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Merely because there exists one contract for two different supplies, the supply made under such contract cannot partake the characteristics of 'composite supply' under Section 2(30) of the CGST Act.

Classification of supply— In the instant case the main question asked by the Appellant in their advance ruling application was whether the contract entered into with DMRC for supply, erection, installation, commissioning and testing of UPS system qualifies as supply of works contract under Section 2(119) of the Central Goods and Services Tax Act, 2017. In response to the above- mentioned question, the AAR held that the said supply of the UPS systems and its erection, installation, commissioning, testing, etc. would not be construed as works contract service as interpreted by the Appellant, Subsequently, The AAR went on to hold that the said supply of UPS systems and its erection, installation, commissioning, testing, etc. would be rather considered as the 'Composite Supply' in terms of Section 2(30) read with Section 2(90) of the CGST Act, 2017. Now, the Appellant has preferred appeal over this very observation of the AAR, wherein they held that the impugned supply made by the Appellant to DMRC in terms of the subject agreement would be considered as Composite Supply Held that— Out of the two supplies, i.e. supply of UPS Systems and supply of services like erection, commissioning, installation, testing, etc., it would not be proper to claim one of the supplies as the “Principal Supply” as envisaged under Section 2(90) of the CGST Act, 2017, as both the supplies i.e. the supply of goods and the supply of services are equally important and indispensable, because in the absence of any of these two, the objective and purpose of the subject agreement cannot be achieved. Here, it is stated that just because some supplies of goods or services or both have been included, or made part of, the one single agreement/contract, as per the convenience of the parties entering into the said agreement, does not make those supplies as composite supply. It is further opined that for any supplies to qualify as the composite supply, it has to satisfy the various essential conditions, which have been discussed herein above. In the present facts and circumstances of the case, it is observed that supplies under question do not satisfy those essential conditions stipulated for the Composite Supply under Section 2(30) of the CGST Act, 2017. Thus, in view of the above discussions, it is observed that the observation made by the Advance Ruling Authority, against which the Appellant has preferred the present appeal, is not proper and legal, and hence the same warrants to be set aside.
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