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TMI Blog2022 (3) TMI 1299X X X X Extracts X X X X X X X X Extracts X X X X ..... of tax at 5% is based on the end use these engines are put to and is available only for the vessels - From the invoice submitted, it is seen that the OBM has been supplied to an individual and the HSN adopted is 8407. As per entry at Sl.no. 252 of Annexure-I of Notification No. 01/2017-C.T. (Rate) dated 28.06.2017, parts of goods of headings 8901,8902,8904,8906,8907 falling under any chapter of the customs Tariff attracts GST @5%. Therefore if the marine engines supplied for use as part of vessel falling under tariff heading 8902, which are used by the fishermen, then such engines as part of such vessels will only attract GST at the rate of 5% as per the above entry. Rate of tax on spare parts exclusively used as part of fishing vessel of heading 8902 - HELD THAT:- Entry Sl.no. 252 of Annexure-I of Notification No. 01/2017-C.T. (Rate) dated 28.06.2017 applies only to parts of goods of heading falling under any chapter when it is a part of goods falling under heading 8902. As the applicant has not produced documents establishing details of spare sales, this authority is constrained to ascertain whether the spares supplied are parts of goods of vessels falling under chapter 8902. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unable to establish the nature of such repair work done after the warranty period, this authority is constrained to ascertain the nature of the supply of repair or maintenance services rendered by the applicant as to whether it is a composite supply or it provides for the supply of spare parts and services (labour) as distinct and separately identifiable supplies. Hence no ruling cannot be extended in this regard. Rate of tax on puff insulated ice boxes used by fishermen in fishing vessels for reducing spoilage and maintaining good hygiene - HELD THAT:- To avail the concessional rate of 5% under entry no. 252 cited supra, goods supplied should be part of goods falling under Chapters 8901, 8902, 8904, 8905, 8906, 8907. The subject Puff insulated ice box is only used independently to keep the fish fresh and it does not become a part of the vessels as provided in the notification. Such boxes cannot be considered as part of the vessels and are in no way connected to the vessels. Their main purpose is to keep the fish fresh and prevent decay and has nothing to do with the vessels or operation of such vessels. Hence the product cannot be considered as a part of fishing vessel falling un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ishing vessels for reducing spoilage and maintaining good hygiene. 5. Rate of tax on marine engine coming under HSN Code 8407 supplied to Defence Department for patrol, flood relief and rescue operations. The Applicant has submitted the copy of application in Form GST ARA - 01 and also submitted a copy of Challan evidencing payment of application fees of ₹ 5,000/- each under sub-rule (1) of Rule 104 of CGST rules 2017 and SGST Rules 2017. 2.1 The applicant has stated that they are a Charitable Society formed under the Travancore-Cochin Literacy Scientific and Charitable Societies Registration Act, 1955. This Society is engaged in undertaking various welfare activities for the poor fisherman in South India for the last forty years. They provide the fishermen necessary fishing requisites at concessional rate. Fishing boats and Ice boxes are manufactured by them while Marine engines for fishing vessels are imported from outside India. They have stated that they are the apex body of several fishermen societies and their activities are spread throughout South India. The applicant's head office is at Trivandrum and branches in various parts of Tamilnadu and Karnataka. All t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hing vessels sold to the customers. Under this warranty period, fishing vessels are repaired free of cost. In other words, the applicant is not collecting any consideration against the supply of goods and services during warranty period, from the purchasers of fishing vessel. Since there is no consideration for the supply, no GST is payable by the applicant on this transaction. Value of materials to be supplied and services to be provided during warranty period are also taken in to account and included in sale price, on which GST is duly paid. The consideration received on original supply of fishing vessels includes the consideration for the promise to repair or replace the machines during Warranty period, without any additional charge. Hence, there is no GST payable on the deemed value of supply made during warranty period free of cost. They have also stated that for the repair work undertaken on fishing vessels and engines after warranty period, they are raising invoice for the value of spares transferred and for value of goods transferred and service rendered to the customers. In the invoice issued to