Supply of Goods or service

[Kaustubh Karandikar]

XYZ is receiving moulds for trials from PQR(Customer). XYZ is making bottles from these moulds on trial run basis and sending the said bottles to PQR. XYZ is charging trial run charges to PQR. Will this transaction will be treated as supply of goods or supply of service?

[KASTURI SETHI]

It is a supply of service. See the following extract from 2010 (261) E.L.T. 737 (A.A.R.) = 2009 (9) TMI 56 - AUTHORITY FOR ADVANCE RULINGS (para no.5.1) AAR, New Delhi Applicant : GUTHY RENKER MARKETING PVT. LTD.

"The Act does not make a distinction between 'a trial run' and ‘service’.

AI Summary

Supply of service: trial run charges for producing goods from customer supplied moulds are treated as taxable services.
Charging fees for producing bottles using customer supplied moulds on a trial basis constitutes a supply of service under GST; the act of manufacturing samples and billing trial run charges is characterized as the performance of a service, consistent with advance ruling authority that the statute does not distinguish a trial run from a service.