The applicant is engaged in the business of rendering repairing service of boats /vessels along with a supply of spare parts and accessories, The applicant has entered into a Repair Rate Contract with the customer, Naval Ship Repair Yard, Southern Naval Command, Indian Navy, Kochi, to provide service, viz, repairing of boats as per the rate mentioned in Repair Rate Contract. Based on such a contract, necessary spare parts/accessories and repair services are provided by the applicant.
The applicant has sought Advance Ruling on the following questions/issues:
Whether the supply of spare parts/accessories and repair service can be considered as a composite supply wherein the principal supply is repair service and hence the rate of tax for all the supplies, consisting of spare parts/accessories and repair service, be taken as 18%?
Mixed supply as per Sec 2(74)
A mixed supply means two or more individual supplies of goods or services made in conjunction with each other for a single price. Since they are priced like one, they are taxed as one — at the rate of the item that draws the highest tax.
Composite supply as per Sec 2(30)
Composite supply is a supply consisting of two or more taxable supplies of goods or services, or both, that are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply. In such cases, GST law requires vendors to charge the tax rate applicable to the principal supply.
But the applicant is covered by the clarification in Para 2.2 of CBIC Circular No.47/21/2018 – GST dated June 8, 2018(“Circular No. 47”)
|How is servicing of cars involving both supply of goods (spare parts) and services (labor), where the value of goods and services are shown separately, to be treated under GST||2.2 Where the supply involves the 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.|
The supply of spares parts/ accessories and repair service are distinct and separately identifiable supplies for which the rates are quoted differently and work orders are issued separately specifying the spares/ accessories to be supplied and the services to be supplied and the rates applicable thereon as per the rates quoted in the Repair Rate Contract can’t be considered as a composite supply.
Where the supply involves the 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.
FINAL CONCLUSION –
In this case, the value of spare parts and the value of service provided by the garage is easily identifiable and therefore will be taxed at their respective rates and providing repair services and supplying spare parts are not naturally bundled and therefore will not be treated as composite supply.
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