customers, value of goods transferred and service charges are separately shown ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 8906 - 'other. Vessels including war ships and life boats other than rowing boats.' As per Entry No. 252 of Schedule I of Notification No. 01/2017 Central (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, they have contended that the marine engines supplied for use as part of Warship and Life boats falling under Customs Tariff Heading 8906 (Serial No. 250 of Schedule I of Notification No. 01/2017 Central (Rate) will attract GST at the rate of 5% only. 3.1 Due to the prevailing PANDEMIC situation and in order not to delay the proceedings, the applicant was addressed through the Email Address mentioned in the application to seek their willingness to participate in a virtual Personal Hearing in Digital media. The applicant consented and the hearing was held on 21.12.2021. The Authorised Representative Shri. John Bosco. A appeared for the hearing and reiterated the submissions. The Member asked the AR to explain the following: i. what ruling is expected from the authority in this scenario as the CBIC Circular no.52/26/2018-GST dated 09.08.2018 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ify from which places their sales is effected and a copy of invoice issued /purchase order from each such place of sale effected to fishermen, defense department etc may be furnished. vi. Tax invoices and practice followed during pre-GST and GST regime. vii. Whether returns have been filed. 3.2 The applicant vide their letter (received on 13.01.2022) submitted the following documents/facts. 1. Copies of tax invoice No. OKP21 / 1 DT 04/05/2021 & SKP21/47 DT 27/10/2021 -documentary evidence for supply of marine engines and spare parts 2. Warranty card 3. Warranty bill No. BTP20/ R274 DT 02/01/2021 -showing the list of materials and service charges incurred during warranty work and accounting entries in the Tally against the warranty bill mentioned. 4. Accounting entry for warranty repair 5. GST Registration certificate 6. Copy of Tax invoice No.SEP21/680 & SVV21/1192 DT 30/11/2021 7. Copy of Tax invoice No.SPZ21/117 DT 26/11/21 & SDM21/358 DT 29/11/21 8. Copy of Tax invoice No.SKP21/54 DT 26/11/21 & SMT21/266 DT 30/11/21 9. Copy of Tax invoice No. SCL21/225 DT 30/11/21 & BEY21/14 DT 14/10/21 10. Copy of Tax invoice No. BTP21/50 DT 05/11/21 & BVV21/7 DT 20/11/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... branch before GST department. They have furnished GST registration certificate with additional business places and the copies of some tax invoices issued from their business places to fishermen customers. Further, the applicant vide their letter dated 13.01.2022 has submitted the amended GST registration certificate. 4. The Centre Jurisdictional authority who has administrative control over the applicant has stated that there are no pending proceedings on the issue raised by the applicant in the Advance Ruling application and has submitted the following comments on the issue raised in the application. * In respect of the rate of tax on Marine Engines coming under HSN code 8407 and its spare parts exclusively used as part of fishing vessels, it appears that these items are covered vide Sl. No. 252 of Notification No. 1/2017 Central Tax (Rate) dated 28.06.2017, GST @ rate of 5 % is applicable. Further, it is submitted that this fact is clarified by Board's Circular No. 52/26/2018 GST dated 09.08.2018 in para 10.2. * In respect of leviability of GST on the supply of materials and labour charges during the warranty period, which is rendered free of cost, separate consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of heading 8902 2. Whether GST leviable on supply of materials and labour charges incurred during the warranty period, free of cost 3. Rate of tax applicable for collection made towards supply of materials and labour charges towards repair of fishing vessel of heading 8902 4. Rate of tax on puff insulated ice boxes used by fishermen in fishing vessels for reducing spoilage and maintaining good hygiene. 5. Rate of tax on marine engine coming under HSN Code 8407 supplied to Defence Department for patrol, flood relief and rescue operations. The questions on which ruling is sought is about the classification of Marine engines supplied by the applicant to fishing vessels and to Defence department; rate of tax on marine engines and Puff insulated boxes and the applicability of GST rate as per the entry of schedule I, Sl.no.252 of Notification No.01/2017 dt. 28.06.2017. Hence the application is found admissible under Section 97 (2) of the CGST Act, 2017. 