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2024 (3) TMI 318 - AAR - GSTClassification of goods - rate of GST - Outboard Motor Engines coming under HSN Code 8407 21 00 and its spare parts exclusively used as part of fishing vessel of heading 8902 or not - collection made towards supply of materials and labour charges towards repair of fishing vessel of heading 8902 or not - marine engine coming under HSN Code 8407 supplied to the Defense Department for patrol, flood relief and rescue operations or not - solar or battery-operated electric boat motor and spare parts used for fishing purpose - solar or battery-operated electric boat motor and spare parts used for tourism purpose - levy of GST on supply of materials and labour charges incurred during the warranty period, free of cost. Outboard motor engines marine engines - HELD THAT - If the marine engines are supplied for use as part of fishing vessel falling under Customs Tariff Heading 8902, then the marine engine as part of fishing vessel will only attract GST at the rate of 5% as per the entry at SI No. 252 of Schedule I of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017 - the marine engine and its spare parts supplied for use in fishing vessels falling under Customs Tariff Heading 8902 shall attract GST at the rate of 5% as per entry at SI No. 252 of; Schedule I of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017. Applicability of GST on the supply of materials and labour during repair works within warranty period to the marine engines and spare parts supplied by the applicant - HELD THAT - The consideration received for the original supply includes the consideration for promise to repair or replace. Hence separate consideration is not charged for warranty repairs / replacement. The supply of goods and services for warranty repairs / replacement is incidental to the original supply and the value of supply made earlier includes the charges for the warranty supply also. Therefore, the supply of goods or services or both during warranty period without consideration in discharge of the warranty obligation is not liable to GST. However, if any additional consideration is received in respect of such supplies of goods or services or both it will be liable to GST at the rate applicable for the goods / services as per the rate schedule. Applicability of the GST on the repair or maintenance work of fishing vessels falling under Customs Tariff Heading 8902 wherein supply of spare parts and service labour is involved - HELD THAT - In the instant case the applicant has submitted that they are raising invoice for supply of repair or maintenance service of fishing vessels or marine engines for the value of spares transferred and for value of services showing separately the value of goods transferred and the service charges (labour). Hence, it is possible to ascertain the value of supply of spare parts and services (labour) separately. Therefore, in view of the clarification of CBIC in Circular No. 47/21/2018 - GST dated 08.06.2018 in cases where repair or maintenance services are supplied and the value of spare parts and services are separately charged in the invoice raised for the supply, the spare parts and the services shall attract GST respectively at the rates applicable to such spare parts and service as per the GST rate schedule as the supply of the spare parts and repair service are distinct and separately identifiable. In such cases the spare parts being supplied for use as part of fishing vessels will attract GST at the rate of 5% 2.5%-CGST 2.5%-SGST as per entry at SI No. 252 of Schedule I of Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017 and the services labour was liable to GST at the rate of 18% as per SI No. 25 (ii) of the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 as it existed till 02.06.2021 and the services labour will also be liable to GST at the rate of 5% with effect from 02.06.2021 as per entry at SI No. 25 (ib) - Maintenance, repair or overhaul services in respect of ships and other vessels, their engines and other components or parts of the Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as inserted by Notification No. 02/2021 Central Tax (Rate) dated 02.06.2021. Rate of tax on marine engine coming under HSN Code 8407 supplied to the Defence Department for patrol, flood relief and rescue operations - HELD THAT - The vessels used by the Defence and other agencies for patrol, relief and rescue operations fall under Customs Tariff Heading 8906 - Other vessels including warships and lifeboats other than rowing boats. The ships /boats / vessels falling under CTH 8906 are liable to GST at the rate of 5% as per entry at SI No. 250 of Schedule I of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017. As per entry at SI No. 252 of Schedule I of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017 parts of goods of headings 8901, 8902, 8904, 8905, 8906 and 8907 falling under any chapter of the Customs Tariff attracts GST at the rate of 5 %. Therefore if the marine engines are supplied for use as part of vessel falling under Customs Tariff Heading 8906, which are used by the Department of Defence and other agencies