Page 242 - GSTL_21st May 2020_Vol 36_Part 3

488 GST LAW TIMES [ Vol. 36
pugned issue the same person has been entrusted with the responsibility of pro-
curing the material and erection and installation of equipment and commission-
ing of project. Though as per the contention of the appellant, goods formed a
predominant part of the contract, the obligation of the appellant under both the
contract ceases only after the turnkey project becomes operational and after the
final payment is made both for supply of material and for erection of the system.
The appellant is entrusted with the work mainly for their expertise in
erection and installation of the plant and the execution of turnkey project. The
function relating to the supply of material and the rendering of services of erection and
installation are integrally connected and interdependent. The terms of supply clearly
show that the implementation schedule is not only for supply but also for erec-
tion, testing and commissioning of the project.
43. Thus, from the above it is seen that the supply of the goods and the
supply of services are inextricably linked with each other. The contract awarded
in substance and essence is a composite contract as defined in Section 2(30) of the
C.G.S.T. Act, 2017 for supply of goods and services.
The term ‘composite supply’ is given under clause (30) of Section 2 of the
CGST Act.
“composite supply” means 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 con-
junction 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;
It is important to see the definition of ‘principal supply’ and goods along
with the same.
“principal supply” means the supply of goods or services which constitutes
the predominant element of a composite supply and to which any other
supply forming part of that composite supply is ancillary;
A reading of the definition of ‘composite supply’ shows that there should
be
(a) Two or more taxable supplies;
(b) Of goods or services or both;
(c) Or in combination thereof;
(d) Which are naturally bundled and supplied in conjunction with
each other;
(e) In the ordinary course of business.
(f) One of which is a principal supply.
44. The Contracts involve two supplies, one for the supply of goods
and the other for the supply of services. The contracts fulfill the conditions of the
‘composite supply’. There is supply of goods and services. They are naturally
bundled in the sense that both the goods and services may require to fulfill the
intention of the buyer in giving the contract. The supply of goods and services
are provided as a package and if one or more is removed, the nature of the sup-
ply would be affected. Thus, we hold that though there are two contracts made
one for the supply of goods and the other for the supply of services, what can be
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