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TMI Blog2019 (8) TMI 1283X X X X Extracts X X X X X X X X Extracts X X X X ..... r referred to the 'Applicant'), is engaged in manufacture and supply of Complementary Weaning Food containing Amylase Activity to the Department of Integrated Child Development Services, Government of Tamil Nadu. The applicant is registered under the GST Act with GSTIN.33ADOPK5292P1ZT. They have sought Advance Ruling on the following questions: 1) What is the rate of GST applicable for transportation of goods using the vehicle owned by the supplier for delivering the goods at the place as per direction of the ICDS Department and apart from selling the goods as per contract entered with Department of Integrated child Development Services (ICDS), Government of TamilNadu? 2) Whether the transport service provided by them would come under Goods transport Agency service or not? 3) Whether supply of goods and transportation charge provided to an unregistered person, in this situation whether GST is applicable or not? If applicable, what is the Rate of GST for Transportation charges for using the vehicles owned by the suppliers? 4) If the supplier supplies the goods at the delivery point of the buyers and supplier raises invoice for the value of goods and transport charges separat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransportation of the above said food items through the vehicle owned by them. 2.3 The applicant stated that in respect of Supply using own vehicle they are of view that supply of goods and transport service are integral parts, even though invoices are raised separately for goods and transportation charges. Hence this transaction will be covered under composite supply and rate of GST for applicable for goods will be applicable for transportation charges. 3.1 The applicant was heard on 22.05.2019. The applicant appeared and submitted copy of the recent Tender document and Agreement copy dated Feb 2019. They stated that they are supplying food preparation as specified in tender under ICDS scheme directly to Block officer & Anganwadi Center. The product is packed in 1 kg and 2 kgs and unit packed of these packets. They stated that the tender itself specifies that the transportation charges are included in price and also specified in agreement. However, they have been invoicing separately for food and transport at 5%. They stated that it would be a 'composite supply' with principal supply of goods and tax rate should be 5% as per 39/2017 notification. They sought to submit photographs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n illustrated by the taxpayer/ applicant, the supply of goods and transportation of goods will not fall under the category of "Composite Supply" as it is not a natural bundle in as much as the transportation of goods, actually carried out by the taxpayer, can be provided by any person, i.e., by a consignor or consignee or by a GTA other than the consignor or consignee. 5. The State Jurisdiction Officer has offered their comments on the query raised by the applicant, which, is given below: * The terms and conditions for the supply of complementary weaning food containing Amylase Activity (OOTA SATHU VUNAVU) at Page 9. Bid price 1 (2) (d) clearly noted as charges on transportation, shall be indicated separately as follows:- (i) From factory to project level and (ii) Project to center level. For evaluation, transportation charges will be included with price of goods.- This shows specific transport charges not collectable by the seller. * As per agreement entered by the applicant with Government, the transportation charges if any included in Unit Price of Goods. Therefore, no transport or freight charges are collectable from the purchased. Hence no taxable service noticed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment, 'For evaluation, transportation charges will be included with the price of goods'. The bidder's separation of price components will be solely for the purpose of facilitating comparison of bids by the purchase. * As per clause 9(5) of the Bid Document 'Price quoted by the Bidder shall be fixed during the Bidder's performance of the Contract and not subject to variation on any account except changes in applicable statutory taxes and duties, etc. * Evaluation of Bid specified in Para 24 states that the evaluation will take into account cost of inland transportation for delivery of goods to final destination. * Para 36 specifies the conditions for packing * As per the bid document (Para 37), the Delivery of the goods is to be made by the supplier as per the schedule of Requirements. The schedule of Requirements enclosed as Annexure-II(a) to the Bid Document states that 'Indents will be placed around 10th of every month to which supply is required and the supplies should be completed before the end of the month in which indent is placed. Goods to be delivered at the centers located throughout the districts as in Annexure II(B) based on the indent placed'. It also specifies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n food and transportation cost. 6.4 The applicant has further submitted that they are raising two invoices for supply of the product to the Anganwadi centers, one for the product and one against the Transportation Charges. They have submitted copies of the following two invoices for perusal: a. Inv.No. CWF 2/2019-20 Dt.30.04.2019 for Rs. 5931/- towards supply of 0. 