Order Date - 06 December 2023

Facts -

• The Applicant, Tata Advanced Systems Ltd, is engaged in the business of assembly, manufacture and supply of aircraft. The applicant has been appointed as Indian Aircraft Contractor (IAC) for manufacture and supply of  aircraft with Airbus.
• The applicant states that as the contract entail both supply of goods, viz aircraft as well as support services; that the supply of aircraft & provision of support services are naturally bundled & supplied in conjunction with each other in ordinary course of business & hence the supply would constitute composite supply.

Issue -

• Whether the supply of aircraft would constitute composite supply?

Order -

• The AAR observed that the contract entails both supply of goods, viz: aircraft as well as support services. It was also found that the supply of aircraft is the principal supply and the support services as listed out is only incidental and ancillary to the principal supply of the aircraft & that the completion of services in isolation will not result in discharge of the obligations under the contract.
• Hence it was held that the supply of aircrafts & provision of support services are naturally bundled & hence in terms of section 2(30) of the CGST Act, the aforesaid said supply is a composite supply.
• Since the contract with airbus for supply of aircraft is a composite supply and the principal supply being supplied of goods viz, aircraft, thus it was held that the aircraft’s are classifiable under CTH 8802 & will attract GST @ 5% in terms of Notification No. 1/2017 IT (Rate) dated 28.6.2017. It was also held that the value to be adopted for the purpose of payment of aircraft will include the supply made free of cost by Airbus.
• A conjoint reading of section I2, with notification No. 6612017 -CT , clearly leads one to a conclusion, that provision on payment of tax on advances received on supply of goods, stands deleted vide notification No. 66/2017-CT dated 15.11.2017. Therefore , they are not required to pay GST on the receipt of advance in the case of  supply of goods.