2018 (10) TMI 302 - AAR - GST

Supply of goods or Supply of services? - use of explosives in the blasting activity - Whether the blasting activity carried out by the applicant is to be considered as a supply of goods or supply of service ? Held that - In the present case applicant uses explosives in the blasting activity at their client s site. Thus it would be evident that blasting activity is carried out by the applicant for their client for which the applicant uses explosives. The applicant carries out blasting work with the aid of explosives. Thus, there is deemed supply of explosives in this case in view of the judgement of Hon ble Supreme Court in the case of Bharat Pest Control (supra) as well as the supply of service in the form of the blasting work. Therefore, the situation as narrated by the applicant is a composite supply of goods and services and shall be covered by Section 2(30) and Section 8(a) of the CGST Act, 2017 and the GGST Act, 2017. Ruling - The blasting activity carried out by M/s. Khedut Hat, Moti Bazar, Gondal, Rajkot- 360 311 is a composite supply of goods and services and shall be covered by Section 2(30) and Section 8(a) of the Central Goods and Services Tax Act, 2017 and the Gujarat Goods and Services Tax Act, 2017.

Summary

Issues involved:
Determining whether blasting activity constitutes a 'supply of goods' or 'supply of services'.

Analysis:
The applicant, engaged in blasting work using explosives, sought clarification on the nature of their activity. They argued that since they retain control over the explosives throughout the process, the activity should be classified as a 'supply of service.' The applicant highlighted that the client is not authorized to handle explosives, indicating that no transfer of ownership occurs during the blasting activity.

The Authority considered the applicant's submissions and the relevant legal framework, including Section 7 of the Central Goods and Services Tax Act, 2017, and the Gujarat Goods and Services Tax Act, 2017. Referring to a Supreme Court judgment in the case of State of Gujarat Vs. Bharat Pest Control, the Authority emphasized that the scope of supply is not limited to Schedule II and can encompass both goods and services. In this context, the Authority concluded that the blasting activity involved a composite supply of goods (explosives) and services (blasting work) under Section 2(30) and Section 8(a) of the CGST Act, 2017 and the GGST Act, 2017.

In light of the above analysis, the Authority ruled that the blasting activity conducted by the applicant constitutes a 'composite supply' of goods and services, falling within the purview of the relevant tax legislation. The ruling clarifies the classification of the applicant's operations, providing guidance on the tax treatment applicable to such composite supplies in the context of GST laws.