100 Mts. Of the product, charging CGST @ 2.5% and SGST @ 2.5% with HSN 1901 at Rs. 56490/- per MT. b. Inv.No. CWFT 2/2019-20 Dt.30.04.2019 for Rs. 294/- towards transport charges for the supply of 0.100 Mts. of the product, charging CGST @ 2.5% and SGST @ 2.5% with SAC 996511 at Rs. 2800/- per MT. On perusal of the invoices, it is seen that the applicant raises two Invoices for a single supply of the product, one for the value of the product and other for Transportation. They are raised on the Director cum Mission Director, Integrated Child Development Services Scheme, Tamil Nadu with place of supply as "Various centers in various blocks of various districts as per Acknowledgement No". This according to the applicant is for accounting purposes. The delivery challans indicate that the applicant is delivering to sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e bid price. Evaluation will take into account cost of inland transportation for delivery of goods to final destination. The bid and the agreements only mention a total quantity to be delivered in during the period in all destinations put together. It does not specify how much amount will be delivered at what place. These details would be mentioned in separate indents raised. Para 39 of bid document specifies that payment will be made only after confirmation of delivery and verification of stock entry certificate at each center. This means that the food packets reaching the destinations which are the Anganwadi centers will alone complete the obligation of the applicant as per the contract. Para 40 states that the supplier shall not assign or sublet the allotted work in whole or in part. The applicant cannot assign or sublet any portion of the contract whether it is manufacturing or delivery. Accordingly, the applicant in the have been transporting these products through goods carriage vehicle owned by them. Penalties are also prescribed for failure to deliver as indented with in the timelines specified. Thus any nonperformance on any component of the supply has penalties prescribed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey have chosen to keep the responsibility of the delivery to the supplier of the food himself. In this case, it eliminates further agreements and more importantly, ensures timely delivery of fresh and quality food. This would also give them the flexibility to get the right quantity to each center at the time of requirement. Accordingly, the bid document clearly indicates that the bidder shall have the responsibility to deliver the specified quantities to all the centers. The bid price is also made inclusive of a fixed transportation charge instead of an actual basis. The applicant is also prohibited from assigning or sub lease any part of the contract including the delivery to a third party. The agreement signed and the invoicing also supports this. Therefore, in this case the supply of 'Complementary Weaning Food Containing Amylase Activity' is naturally bundled with the delivery at the designated centers as specified as per the bid and agreement and hence, this is a composite supply as per Section 2(30) of the CGST/TNGST Act 2017. The principal supply in this case is the supply of 'Complementary Weaning Food Containing Amylase Activity' as seen both in the bid document/ agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch of the taxable supplies separately. The applicant has asked a query whether it will be still a composite supply even if the invoices are raised separately for supply of food and delivery of the food. It is seen from the bid document that payment will be made only after delivery of the food at the centers specified. Based on this and the fact that it is a composite supply, it is for the applicant and the recipient to appropriately raise invoices. This forum cannot specify how the invoices are to be raised. 9. In view of the above, we rule as under: RULING 1. The supply of 'Complementary Weaning Food Containing Amylase Activity' at the specified destinations as per the bid/ agreement is a composite supply which is a taxable supply liable to GST. 2. The applicable rate is 2.5% CGST and 2.5% SGST subject to fulfillment of the conditions of Notification No. 39/2017 -Central Tax (Rate) dt 18.10.2017 and Notification No. II(2)/CTR/8689f-1)/2017 vide Go Ms. 140 Commercial Tax and registration Department (B1) dt 17.10.2017. 3. As the entire supply of the food and delivery together is a composite supply, the transportation/ delivery alone is not a "Goods Transport Agency service. 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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