Page 243 - GSTL_21st May 2020_Vol 36_Part 3

2020 ] IN RE : SIEMENS LTD. 489
easily gathered from the tenor of the agreements is that the buyer has given a
contract which is a single indivisible contract which involves element of two
supplies - one for the supply of goods and other for the supply of services. By
making two separate agreements - one for the supply of goods and the other for
the ‘supply for services’ what is purported to be done is an artificial division of
contracts which though done, cannot take away the true and inherent nature of
the contract.
It is important to note that in GST, under composite supply, whether the
two taxable supplies are arising from one indivisible contract or from two sepa-
rate contract is immaterial till these two supplies are naturally bundled and one
supply being principal supply & other being ancillary supply to principal sup-
ply. Even if the considerations for two taxable supplies are separately quoted or
there is single consideration for two supplies, both types of scenarios are covered
under composite supply till the conditions as mentioned above for composite
supply are fulfilled (i.e. naturally bundled supplies and one being principal sup-
ply and other ancillary supply to principal supply).
The entire transaction of providing the goods and the services is natural-
ly bundled and hence this is clearly a case of composite supply of goods and
supply of services.
45. The appellant on the issue of divisibility of contract has relied on
judgments which are M/s. Ishikawajma-Harima Heavy Indus. Ltd. v. Dir. of Income
Tax, Mumbai, 2007 (6) S.T.R. 3 (S.C.), M/s. Linde Engineering Division v. Income Tax,
(2014) 365 ITR 1, M/s. Siemens India Limited v. State of Kerala, 2003 (132) STC 0418,
M/s. Titanium Equipments and Anode Manufacturing Corporation, (1998) 110 STC 4.
The sum and substance of these judgments is that when two separate
contracts have been entered into by either parties, identifying two separate
works viz. supply and service, then it is wrong in holding the same as indivisible
contract.
It is to be noted that all judgments cited by the appellant are based on
different terms of contract, scope of the contract and the provisions of law by
which contract is governed i.e. Income-tax Act or other Acts. In the paras of
judgments relied by the appellant nowhere the concept of overriding effect of
one contract on other, cross fall clause in the contract are discussed. Further the
judgments are under Income-tax Act or pre-GST Acts where concept of compo-
site supply (as explained aforesaid) as incorporated under GST was not present.
Further in present case the indivisibility of contract or composite contract is not
required to be decided by interpreting terms of contract but there is clear cut
mention of the same in the terms of agreement that notwithstanding the award
of work under six separate contracts, the JV shall be overall responsible to ensure
the execution of all the six contracts to achieve successful completion and taking
over of the works covered under the package and operational acceptance by the
employer as per the requirements stipulated in the bidding documents and not-
withstanding the break-up of the Contract Price, the Contract shall, at all times,
be construed as a single source responsibility Contract and any breach in any
part of the Contract shall be treated as a breach of the entire contract. Hence it is
felt that the judgments relied by the appellant are not applicable to the present
case before us.
46. Rather reference can be made to the Andhra High Court judgement
in the case of M/s. Larsen and Toubro Ltd. (14 September, 2015, W.P. No. 22960 of

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