance
Ruling (GAAAR)
Order No.: GUJ/GAAAR/APPEAL/2022/01
Date of
Order: 24.02.2022
Name of the
Party: M/s. Shree Arbuda Transport, Gandhidham
Summary of
Advance Ruling:
The case pertains to the
classification and taxability of bundled services offered by M/s. Shree Arbuda
Transport. The key issue is whether their services constitute a "composite
supply" or "mixed supply" under GST. The Gujarat
Appellate Authority for Advance Ruling (GAAAR) ruled that the services qualify
as mixed supply, attracting GST at the highest applicable rate of 18%.
Relevant
Sections:
1. Section
2(30) of the CGST Act, 2017 – Definition of Composite Supply
2. Section
2(74) of the CGST Act, 2017 – Definition of Mixed Supply
3. Section
8 of the CGST Act, 2017 – Tax liability on Composite and
Mixed Supply
4. Notification
No. 11/2017-Central Tax (Rate) dated 28.06.2017
– GST rates for services
Facts of
the Case:
- M/s. Shree Arbuda Transport provides
various services related to the transportation of goods.
- Their services include Goods
Transport Agency (GTA) services, Clearing & Forwarding, Labour Supply,
Customs-related services, etc.
- They intended to offer a single
consolidated rate for these services, leading to the question of
whether such a supply qualifies as a "composite supply"
or a "mixed supply" under GST.
- The Gujarat Authority for Advance
Ruling (GAAR) earlier ruled that this is a composite supply.
However, the applicant disagreed and appealed before the Gujarat Appellate
Authority for Advance Ruling (GAAAR).
Questions
Raised for Advance Ruling:
1. Would
the bundled supply of services for a single consolidated rate be considered as
“Composite Supply” or “Mixed Supply” as per Section 2(74) of the CGST Act?
2. What
is the applicable HSN Code and GST rate for such bundled services?
3. Can
the applicant avail Input Tax Credit (ITC) on:
o GST
paid on commercial vehicles and their maintenance used for transportation?
o GST
paid on services from CFS (Container Freight Station)/Port/Labour contractor
related to such outward supply?
4. Can
the exporter client claim a refund of GST paid on the appellant’s invoices?
Submission
by the Applicant:
- The applicant argued that the bundled
services do not qualify as "composite supply"
since they are not naturally bundled in the ordinary course of business.
- They contended that their services
should be treated as a "mixed supply", which would be
taxed at the highest applicable GST rate.
- They sought clarity on whether they
could claim Input Tax Credit (ITC) on expenses related to
transportation and associated services.
- They also raised a query on whether
their exporter clients could claim a refund of the GST paid.
Findings by
the Authority:
1. Classification
as Mixed Supply:
o The
authority found that the services provided by the applicant are not
naturally bundled in the ordinary course of business.
o Since
these services can be supplied separately, but are offered as a bundle for a
single price, the supply qualifies as "Mixed Supply" under Section
2(74) of the CGST Act.
2. Applicable
GST Rate & HSN Code:
o As
per Section 8 of the CGST Act, 2017, the tax rate for mixed supply shall
be determined based on the highest rate applicable to any service in the
bundle.
o Since
several services in the bundle attract 18% GST, the entire bundle will
be taxed at 18% GST.
o The
correct HSN classification for this mixed supply was determined as 996719
(Other cargo and baggage handling services).
3. Input
Tax Credit (ITC) Eligibility:
o The
authority ruled that ITC cannot be denied merely because one of the
constituent services (transportation of rice) attracts a Nil rate of GST
when supplied separately.
o Therefore,
the applicant is eligible to claim ITC on inputs, input services, and
capital goods used in providing the mixed supply.
4. Exporter
Client’s Refund Eligibility:
o The
authority declined to answer this question, stating that exporter clients
must file their own application to seek clarification on refund
eligibility.
Final
Ruling by the Authority:
1. The
bundled supply of services offered by M/s. Shree Arbuda Transport is a
“Mixed Supply” under Section 2(74) of the CGST Act, 2017.
2. The
applicable HSN Code is 996719, and the GST rate is 18%.
3. The
firm can avail Input Tax Credit (ITC) on inputs, input services, and
capital goods used for providing the mixed supply.
4. The
question regarding exporter clients’ refund eligibility is beyond the
scope of this ruling and must be addressed separately by the exporters.
Conclusion:The ruling clarifies
that M/s. Shree Arbuda Transport’s bundled services will be treated as mixed
supply, attracting 18% GST. They are eligible for ITC, but
exporters must seek separate clarification regarding refund claims.
Disclaimer: All the Information is based on the notification, circular and order issued by the Govt. authority and judgement delivered by the court or the authority information is strictly for educational purposes and on the basis of our best understanding of laws & not binding on anyone.
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