Page 157 - GSTL_23rd July 2020_Vol 38_Part 4

2020 ] IN RE : H.P. SALES INDIA PVT. LTD. 523
• One is the transfer of ownership of the PV module from the
appellant (the original purchaser) to the Project Owner on
High Sea Sale basis.
• Second is the free issue of the PV module by the owner to the
contractor at the Plant site.
• The third part is the supply of the remaining part of the goods
and services by the appellant.
25. The effect of the first transaction under the contract is to trans-
fer the chattel as chattel to the other contracting party and thus ef-
fectively separate it from the subsequent supplies. This transaction
is outside the scope of GST as it takes place on High Sea Sales basis.
However, we note that it is a ‘supply’ as understood in ordinary
parlance, wherein the meaning of the expression supply is clearly
understood to “make (something needed or wanted) available to
someone; provide”.
26. The second transaction which happens thereafter, is the free
supply of the PV module by the Project owner to the appellant for
setting up the Solar Power plant. This supply without consideration
is not within the fold of the definition of “supply’ as stated in Sec-
tion 7 of the CGST Act. Other than the exceptions spelt out in
Schedule I, any supply without a consideration is not a ‘supply’ and
hence does not attract GST. What crystallizes from the above is that,
the supply of the PV module which is the major component of the
contract is not coupled at all with the supply of the other parts of
the Solar Power Plant and the services for setting up the Solar Pow-
er Plant. In fact, the supply of the PV module in the situation is sep-
arated both in time and intent and is distinct and never coupled
with supply of other items/services within the impugned contract
(and which, it is the responsibility of the owner to procure and
make available to the contractor). The transaction of supply of PV
module in itself is abstracted from the rest of the elements of the
EPC contract. It is clearly a separate instance of sale/delivery from
the rest of the agreement of work or service and the sale of other
items, and just because the contractor may have arranged the pro-
curement of it for the owner, does not take away from the distinct
and separate nature of the supply. The distinction is observed by
the contracting parties too in having separately received the consid-
eration for this element of supply from the rest of the supplies made
under the contract. Transfer of property of goods for a price is the
linchpin of the definition of sale. Clearly, the thing to be delivered
(PV modules in this case) has an individual existence before the de-
livery as the sole property of the party who is to deliver it and for
that reason, this then is a sale. If ‘A’ may transfer property for a
price in a thing in which ‘B’ had no previous property then the con-
tract is a contract for sale. On the other hand, where the main object
of work undertaken by the payee of the price is not the transfer of a
chattel qua chattel, the contract is one for work and labour. The in-
tention in the two different transactions is different on the matter of
PV module sold on high seas, it is sale; and thereafter other transac-
tions in goods and services are to follow.
27. Therefore, in view of the above, we find that the supply of PV
module is a distinct transaction by itself and cannot be said to be
naturally bundled with the supply of the remaining parts required
for setting up the Solar Power Plant. The contract itself makes it
GST LAW TIMES  23rd July 2020  157