7.1 The question of rate of tax on Marine engines coming under HSN code 8407 and its spare parts exclusively used as part of fishing vessel of heading 8902 is taken up for discussion. Applicant has submitted that they sell the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7-Central Tax (rate) dated 28.06.2017. Further, parts of goods of heading 8902, falling under any chapter also attracts GST rate of 5%, vide S. No. 252 of Schedule I of the said notification. The Marine engine for fishing vessel falling under Tariff item 8408 1093 of the Customs Tariff Act, 1975 would attract a GST rate of 5% by virtue of S. No. 252 of Schedule I of the notification No. 01/2017-Central Tax (rate) dated 28.06.2017. 10.2 Therefore, it is clarified that the supplies of marine engine for fishing vessel (being a part of the fishing vessel), falling under tariff item 8408 10 93 at trust. 5% GST." It is found that the circular further clarifies that the marine engines falling under tariff item 8408 would attract 5% GST only when it is supplied for fishing vessels. Thus it is seen that the rate would be applicable based on end use only. Hence it becomes imperative that the end use of such engines should be established to avail the reduced rate of GST. Applicant has submitted that the outboard motors they supply are fitted in fishing vessels. Applicant has submitted a tax invoice issued by their Tirunelveli workshop and service centre vide Invoice no. OKP21/1 dt. 04.05.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . From the above documents, it is seen that the warranty is issued for 6 months subject to satisfaction of certain terms and conditions. The tally entry shows that the warranty repair has been offset by credit entry from Repair Debtors which shows that no amount has come into the account of the applicant and that the provision for Repair has been debited. Thus the documentary proof shows that the repairs are done free of cost during the warranty period. Further they have stated that the value of materials to be supplied and service provided during warranty period are taken into account and included in the sale price on which GST has been duly paid. The applicant has submitted that consideration received on original supply of fishing vessels includes the consideration for the promise to repair or replace the machines during warranty period without any additional charge. As parts are provided to the customer without a consideration under warranty, no GST is chargeable on such replacement. The value of supply made earlier includes the charges to be incurred during the warranty period. Therefore the replacement of the goods and service rendered during the warranty period without consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of fishing vessels/boats etc involves supply of both goods/spare parts and services in conjunction and are naturally bundled with each other in the ordinary course of business to be treated as composite supply. This fact can be ascertained only from the contract entered into for rendering such service. In the instant case, applicant has not submitted any such contract for reference. However they have relied on the CBIC Circular No, 47/21/2018 - GST dated 08.06.2018 which provides as follows: "2. How is servicing of cars involving both supply of goods (spare parts) and services (labour), where the value of goods and services are shown separately, to be treated under GST? 2.1 The taxability of supply would, have to be determined on a case to case basis looking at the facts and circumstances of each case. 2.2 Where a supply involves supply of both goods and services and the value of such goods and services supplied are shown separately, the goods and services would be liable to tax at the rates as applicable to such goods and services separately." 8.3 From the above circular, it is seen that the taxability of supply would have to be determined on a case to case basis based on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce the product cannot be considered as a part of fishing vessel falling under Customs Tariff Heading 8902 and hence is not eligible for the concessional rate of GST as per entry at SI.No.252 of Schedule I of Notification No.01/2017 Central Tax (Rate) dated 28.06.2017. 10. Applicant has further stated that they are supplying marine engines to Defence department for patrol and flood relief and rescue operations and such engines supplied would also be eligible for GST at the rate of 5% as per no.252 of Annexure-I of Notification No. 01/2017-C.T (Rate) dated 28.06.2017 under Customs Tariff Heading 8906. Applicant had not filed any documentary evidences along with the application to substantiate that the engines they supply are being used in boats used by defence departments. The applicant has not furnished any purchase orders for supply of engines at present or for proposed supplies. In this scenario, this authority is constrained to pass any ruling on the question raised about eligibility to avail rate of 5% as prescribed at Sl.no. 252 of Annexure-I of Notification No. 01/2017-C.T. (Rate) dated 28.06.2017. 11. During PH held on 21.12.2021, the Authorised Representative raised a que ..... X X X X Extracts X X X X X X X X Extracts X X X X
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