In re Archipel India Foundation (GST AAAR Andhra Pradesh)
The GST AAAR Andhra Pradesh recently upheld the Authority for Advance Ruling’s (AAR) decision regarding the classification of transactions undertaken by Archipel India Foundation (AIF) in collaboration with Shell Energy India Private Ltd (SEIPL). The central issue of the appeal was whether the transactions involved in AIF’s project were to be considered a “Composite Supply” under the Goods and Services Tax (GST) law. The project in question involves afforestation, reforestation, and sustainable land management activities aimed at enhancing agricultural productivity and generating carbon credits.
The Agreement between AIF and SEIPL outlines a collaboration where SEIPL supports the AIF project by covering development and operational costs with the goal of acquiring carbon credits. In return, SEIPL gains full legal ownership of the carbon credits generated by the project. The project is designed to improve land management and increase productivity for farmers in Andhra Pradesh. Under this agreement, AIF is responsible for implementing the project and managing various operational aspects, while SEIPL’s role is to provide financial support and obtain carbon credits.
During the review, the AAAR scrutinized the nature of the supplies made by AIF to both SEIPL and the farmers. It was noted that AIF’s services were divided into two main streams: one directed towards SEIPL, involving project design and carbon credit coordination, and the other towards farmers, involving practical support such as sapling procurement, plantation, and maintenance. The key question was whether these multiple supplies could be classified as a single “Composite Supply” under GST law.
