Advance Ruling- In the instant case, the applicant is in the business of supplying, installing and commissioning HVAC clean room projects for pharmaceutical companies. They received purchase order but the components such as Air handling units, Ducting and Grills separately and an order for installation separately. They install these components by engaging other partners from the market. The applicant is desirous of ascertaining whether they can charge item wise tax on their customer in view of the contract being divisible. 

Questions raised is as follows:

1. Can we do item wise billing for every product in the Air Handling units independently taking the benefit of lower rate of taxation instead of adopting the higher rate of taxation?

2. In case of procurement of higher rate items i.e. 28% from different company and rest of the system (less than 28%) from other company is agreeable? Or Section 8 of the Act is invoked and does department take a view of higher rate of taxation for the whole system?

 The crux of the issue boils down to whether the contract for installation HVAC clean room system is divisible into one for supply of material and other for service or not. Further whether it is a composite supply or a mixed supply. And in case it is composite supply, then what is the principle supply. In order to answer these questions which are related to the issues raised by the applicant they are requested to produce copies of purchase orders of material and orders for erection contracts.

Held that- In the absence of the key elements to discern the nature of the contract as to whether it is a naturally bundled supply or not their application stands rejected.