GST rate on fishing vessel parts and repair supplies depends on vessel classification and time of supply.

Marine engines and spare parts supplied as components of fishing vessels under heading 8902 qualify for GST at 5% under Serial No. 252 of Schedule I to Notification No. 01/2017-Central Tax (Rate), because the specific entry extends the concessional rate to parts of goods under the covered headings; if the items are supplied for other uses, their own tariff classification governs the rate. Repair and maintenance supplies for fishing vessels are composite supplies in which the principal supply is the maintenance service, and the applicable GST rate follows the notified rate in force on the time of supply. Supplies with time of supply before 2 June 2021 are taxed at 18%, while supplies on or after that date attract 5%.

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Issues: (i) Whether marine engines and spare parts supplied for use as parts of fishing vessels falling under heading 8902 attract GST at 5% under Serial No. 252 of Schedule I of Notification No. 01/2017-Central Tax (Rate); (ii) Whether supply of materials and services for repair and maintenance of fishing vessels is taxable at 5% or at the rate applicable on the date of time of supply.

Issue (i): Whether marine engines and spare parts supplied for use as parts of fishing vessels falling under heading 8902 attract GST at 5% under Serial No. 252 of Schedule I of Notification No. 01/2017-Central Tax (Rate)

Analysis: Goods of heading 8902, being fishing vessels and similar vessels, are taxable at 5%. The entry at Serial No. 252 of Schedule I extends the same rate to parts of goods of headings 8901, 8902, 8904, 8905, 8906 and 8907 falling under any chapter of the Customs Tariff. Marine engines and spare parts, when supplied as components of a fishing vessel covered by heading 8902, are therefore treated as parts of that vessel for the purpose of the notification. The clarification issued in the CBIC circular also supports this position.

Conclusion: Yes. Marine engines and spare parts, when supplied for use as parts of fishing vessels under heading 8902, attract GST at 5%. If supplied for other uses, the rate depends on their own tariff classification.

Issue (ii): Whether supply of materials and services for repair and maintenance of fishing vessels is taxable at 5% or at the rate applicable on the date of time of supply.

Analysis: Repair and maintenance of fishing vessels involving supply of goods, spare parts and services in conjunction constitutes a composite supply. The predominant element is the repair or maintenance service, which falls under the relevant service classification for maintenance and repair of transport machinery and equipment. The applicable rate changes with the notified rate, and the governing factor is the time of supply under the rule for change in rate of tax. Accordingly, supplies whose time of supply falls before 2 June 2021 remain taxable at 18%, while supplies whose time of supply falls on or after that date attract 5%.

Conclusion: The applicable GST rate depends on the time of supply. It is 18% if the time of supply is before 2 June 2021 and 5% if the time of supply is on or after 2 June 2021.

Final Conclusion: The application succeeds on the core valuation and rate questions, and the ruling grants the requested tax treatment for parts supplied as components of fishing vessels while also applying the notified change in rate for repair and maintenance services according to the time of supply.

Ratio Decidendi: Parts supplied as components of a vessel classified under heading 8902 take the concessional rate under the specific parts entry, and composite repair or maintenance supplies are taxed according to the principal supply and the time of supply where the rate changes.

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