2021 (10) TMI 325 - AAR - GST

Classification of supply - supply of goods or supply of services - composite supply or not - supply of cooking gas through pipeline from the gas banks installed at the project premises - HELD THAT - It is a matter of fact that all the gas banks are installed at the common area of the project. Further, the Agreement to sub-Lease clearly specifies that all central and appurtenant installations for service such as electricity, telephone, television, gas shall be included in common parts portions of the project. It is also a matter of fact that the applicant has been entrusted by the developer for providing all sorts of facility and property management services in respect of the said residential complex and to provide such services, the applicant obtains services from two service providers namely (i) Cooliers International (India) Property Services Private Limited and (ii) Futuristic Utility Services. The applicant, provides the said services to the owners of the all apartment/flat/unit owners and issues invoices towards Common Area Maintenance (CAM, for short) Charges charging tax @ 18% leviable under the GST Act. This CAM charges inter alia includes services in respect of maintenance of gas bank, repair and maintenance of gas pipeline and other services related to supply of gas through LPG Reticulated System. Whether supply of cooking gas can be treated as a separate supply being supply of goods or it can be considered as a composite supply comprising supply of goods and supply of services both? - HELD THAT - According to the Agreement to sub-Lease , each and every apartment owner, irrespective of the fact whether she/he will avail the pipeline gas supply or not, is required to pay a fixed amount against Piped Gas Bank connection . Further, if an apartment owner doesn t want to avail the pipeline supply of gas, still he shall have to bear the expenses incurred towards maintenance of gas bank, repair and maintenance of pipeline through which LPG will be supplied since such expenses are included under CAM charges - It is, therefore, not clear whether an apartment owner has to enter into a separate agreement/contract with the applicant for procuring pipeline gas supply. The applicant has not furnished any documents before us regarding terms and conditions towards supply of gas through pipeline and whether the applicant has to follow any guidelines issued by the appropriate authority for supply of gas through pipeline. In the instant case, the applicant is providing facility and property management services to each and every apartment owner of the project. This service includes maintenance and repair services related to supply of cooking gas through pipeline and is also applicable to the apartment owner who is not availing the pipeline gas supply. So, when an apartment owner intends to get supply of cooking gas through pipeline, she/he will be provided the same along with the services for which she/he has already been paying to the applicant. So, supply of cooking gas through pipeline is inextricably linked with facility and property management services as provided by the applicant. It therefore follows that in spite of issuance of separate invoices as GAS CHARGES BILL for consumption of gas, supply of gas through pipeline is found to be naturally bundled with facility and property management services and are supplied in conjunction with each other. The instant supply, therefore, shall be treated as composite supply as defined under clause (30) of section 2 of the GST Act where the principal supply is facility and management services.

Issues Involved:

1. Classification of supply of cooking gas as either supply of goods or supply of services.
2. Determination of whether the supply of cooking gas is a composite supply.

Issue-wise Detailed Analysis:

1. Classification of Supply of Cooking Gas:

The applicant, engaged in providing maintenance services to apartment owners, questioned whether the supply of cooking gas through a pipeline should be classified as a supply of goods or services. The applicant argued that the gas should be classified as a supply of goods, citing that they purchase gas cylinders, refill a gas bank, and supply the gas to apartment owners. They contended that since the gas is procured and supplied, it should be treated as a supply of goods, similar to how the vendor classifies it under HSN 271119 with a GST rate of 5%.

The Revenue, however, argued that the supply of cooking gas is part of the general maintenance and upkeep services provided by the applicant. They highlighted that the applicant charges a fixed maintenance fee that includes the upkeep of the gas bank and pipelines, and an additional charge based on gas consumption. The Revenue asserted that these charges are part of the same consideration for the contract of general maintenance and should be taxed as services at 18%.

2. Determination of Composite Supply:

The applicant argued that the supply of cooking gas and maintenance services are not naturally bundled and should not be treated as a composite supply. They emphasized that the gas supply is optional for apartment owners and is invoiced separately based on actual consumption. They further argued that the maintenance of the piped gas connection is distinct from the supply of cooking gas, and thus, the gas supply should be treated as an independent supply of goods.

The Revenue countered that the maintenance of the gas bank and pipelines is integral to the overall maintenance services provided by the applicant. They pointed out that the applicant issues a consolidated maintenance bill that includes charges for the upkeep of the gas system, and an additional invoice for gas consumption. The Revenue maintained that the consideration for gas consumption is an additional component of the general maintenance service, making it a composite supply of services.

Observations and Findings:

The Authority for Advance Ruling (AAR) examined the nature of the supply of cooking gas through the reticulated gas system. They noted that the installation and maintenance of the gas bank and pipelines are part of the common area maintenance services provided by the applicant. The AAR observed that the applicant is responsible for the overall facility and property management, including the maintenance of the gas system, and charges a fixed amount for this service irrespective of gas consumption.

The AAR concluded that the supply of cooking gas is inextricably linked with the facility and property management services. They determined that the gas supply, although invoiced separately, is naturally bundled with the maintenance services and is supplied in conjunction with them. Therefore, the supply of cooking gas through the pipeline should be treated as a composite supply of services, with the principal supply being the facility and property management services.

Ruling:

In the given circumstances, the supply of cooking gas as provided by the applicant shall be classified as a supply of services.

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