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GST - UPS supplied with external storage battery is a mixed supply-Appellate authority upholds order of AAR

 

By TIOL News Service

KOLKATA, AUG 06, 2018: THE appellant is a manufacturer of power backups and solar products, including uninterrupted power supply system (UPS) and had sought a ruling from the Advance Ruling authority for classification of supply of UPS along with battery and the Authority had held thus -

GST  - Applicant, stated to be a supplier of power solutions, including UPS, servo stabiliser, batteries etc. wants a ruling on the classification of the supply when it supplies UPS along with the battery - More specifically, they want a ruling on whether such supplies can be treated as Composite Supply within the meaning of Section 2(30) of the CGST Act, 2017.

Held: A standalone UPS and a battery can be separately supplied in retail set up - A person can purchase a standalone UPS and a battery from different vendors - applicant himself admits that he supplies the battery and UPS as separate machines as well as UPS with battery - It is obvious that the UPS and the battery have separate commercial values as goods and should be taxed under the respective tariff heads when supplied separately - If a combination of goods that does not amount to a composite supply is being offered at a single price, such supplies are to be treated as mixed supplies - Supply of UPS and Battery is to be considered as Mixed Supply within the meaning of Section 2(74) of the GST Act, as they are supplied under a single contract at a combined single price: AAR [para 10, 13]

Kindly see 2018-TIOL-05-AAR-GST.

The applicant is aggrieved by this order and has approached the appellate authority.

It is submitted that when a UPS comprising of static converter and an external battery is supplied it falls under CTH 8504 and is taxable @18% under Item no. 375 of Schedule III; that UPS cannot function without battery, therefore, it is an integral part of UPS and hence naturally bundled and supplied in conjunction with each other and hence such supply should be construed as a 'composite supply' and not a 'mixed supply'. Case laws were cited in support.

The Appellate authority observed that the case laws related to Central Excise/Customs and focused on classification of UPS under Harmonised Tariff head 8504 and there was nothing decisive which aids the appellant to ascertain whether the supply is a 'composite' or 'mixed one', as defined under the GST Act.

After extracting the definitions of 'composite supply, 'principal supply' and 'mixed supply' as given in clauses (30), (90) and (74) of section 2 of the CGST Act, 2017, the appellate authority observed -

+ There is no denying the fact that an in-built battery of static converter (UPS) is part and parcel of the uninterrupted power supply system and is covered under TH 8504 and intra-state supply thereof attracts tax under GST Act as per rate applicable to goods enumerated under Schedule III of Tax-Rate Notifications, but the situation changes when storage battery or electric accumulator is supplied separately irrespective of whether under a single contract or a separate contract.

Concluding that the appellate authority agrees with the observations of the Advance Ruling authority and that the storage battery has multiple uses and can be put to different uses and when supplied separately with static converter (UPS) it cannot be considered as a 'composite supply' or a 'naturally bundled supply', the appeal was dismissed.

(See 2018-TIOL-04-AAAR-GST)


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