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2018 (4) TMI 810 - AAR - GSTClassification 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. 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 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 . Ruling - The supply of UPS and Battery is to be considered as Mixed Supply within the meaning of Section 2(74) of the GST Act, as they are supplied under a single contract at a combined single price.
Issues: Classification of supply of UPS along with battery as Composite Supply or Mixed Supply under the GST Act.
Analysis: 1. The Applicant sought a ruling on the classification of the supply of UPS along with the battery, specifically whether it can be treated as a Composite Supply under Section 2(30) of the GST Act. The Advance Ruling Authority admitted the application as the issue was not pending or decided elsewhere. 2. The classification of goods involved (UPS and battery) was determined based on the Rate Notifications on Goods. The Rules for Interpretation of the Customs Tariff Act were to be followed for interpretation of the Notifications. 3. Note 3 to Section XVI of the Tariff Act defines a composite machine and its classification. However, its applicability is subject to the definitions of composite supply and taxability under Section 8(a) of the GST Act. 4. Batteries and UPS were classified under specific Tariff Heads based on their functions and characteristics. UPS provides emergency power during mains power failure, while batteries store and release energy. The UPS requires the battery to function effectively. 5. When a UPS is supplied with a built-in battery inseparable from it, it qualifies as a composite supply under Note 3. However, if UPS and battery are separately supplied but charged as a single contract, they constitute a Mixed Supply as per Section 2(74) of the GST Act. 6. The ruling determined that the supply of UPS and Battery should be considered a Mixed Supply as they are supplied under a single contract at a combined single price. This classification is valid unless declared void under the provisions of the GST Act. Conclusion: The judgment clarified the classification of the supply of UPS along with the battery, distinguishing between Composite Supply and Mixed Supply under the GST Act based on the nature of the contract and pricing.
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