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TMI Blog2022 (4) TMI 1142X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the ordinary course of business. The supply of coal done through a separate purchase order and the supply of Coal Handling and Distribution of coal done through a subsequent work order are two individual supplies which are not rendered in conjunction with each other and have to be treated as independent and separate supplies only. Hence the supply of coal is liable for 5% GST and the supply of service of handling and distribution is liable for 18%. - TN/11/ARA/2022 - - - Dated:- 31-3-2022 - SHRI T.G. VENKATESH, I.R.S., AND TMT K. LATHA., M.SC., (AGRI), MEMBER Note: Any appeal against the Advance Ruling order shall be filed before the Tamil Nadu State Appellate Authority for Advance Ruling, Chennai under Sub-section (1) of Section 100 of CGST ACT/TNGST Act 2017 within 30 days from the date on which the ruling sought to be appealed against is communicated. At the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the coal handling and distribution services and intends to purchase coal. (b) Supply of coal and availment of coal handling and distribution - Where the customer not only wishes to purchase coal, but also intends to avail services of coal handling and distribution during the period of supply of coal. (c) Supply of coal handling and distribution services -Where the customer only intends to avail coal handling and distribution services and not coal. The Coal handling and distribution charges (per MT) includes a bouquet of services provided to customer towards handling the desired quantity of order placed by customer including but not limited to:- (a) Loading, unloading of material at site (b) Storage charges of the quantity ordered (c) Coal safety and security (d) Adequate water sprinkling (e) Commitment charges towards fulfilling supply (f) Custom clearing services (g) Insurance They have stated that separate purchase order/intent is to be placed to them by the customers for:- i. Purchase of coal only ii. Coal handling and distribution services -This is decided by the customer on case to case basis -well aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esentative CA. Prasanna Krishnan appeared for the hearing and reiterated the submissions. The Member asked the AR to clarify what are all the activities done in 'Handling' process. The AR replied that it encompasses unloading at port, transporting and unloading at customers premises. The Member asked about the practice followed in the pre-GST regime to which the AR replied that they were receiving single orders either for supply of goods or service. Due to the pandemic situation, applicant is getting order for goods followed by services as explained in their statement of facts. The Member enquired whether they import and purchase in local market also for which the AR replied that the local purchases are almost NIL. The AR was asked to furnish the following documents,- i. write up on the situation wherein different types of supply a/b/c are preferred/undertaken by the customer/applicant along with the copies of quotation, purchase order and invoice for each supply mentioning the time line. ii. Write up on the purchase and sale of coal. (Modus) i.e, whether coal is bought and stored from Indian markets/import, after which sale is made in the case of supply of coal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntly (as mentioned above, after a gap of 3-5 days 'invoice for service' raised on the same customer. Write Up on Purchase and Sale of coal -whether coal is bought and stored from Indian Markets / import after which sale is made in the case of supply of coal simpliciter or is there any other modus operandi without actual possession The applicant purchases the coal from Domestic as well as foreign market. In the recent 2 years they predominantly do import the coal from foreign market only. They do purchase as mentioned above, on outright basis. The applicant becomes proper owner of the goods since the (domestic foreign) supplier raises proper invoice on them in all cases. They never have a case of selling without having actual possession or title - since the same is literally impossible in their business. Imported Coal -Modus Operandi The coal purchased by applicant, often in bulk quantity-with reasonable anticipation of demands from buyers. On importing the goods duly paying the customs duty and unloading on the Port Jetty, They are the owners of the coal. Such goods can be sold on the spot as such - leaving option to buyer to take care of Han ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be 3 to 5 per annum). Write up on practice followed in Pre GST and Post GST era until now : Pre-GST Era - Single and comprehensive Purchase Order for 'Principal Supply of (Coal) Goods' as well as 'Ancillary Supply of Coal Handling and Transportation Service' shall be received from their customers. The applicant's price shall factor cost of material as well as Transportation to ensure proper profit to them. On importing/ buying the coal, they shall arrange to transport the coal to the door step of the buyer with proper State VAT invoice. The applicant paid the State VAT as a seller. There ended the entire business transaction for tax purpose. In post GST era the practice followed has been detailed in para supra. 4. The Centre Jurisdictional authority who has administrative control over the applicant has stated that there are no pending proceedings on the issue raised by the applicant in the Advance Ruling application and has submitted the following comments on the issue raised in the application.- It was reported by the range officer, after verification of the returns filed by the applicant, that the applicant is paying tax only on g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is authority for consideration on merits under Section97(2)(e). Accordingly, the application is taken up for consideration on merits. 7.1 The only question of the applicant is whether they are liable to discharge tax liability @18% on Coal Handling and Distribution charges collected in respect of supply of coal handling and distribution service rendered as per work order wherein the customer issues the work order for such service subsequent to purchase of coal. That is the purchase order for supply of coal is issued to them by their customer at first and subsequently a separate work order for Handling and Transportation service related to the coal is issued. They have stated that a single invoice cannot be raised in this situation as the customer gives two different orders on two different times. The time line of the order for purchase of coal has been submitted as follows:- Specific information on time lines - i. Purchase Order from customer - Requiring Supply of Coal only - Day 1 (say, 03.05.2021) # ii. Separate Work Order for Handling and Distribution Service - Requiring the handling service of above mentioned Coal - Day 8-15 (say, 11.05.2021) iii. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly of coal is undertaken until the buyer's doorstep in a single Purchase order, the activity of sale of coal and supply of Handling and Transportation service until the doorstep can be held to be supplied in conjunction with each other as a composite supply, wherein the principal supply being the supply of coal. In the instant scenario, the whole supply of coal and the Handling and transportation services are two supplies rendered at different times. Applicant has stated that normally, the purchase order for sale of coal is issued first and after the coal is sold, invoice for such sale is raised in 2-3 days. Then the work order for Coal handling and Transportation charges is entered into and the service thereafter is rendered around 8-15th day. Sale of coal takes place first and the ownership of the coal vests with the buyer. Later the work order for supply of service of Coal Handling and Transportation is entered into. Thus the coal becomes the property of the buyer and handling and transportation service is rendered by the applicant subsequently based on an independent work order. In this case the services are rendered in respect of the buyer's goods and therefore the sup ..... X X X X Extracts X X X X X X X X Extracts X X X X
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