Page 153 - GSTL_23rd July 2020_Vol 38_Part 4

2020 ] IN RE : H.P. SALES INDIA PVT. LTD. 519
“46. This brings us to the issue of whether the contract for the set-
ting up of the solar power generation plant is a ‘composite supply’.
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 conjunction with each other in the ordi-
nary course of business, one of which is a principal supply :
Illustration : - Where goods are packed and transported with insur-
ance, the supply of goods, packing materials, transport and insur-
ance is a composite supply and supply of goods is a principal sup-
ply;
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.
47. The Contracts are two - one for the supply of goods and the
other for the supply of services. The contract or the agreement ful-
fils 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 fulfil the intention of the
buyer in giving the contract. The supply of goods and services are
provided as a package and the different elements are integral to
flow of supply i.e., if one or more is removed, the nature of the sup-
ply would be affected. Thus, we hold that though there are two
agreements made one for the supply of goods and the other for the
supply of services, what can be easily gathered from the tenor of
both the agreements is that the buyer has given a contract for set-
ting up SPGS to the appellant and therefore it is a single indivisible
contract which involves element of two supplies - one for the sup-
ply 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 a single supply of a ‘Solar
Power Generating System, consisting of two or more taxable sup-
plies.
This is clearly a case of composite supply of goods and installation
thereof. The entire transaction of providing the goods and the ser-
vices are naturally bundled - it is natural and also a practice to ex-
GST LAW TIMES  23rd July 2020  153