Case Law Details
In re Vignesh (Guru Traders) (GST AAR Tamilnadu)
Introduction In a recent application to the Authority for Advance Ruling (AAR) in Tamil Nadu, M/s Guru Traders, led by Proprietor Vignesh, posed a significant question regarding the Goods and Services Tax (GST) implications of their bulk cement sales business model.
Background M/s Guru Traders, based out of Sankari, Salem, Tamilnadu, is engaged in the sale of bulk cement. Beyond their trading activities, they operate as a Goods Transport Agency. Their primary inquiry was to ascertain whether selling bulk cement (procured directly from manufacturers) using their own transport qualifies as a composite supply under the GST Act.
Composite Supply: A Definition The Central Goods and Services Tax (CGST) Act, 2017 defines “composite supply” as a bundle of two or more taxable supplies of goods or services, typically combined in the regular course of business, with one being the primary supply. For instance, when goods are sold, packed, transported, and insured together, it’s considered a composite supply, with the selling of the goods being the primary component.
The Standpoint of Guru Traders Guru Traders identified a potential market for supplying bulk cement via tankers between Salem and Coimbatore. They realized there was demand for separate invoices for the cement supply (taxed at 28%) and the transport (taxed at 12%). Guru Traders believed that their sales and transport services could be separated and, therefore, wouldn’t fit the composite supply definition.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