for patrol, relief and rescue operations then the marine engine as part of such vessel will only attract GST at the rate of 5% as per the above entry. Rate of tax applicable for the solar or battery-operated electric boat motor and spare parts when supplied for use in fishing vessels - HELD THAT - Fishing vessels, factory ships and other vessels for processing or preserving fishery products fall under Customs Tariff Heading 8902. As per entry at SI No. 252 of Schedule I of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017 parts of goods of headings 8901, 8902, 8904, 8905, 8906 and 8907 falling under any chapter of the Customs Tariff attracts GST at the rate of 5 %. Therefore, if the solar or battery-operated electric boat motor and spare parts are supplied for use as part of fishing vessel falling under Customs Tariff Heading 8902, then the solar or battery-operated electric boat motor and spare parts as part of fishing vessel will only attract GST at the rate of 5% as per the entry at SI No. 252 of Schedule I of Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017. Rate of tax applicable for the solar or battery-operated electric boat motor and spare parts when supplied for use in boats for tourism purpose - HELD THAT - The cruise ships, excursion boats, ferry boats, cargo ships, barges and similar vessels for transport of persons or goods fall under Customs Tariff Heading 8901 and is liable to GST at the rate of 5% as per entry at SI No. 246 of Schedule I of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017. As per entry at SI No. 252 of Schedule I of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017 parts of goods of Headings 8901, 8902, 8904, 8905, 8906 and 8907 falling under any chapter of the Customs Tariff attracts GST at the rate of 5 %. Therefore, if the solar or battery-operated electric boat motor and spare parts are supplied for use as part of such ships /boats / vessels falling under Customs Tariff Heading 8901, then the solar or battery-operated electric boat motor and spare parts as part of such ships / boats /vessels will only attract GST at the rate of 5% as per the entry at SI No. 252 of Schedule I of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017.
Issues Involved:
1. Rate of tax on Outboard Motor Engines and its spare parts used in fishing vessels. 2. GST applicability on supply of materials and labor charges during the warranty period. 3. Rate of tax for repairs of fishing vessels. 4. Rate of tax on marine engines supplied to the Defense Department. 5. Rate of tax for solar or battery-operated electric boat motors and spare parts used for fishing. 6. Rate of tax for solar or battery-operated electric boat motors and spare parts used for tourism. Summary: Issue 1: Rate of tax on Outboard Motor Engines and its spare parts used in fishing vessels. The authority ruled that outboard motor engines and spare parts supplied for use in fishing vessels falling under Customs Tariff Heading 8902 attract GST at the rate of 5% [2.5%-CGST + 2.5%-SGST] as per entry at SI No. 252 of Schedule I of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017. Issue 2: GST applicability on supply of materials and labor charges during the warranty period. The supply of goods or services during the warranty period without consideration is not liable to GST. However, if any additional consideration is received, it will be liable to GST at the applicable rate for the goods/services as per the rate schedule. Issue 3: Rate of tax for repairs of fishing vessels. Maintenance and repair services of fishing vessels falling under Heading 8902 are classifiable under SAC 998714 and liable to GST at the rate of 5% [2.5%-CGST + 2.5%-SGST] with effect from 02.06.2021. If the value of spare parts and services are separately charged in the invoice, they shall attract GST at the rates applicable to such spare parts and services as per the GST rate schedule. Issue 4: Rate of tax on marine engines supplied to the Defense Department. Marine engines supplied for use as part of vessels falling under Customs Tariff Heading 8906, used by the Department of Defence for patrol, relief, and rescue operations, attract GST at the rate of 5% [2.5%-CGST + 2.5%-SGST] as per entry at SI No. 252 of Schedule I of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017. Issue 5: Rate of tax for solar or battery-operated electric boat motors and spare parts used for fishing. Solar or battery-operated electric boat motors and spare parts supplied for use as part of fishing vessels falling under Customs Tariff Heading 8902 attract GST at the rate of 5% [2.5%-CGST + 2.5%-SGST] as per entry at SI No. 252 of Schedule I of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017. Issue 6: Rate of tax for solar or battery-operated electric boat motors and spare parts used for tourism. Solar or battery-operated electric boat motors and spare parts supplied for use as part of boats/vessels falling under Customs Tariff Heading 8901, used for tourism purposes, attract GST at the rate of 5% as per entry at SI No. 252 of Schedule I of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017.
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