9911796707
TMI Blog2018 (10) TMI 257X X X X Extracts X X X X X X X X Extracts X X X X ..... at the time of maintenance. In case services are considered as principal supply, what tax rate should be applicable? In case of the said contract, what is the relevant place of supply and type of tax which needs to be discharged (i.e. CGST b. The taxable supplies should be naturally bundled; c. The taxable supplies should be supplied in conjunction with each other; and d. One taxable supply should be a principal supply - In such case, the supply which is the principal supply is treated as the main supply and the entire transaction should be eligible to GST as per the principal supply. Where the service provider and service recipient of a service are located in India, the provisions of Section 12 of the of IGST Act, 2017 determine the place of supply of services. Sub-section (10) of Sec. 12 ibid enjoins that place of supply if service on-board a train shall be the first scheduled points of departure of the convenience. If the location of the supplier and place of are not in the same State or Union territory, it shall be treated as inter-State supply of Services and IGST shall be levied, otherwise CGST & SGST shall be levied - If the supply of services is not made on-board a train, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comprehensive maintenance of said rail locomotives. 3. The applicant in this application dated 15-2-2018 has raised following issues for determination by the Authority - (a) Whether supply of comprehensive annual maintenance service which may also involve incidental supply of spare parts/ goods should be classified as a composite supply or mixed supply? (b) In case the said contract is considered as composite supply, what is the principal supply between goods or services? (c) In case goods are considered as principal supply, how the taxability should be determined considering the following : i. The contract would entail supply of various goods falling under different tax brackets. ii. These goods would be supplied on a need basis as and when required at different point(s) of time. iii. There is no fixed value ascribed for goods in the contract considering these goods would be supplied depending upon condition of the locomotive at the time of maintenance. (d) In case services are considered as principal supply, what tax rate should be applicable? (e) In case of the said contract, what is the relevant place of supply and type of tax which needs to be discharged (i.e. CGST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e supplied separately. Further, Section 2(90) of the CGST Act, 2017 /SGST Act, 2017 has defined the term 'principal supply' to mean - "the supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary". The said contract merits to be considered to be a composite supply of service and principal supply is service inasmuch as the supply of goods is merely incidental to the maintenance contract in the given facts and circumstances. In terms of Section 8 of the CGST Act, 2017 / SGST Act, 2017, it has been clarified that a composite supply comprising two or more supplies, one of which is a principal supply would be treated as supply of such principal supply. The relevant extract of Section 8 of the CGST Act provides as follows : "8. Tax liability on composite and mixed supplies. - The tax liability on a composite or a mixed supply, shall be determined in the following manner, namely- (a) a composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply;". 7. The essent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IGST shall be levied, otherwise CGST & SGST shall be levied. If the supply of services is not made on-board a train, the location of a registered service recipient shall be the place of supply of service as per Section 12(2) ibid. 11. The jurisdictional Commissioner, CGST i.e. the Commissioner, CGST & CX, Lucknow has also submitted views on the above said Advance Ruling application which are as under - The activity of the party is a supply of service and principal supply of service inasmuch as the supply of goods is merely incidental to the maintenance contract. Since the supply of maintenance service is for one and fixed price with or without supply of spare parts/goods and supply of service and goods is made in conjunction with each other in the ordinary course [of] maintenance service, to the extent of presence of all the necessary ingredients cited in the legal provisions quoted supra, is naturally bundled with incidental supply of goods, it is a case of composite supply of service. Further, the SAC code for such service is 998714 and prescribed rate of tax is CGST @ 9% and SGST @ 9% or IGST @ 18% of the taxable value. 12. In view of the above, we rule as under : RULING 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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