Page 146 - GSTL_23rd July 2020_Vol 38_Part 4

512 GST LAW TIMES [ Vol. 38
It is important to note in this regard that under the erstwhile indirect tax
regime as well, these supplies have been provided as a bundle at a single rate.
The same was and has been the intention of the suppliers and customers in this
regard. Availability of option to non-purchase under supplies separately does
not change the nature of the supply from a naturally bundled supply.
The contrary statements in the impugned order as highlighted above
clearly indicate that the same is liable to be set aside.
23. As provided above, the impugned order has erred in concluding
that a composite supply should not be done by people but should be part of na-
ture or made in a natural manner. The Impugned order has relied on the diction-
ary meaning of term “naturally bundled” to conclude on this principle, without
appreciating the applicability of the meaning in the context of the GST law and
the facts.
24. Not accepting but assuming where an interpretation of the term
“naturally” means ‘it should not be done by people’ is adopted, many of the
composite supplies, including those clarified by the Revenue authorities by way
of circulars and FAQ’s, may not qualify as naturally bundled as they evolve out
of business practices. Table providing for list of such supplies clarified by CBIC
as a composite supply is enclosed with this submission.
25. The impugned order has clearly mis-construed the terms of agree-
ment entered between Appellant and reseller by understanding that the reseller
is mandated to purchase all the supplies required for the indigo press. The
agreement firstly provides an option to the reseller to opt for either the Tier or A
la carte model. Further, post selection of the desired model, various elements are
bundled and supplied together in order to facilitate the desired output. Where
such supplies under the Tier model were not naturally bundled and supplied
mandatorily, reseller would automatically opt for the A la carte program, which
is not the case.
26. The fact that customers opt for Tier model proves that all such sup-
plies are integral to obtain the final output and not “compulsorily bundled”.
27. The click model is given to customers intending to have all the ar-
rangements at one place and to pay at the time of consumption. Click model al-
lows businesses to create a lower cost entry point for customers in addition to
helping them manage cash flow by aligning revenue and expenses. Click model
helps customers change their “capital expenditure” to “operating expenditure”.
28. Further, as per the Flyer issued by the Central Board of Indirect
Taxes and Customs (“CBIC.”), one of the feature of a composite supply is that the
components of a “composite supply” should not be available separately. The
Click model contractually and practically ensures that this criterion is met.
29. Further, the Hon’ble Maharashtra AAR, in the application filed by
M/s. Five Star Shipping [2018 (14) G.S.T.L. 443 (A.A.R. - GST)] observed as follow-
ing in the Para 6 :
“If each service as per the applicant’s own submission, can be provided in
isolation then one of the indicators of a composite supply as per the flyer on
composite supply and mixed supply that the different elements are not
available separately would not be fulfilled. Going by the above, it is clear
that the services as set out in Exhibit A cannot be treated as a composite
supply.”

GST LAW TIMES  23rd July 2020  146