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of <h1>Repairing transformers for another entity is a composite supply under GST Act, with repair service as principal supply.</h1> The Authority ruled that repairing and servicing transformers owned by another entity is classified as a composite supply under the GST Act, with the ... Repairing and servicing of transformers owned by WBSEDCL - Job-work or not - composite or mixed supply? - principal supply - rate of tax - supply against challans without raising tax invoices - Held that:- Repairing and servicing of defective transformers signify working on something which is already in existence. It involves supply of goods, but not as chattels. The goods, namely the spare parts that have replaced the defective ones, are embedded or fixed to the transformer already in existence so that the defects get removed. The contract is not for the supply of the spare parts, but for the treatment or process for maintenance and removal of the defects from the transformers that belong to WBSEDCL. The predominant element of the supply, therefore, is not transfer of title to the goods, but service in terms of para 3 of Schedule II to the GST Act, and supply of spare parts is ancillary to such supply. The service so supplied is classifiable under SAC 998719, being repair of transformers, and taxable under Sl No. 25(ii) of the Rate Notification, as amended from time to time. Issues:1. Admissibility of the Application2. Submissions of the Applicant3. Observations & Findings of the AuthorityAdmissibility of the Application:The Applicant sought a ruling on whether repairing and servicing transformers owned by WBSEDCL constitutes job work under the GST Act, and if it is a composite or mixed supply. The Authority found the questions admissible for advance ruling under section 97 (a) & (b) of the GST Act, as they involved classification of supply for tax rate purposes. The Application was admitted as the questions were not decided by any authority and no objections were raised.Submissions of the Applicant:The Applicant argued that repairing transformers is job work under section 2(68) of the GST Act and should be treated as a supply of service. Referring to a West Bengal government notification, the Applicant contended that repair/servicing of transformers is a composite supply, with the principal supply being the service of repair, taxable under specific notifications.Observations & Findings of the Authority:The Authority determined that repairing transformers involves transfer of property in goods, making it more than just job work. While acknowledging the composite nature of the activity, the Authority noted that the principal supply depends on the dominant element of the composite supply. Citing a Maharashtra AAR order, the Authority emphasized that the dominant intention in such contracts is crucial in determining the principal supply. Ultimately, the Authority ruled that repairing and servicing transformers is a composite supply, with the principal supply being the service of repair, taxable under specific notifications.This detailed judgment clarified that repairing and servicing transformers owned by another entity is not considered job work under the GST Act. Instead, it is classified as a composite supply, with the principal supply being the service of repair, subject to specific tax rates outlined in relevant notifications.
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