The contract between Airbus and the Tata Group company for aircraft supply to the defence ministry is a “composite supply”. It would draw a 5% goods and services tax (GST), Gujarat Authority for Advance Ruling (AAR) held.
As per the contract, 16 of the 56 aircraft shall be supplied via Airbus from Spain to the defence ministry in a fly-away condition.
For the remaining 40 aircraft the same has joined the contract with the Tata Consultancy Services (TCS) for the manufacture and supply.
Subsequently, TCS engaged in a contract with its affiliate, Tata Advanced Systems, assigning responsibility for aircraft maintenance services alongside other support functions.
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Tata Advanced Systems sought clarification from the AAR regarding the applicability of GST on the aircraft supply.
Arguing that the aircraft supply and support services were interconnected, the company asserted that a 5% GST should apply due to their bundled nature.
The AAR sided with the company, deeming it a “composite supply” eligible for a five per cent GST levy.
The AAR determined that the aircraft supply and the support services naturally complement each other and are routinely provided together in regular business operations.
Highlighting that the service provision is contingent upon the aircraft supply.
The authority clarified that Tata Advanced Systems’ offering comprised both goods (aircraft) and services (maintenance).
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This ruling underscores that due to the inherent bundling of these services and the dependency of ancillary services on the primary supply in standard trade practices, a 5% GST is applicable for the supply of goods.
| Applicant Name | Tata Advanced Systems |
| GSTIN of the applicant | 24AACCT5245K1Z9 |
| Date | 06.12.2023 |
| Applicant | Rohit Jain |
| Ahmedabad GST AAR | Read Order |
