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TMI Blog2019 (8) TMI 1218X X X X Extracts X X X X X X X X Extracts X X X X ..... supply is a composite supply and hence there cannot be different type of treatments of tax liability of supply of different goods/services naturally bundled together - it is very clear that freight and insurance, charged by the supplier to the recipient of a supply, is included in the value for charging of tax under The Central Goods and Service Tax Act, 2017 and Gujarat Goods Services Tax Act, 2017. Inclusions specified in section 15(2) which is to be added to the transaction value under GST - HELD THAT:- The arranging of delivery of goods is the responsibility of supplier and accordingly transportation insurance (anything done before delivery of goods) being arranged by supplier. The actual freight cost incurred by supplier varies with pre contracted price with buyer - GST is applied on supply of goods or services. If there are two values of any supply, then GST is to be taxed on the higher value of supply. Hence in this case, the higher of the two value i.e. the actual cost of Freight and insurance or the pre contracted fixed freight per unit of the product, shall be included in the value of composite supply. - AAR No. GUJ/GAAR/R/2018/05 (IN APPLICATION NO. Advance Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned in their annexure I that; under GST, a composite supply would mean a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply: Illustration : Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply 3.4 The applicant mentioned that as per the given definition and considering nature of product, ABI is a principal supply and freight and insurance is part of composite supply; that applying contention of naturally bundled product, it is not possible to sell the product without freight and insurance; that if it had been situation if ABNL is not selling goods to Power Grid, it will never charge for freight and insurance and that not with standing with above, if Adity Birla Insulator is not charging GST on freight, then, liability would be of power grid to pay ST on Reverse charge mechanism; that Adity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransported with insurance, then supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply. 6.1 One of the several indicators, to ascertain a composite supply, as defined in C.B.E. C. Flyer No. 4, dated 1-1-2018, is reproduced below : The nature of the various services in a bundle of services will also help in determining whether the services are bundled in the ordinary course of business. If the nature of services is such that one of the services is the main service and the other services combined with such service are in the nature of incidental or ancillary services which help in better enjoyment of a main service. For example, service of stay in a hotel is often combined with a service or laundering of 3-4 items of clothing free of cost per day. Such service is an ancillary service to the provision of hotel accommodation and the resultant package would be treated as services naturally bundled in the ordinary course of business. The case of the applicant clearly falls in the above category. 6.2 The different elements are integral to one overall supply - if one or more is r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (e) subsidies directly linked to the price excluding subsidies provided by the Central Government and State Governments. Explanation . For the purposes of this sub-section, the amount of subsidy shall be included in the value of supply of the supplier who receives the subsidy. As per the above, it is very clear that freight and insurance, charged by the supplier to the recipient of a supply, is included in the value for charging of tax under The Central Goods and Service Tax Act, 2017 and Gujarat Goods Services Tax Act, 2017. 6.6 Now the question: One of the inclusions specified in section 15(2) which is to be added to the transaction value under GST is: Incidental expenses, such as commission and packing, charged by the supplier to the recipient of a supply, including any amount charged for anything done by the supplier in respect of the supply of goods and/or services at the time of, or before delivery of the goods or as the case may be supply of services Whether above inclusion rule encompasses payment of Freight and insurance which is being reimbursed by the buyer (not on an actual cost basis but on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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