Composite supply test for repair contracts: separately priced spare parts and services attract GST at their own rates.

Supply of spare parts/accessories and repair service was not a composite supply because the contract, work orders and invoices separately identified goods and services, with separate pricing and price revision terms for spares. On those facts, the components were not inextricably linked as a single supply, so each was liable to GST at its own applicable rate. The ruling also followed CBIC clarification that where goods and services are supplied together but their values are shown separately, each component is taxed at the rate applicable to it.

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Issues: Whether the supply of spare parts/accessories and repair service constituted a composite supply with repair service as the principal supply, so as to attract GST at 18% on the entire supply.

Analysis: The supply arrangement showed that spare parts/accessories and repair service were separately identified in the repair rate contract, work orders and invoices. The rates for goods and services were quoted separately, and the contract also provided for separate revision of prices of spares and a fall clause for goods. On these facts, the supplies were not inextricably linked as a single composite supply. The ruling also relied on the CBIC clarification that where goods and services are supplied together and their values are shown separately, each is liable to tax at the rate applicable to it.

Conclusion: The supply of spare parts/accessories and repair service was not a composite supply and each component was liable to GST at its own applicable rate.

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