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The supply of coal done through a separate purchase order and the supply of Coal Handling and Distribution of coal done through a subsequent work order are two individual supplies which are not rendered in conjunction with each other and have to be treated as independent and separate supplies only. Hence the supply of coal is liable for 5%GST and the supply of service of handling and distribution is liable for 18%.

Classification of service- In the instant case, the applicant has sought Advance Ruling on the following questions:-

1. Whether we are liable to discharge tax liability at 18% on coal handling and Distribution charges collected in respect of supply of coal handling and distribution services rendered as per a work order issued by the customer subsequent to his coal (only) order

Can we club the aforementioned coal handling and distribution service ordered by customer separately and subsequently with 'supply of coal' to understand that as a composite supply of coal and pay GST at 5%?

The only question of the applicant is whether they are liable to discharge tax liability @18% on Coal Handling and Distribution charges collected in respect of supply of coal handling and distribution service rendered as per work order wherein the customer issues the work order for such service subsequent to purchase of coal. That is the purchase order for supply of coal is issued to them by their customer at first and subsequently a separate work order for Handling and Transportation service related to the coal is issued. They have stated that a single invoice cannot be raised in this situation as the customer gives two different orders on two different times.

In the instant scenario, the whole supply of coal and the Handling and transportation services are two supplies rendered at different times. Applicant has stated that normally, the purchase order for sale of coal is issued first and after the coal is sold, invoice for such sale is raised in 2-3 days. Then the work order for Coal handling and Transportation charges is entered into and the service thereafter is rendered around 8-15th day. Sale of coal takes place first and the ownership of the coal vests with the buyer. Later the work order for supply of service of Coal Handling and Transportation is entered into. Thus the coal becomes the property of the buyer and handling and transportation service is rendered by the applicant subsequently based on an independent work order. In this case the services are rendered in respect of the buyer's goods and therefore the supply of such service is not made in conjunction with the sale already made and not a composite supply.

Held that- 'Sale of coal' by the applicant and subsequent supply of coal handling and distribution service ordered by a customer separately is not a composite supply. Applicant is liable to discharge GST on Coal Handling and distribution charges collected at the applicable rates (at present 18%) for such independent supply.