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TMI Blog2024 (3) TMI 318X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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, 890 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred to as CGST Act) and the Kerala State Goods and Services Tax Act, 2017 (hereinafter referred to as KSGST Act) are same except for certain provisions. Accordingly, a reference hereinafter to the provisions of the CGST Act, Rules and Notifications issued there under shall include a reference to the corresponding provisions of the KSGST Act, Rules and the Notifications issued there under. 3. The applicant requested advance ruling on the following. 3.1. Rate of tax on Outboard Motor Engines coming under HSN Code 8407 21 00 and its spare parts exclusively used as part of fishing vessel of heading 8902. 3.2. Whether GST leviable on supply of materials and labour charges incurred during the warranty period, free of cost. 3.3. Rate of tax applicable for collection made towards supply of materials and labour charges towards repair of fishing vessel of heading 8902. 3.4. Rate of tax on marine engine coming under HSN Code 8407 supplied to the Defense Department for patrol, flood relief and rescue operations. 3.5. Rate of tax applicable for the solar or battery-operated electric boat motor and spare parts used for fishing purpose. 3.6. Rate of tax applicable for the solar or battery-oper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchasers of fishing vessel. Since there is no consideration for this supply, no GST is payable by them on the transaction. The value of materials to be supplied and services to be provided during warranty period are also taken into account and included in the sale price, on which GST is duly paid. The consideration received on original supply of fishing vessel includes the consideration for the promise to repair or replace the machines during warranty period, without any additional charge. Hence there no GST is payable on the deemed value of supply made during warranty period free of cost. 4.5. 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 services-rendered to the customers. In the invoice issued to customers' value of goods transferred and service charges are separately shown. This supply is to be treated as 'Composite supply' and since the dominant element is replacement of defective parts, the rate of tax applicable to fishing vessels, engines and spare parts (5 %) is to be applicable for the entire consideration charged by them. 4.6. Without prejudi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttention to the Advance Ruling No. KER/139/2021 dated 25.06.2022 in the application of M/s. Kerala State Co-operative Federation for Fisheries Development Limited [Matsyafed], Thiruvananthapuram wherein this Authority has held that marine engines and its spare parts supplied for use in fishing vessels of Heading 8902 would attract a GST rate of 5% only. He stated that they are eligible to supply marine engine of Heading 8407 or any heading and its spare parts falling under any heading for being used as parts of a fishing vessel of heading 8902 by paying GST at the rate of 5% as per Entry at SI. No. 252 of Schedule I of Notification No. 01/2017 CT (Rate) dated 28.06.2017 and requested to issue the ruling on the basis of the submissions made in the application and during personal hearing. 7. Discussion and Conclusion: 7.1. The matter was examined in detail. The issues to be decided by the authority are; (1) The rate of tax on Outboard Motor Engines coming under HSN Code 8407 21 00 and its spare parts when it is supplied for use as part of fishing vessel of Heading 8902; (2) Whether GST is leviable on supply of materials and labour charges incurred during the warranty period, free of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ine: Reference has been received seeking clarification regarding GST rates on Marine Engine. The fishing vessels are classifiable under heading 8902, and attract GST @ 5%, as per S. No. 247 of Schedule I of the notification No. 01/2017-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 10 93 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 attracts 5% GST 7.4. Therefore, 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% [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. 7.5. The second issue to be decided is the applicabili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce the supply of goods / spare parts are ancillary to the repair or maintenance of the fishing vessels. Hence the predominant element of the supply is not the transfer of title in goods / spare parts but that of service of repair or maintenance and the supply of goods / spare parts being ancillary / incidental to the activity of repair or maintenance it is appropriately classifiable under Heading 9987 - 998714 - Maintenance and repair of transport machinery and equipment under the Scheme of Classification of Services notified as Annexure to Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017. As per the Explanatory notes to the Scheme of Classification of Services the Heading 998714 includes maintenance and repair services of ships and floating platforms and structures, pleasure and sporting boats. Therefore, the services of maintenance and repairs of fishing vessels falling under Heading 8902 is appropriately classifiable under Heading 998714 and was liable to GST at the rate of 18% [9% -CGST + 9%-SGST] as per entry at 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 is liable to GST at the rate of 5% [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to GST at the rate of 5% [2.5%-CGST + 2.5%-SGST] 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. 7.9. The fourth issue to be decided is the rate of tax on marine engine coming under HSN Code 8407 supplied to the Defence Department for patrol, flood relief and rescue operations. 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% [2.5%-CGST + 2.5%-SGST] 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... els 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. In the light of the facts and legal position as stated above, the following ruling is issued: RULING Question No. 1. Rate of tax on Outboard Motor Engines coming under HSN Code 8407 21 00 and its spare parts exclusively used as part of fishing vessel of heading 8902. RULING : The outboard motor engines and its spare parts supplied for use in fishing vessels falling under Customs Tariff Heading 8902 shall 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. Question No. 2. Whether GST leviable on supply of materials and labour charges incurred during the warranty period, free of cost? RULING : 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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