Whether supply of business consulting services along with duty credit scrips constitutes a mixed supply, taxable at 18%?

PJ/Case Law/2019-2020/3543

CASE: In Re RB Shah Enterprises India Private Limited (GST AAR Tamilnadu)

CITATION:TN/53/AAR/2019 DATED 25.11.2019

ISSUE: Determination of liability to pay tax on the services rendered. Whether supply of business consulting services along with duty credit scrips constitutes a mixed supply, taxable at 18%?

BRIEF FACTS: The applicant supplies consultancy services to the clients relating to customs/DGFT, other statutory requirements for import of goods.
In the instant case, the applicant provides along with Contract of duty scrips facilitation, documents preparation related to duty payments, Document Management System, Goods transport track, redemption of scrips and refund of additional duties, if any. The applicant received a service order their client M/s Sitaram Shipping Services wherein a MEIS duty scrip has been obtained on behalf of the client and has been charged in Description of service as “Management & advisory for customs Import Duty remittance, DMS Solutions, Digital Key Issuance, DGFT applications & DCS facilitating Services”. The applicant is charging a lumpsum amount of all the mentioned services in the invoice.

Appellant’s contention: The applicant submitted they are selling duty scrips to their clients along with certain services and they do not provide split in value for the scrips and other services. They stated that these services are naturally bundled together, thus it is a composite supply. The principle supply is service and hence totally chargeable @ 18%.The applicant has sought ruling on whether the services by the applicant along with duty credit scrip are composite in nature ,the principal supply being service rendered or usage of scrip and the applicable rate of GST.

Reasoning of judgement: It is seen that the duty credit scrip is purchased by the applicant on behalf of the client, which the applicant further re-transferred to the client. The applicant can very well supply duty credit scrip by buying it and re-selling it or only act as a consultant for the transaction by identifying the seller of the scrip and gettingittransferred in the name of their client. Hence such supply of services cannot be considered as naturally bundled together and is not a composite supply. These are individual supplies which are made in conjuction with each other and thus it is a mixed supply. The supply of duty credit scrip HSN 4907 is exempt and the various services that the applicant is supplying are all taxable at 9% CGST vide Notification No. 11/2017-C.T.(Rate) dated 28.06.2017 as amended and at 9% SGST vide Notification No. II(2)/CTR/532(d-14)/2017 vide G.O. (Ms) No. 72 dated 29.06.2017 as amended. Therefore, as per Section 8 of the ACT, the rate of tax of this mixed supply which is billed at a single price is the rate of the highest rate of the services supplied which is18%.

Decision: Ruling is against the assessee.

Comment: The various services provided by the applicant can be independently provided and thus cannot be considered as naturally bundled. As per section 8 of CGST Act, the above mentioned services made are in conjunction with each other falls under the category of mixed supply which shall be treated as a supply of that particular service and attracts highest rate of tax.

Prepared by: Priyal Mathur

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PJ/Case Law/2019-2020/3543

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