Supply of cooking gas through pipelines from gas banks into a premise will be supply of services and to be bundled with facility and management services, West Bengal’s Authority for Advance Rulings (WBAAR) has said.

AAR has termed such a supply as ‘Composite Supply’ under GST where the principal supply is facilities and management services. ‘Composite Supply’ means supply of two or more goods or services or both. These are naturally bundled and supplied in conjunction with each other in the ordinary course of business and one of which is called principal supply. Rate for principal supply will be rate for entire supply.

The applicant in the case provides facility and property management services to flat owners of residential complex. This include maintenance of and repair services related to supply of cooking gas through pipeline and is also applicable to the apartment owner which is not availing the pipeline gas supply. Here the gas supply is through LPG Reticulated System.

The AAR noted that such a system is one of the latest value-additions being offered by builders. It involves a piped network that supplies cooking gas to individual flats through a centralised gas bank. Here, the cylinders are connected to a manifold which consists of two arms – active bank and standby bank. While gas is supplied from the former, later act as back up,

When LPG gets exhausted in the active one, standby is used to supply and in the mean time, empty cylinder is replaced with new one. Entire system could be manual or automatic but effort is to ensure uninterrupted supply. A gas meter is installed at given place in the apartment to record usages and accordingly payment is made.

AAR observed when an apartment owner intends to get supply from the pipeline, she/he will be provided the same along with the services which she/he has already been paying. So, “supply of cooking gas through pipeline is inextricably linked with facility and property management services as provided by the applicant,” AAR said.

Accordingly, it said that in spite of issuance of separate invoices as ‘GAS CHARGES BILL’ for consumption of gas, supply of gas through pipeline is found to be naturally bundled with facility and property management services and are supplied in conjunction with each other.

Harpreet Singh, Partner, Indirect taxes at KPMG in India, said that generally one would consider supply of cooking gas as supply of goods and not as supply of facility management services, and hence this ruling has given an interesting perspective, by applying the concept of supply being naturally bundled and hence treated as composite supply.

“With this and some other recent rulings, it is becoming more and more clear that what qualifies as ‘composite’ or ‘mixed supply’ needs to be carefully examined keeping in mind the common practice in the industry, dependence of one supply on the other i.e. inextricable linkage, methodology of supply, invoicing mechanism etc,” he said.

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