TaxTMI 
TaxTMI 
2018 (11) TMI 1348
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....eedings were passed by any authority. Based on the above observations, the application is admitted to pronounce advance ruling. 1. SUBMISSION OF THE APPLICANT: The Applicant is a private limited company incorporated under the provisions of Companies Act, 1956 having registered head office located at Pune and holding GST registration Number (GSTIN) 08AACCS6638K1ZX for the State of Maharashtra. 1.1. The Applicant is a multi-product, multi-division entity, engaged in manufacturing, distribution and sales agency activities of various industrial products which include metal cutting tools, mining/construction equipment, spares for mining equipment, seamless stainless steel tubes and pipes and wires and heating systems. Further, the Applicant is also engaged into the business of after sales support for the mining equipment manufactured by its overseas group entities which are imported by the customers into India. 1.2. With respect to after sales support, the Applicant provides maintenance services for the imported equipment which includes repair and replacement of parts and tools. The maintenance services are provided for the equipment post issuance of commissioning certificat....
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....re such supply does not constitute a composite supply. c. As per Section 2 (90) of GST Act, "principal supply" means the supply of goods or services winch constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary. d. In the present case, the Applicant is entering into agreements with prospective customers with the sole intention to provide maintenance services to a customer. The main object of such maintenance services is to ensure the uninterrupted operation of the equipment, which could be achieved by ensuring the guaranteed availability of the equipment as defined under the agreement. Further, it is important to note that in case such guaranteed availability is not achieved by the Applicant, then the Applicant may be liable to penal consequences. e. In order to achieve the above guaranteed availability, the Applicant may or may not necessarily require to use or supply spare parts or goods on a regular basis, however the Applicant would be required to supply maintenance services which would be rendered through skilled engineering, labourers etc. stationed at the site. f. Further, it is im....
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....C") now renamed as Central Board of Indirect Tax and Customs ('CBIC'). Para 9.2.4 of the Education Guide mentioned the following: "Whether services are bundled in the ordinary course of business would depend upon the normal or frequent practices followed in the area of business to which services relate." The nature of the various services in a bundle of services will also help in determining whether the services are naturally bundled in the ordinary course of business. If the nature of services is such that one of the services is the main service and the other services combined with such service are in the nature of incidental or ancillary services which help in better enjoyment of a main service. Referring to the scope of work to be executed under the above agreement, we have analysed few of the above indicative factors below: i. Perception of the service recipient: The intention of both the supplier and the service recipient under the execution of the agreement is to ensure the uninterrupted operation of the equipment. Thus, the perception of the recipient is intended towards the receipt of maintenance services irrespective of the quantum of goods being consumed fo....
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....reement are naturally bundled in the ordinary course of business. c) Taxable supply should be supplied in conjunction with each other. The term 'conjunction' under Oxford dictionary has been "Conjunction: The action or an instance of two or more events or things occurring at the same point in time or space" In the instant case, the supply of goods or services or both shall be occurring together or at the same point of time as the sole intention of the agreements is to ensure that the equipment is operating without any interruptions. Hence, it could be said that the supply of goods or services would be done by the Applicant in conjunction with each other. d) One taxable supply should be a principal supply The definition of principal supply states that the supply which constitutes the predominant element of a composite supply and to which the other supply is ancillary shall be the principal supply. As the provision of maintenance services under the said agreements is with the objective to ensure smooth and uninterrupted operation of the equipment. Thus, the activity of providing maintenance and repair service would constitute the predominant element of the composite....
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....ity, engaged in manufacturing, distribution and sales agency activities of various industrial products which include metal cutting tools, mining/construction equipment, spares for mining equipment, seamless stainless steel tubes and pipes and wires and heating systems. Further, the Applicant is also engaged in the business of after sales support services for the mining equipment manufactured by its overseas group entities which are imported by the customers into India. Question no. 1 The applicant is mainly providing support services in respect of maintenance of machinery supplied by them. The machinery supplied in 2017 also requires maintenance and further supply of its parts by the applicant. We also find that the applicant also makes an integrated contract for the operation and maintenance service and they are not in a position to ascertain which parts are to be supplied in the course of its operation and maintenance. In these two situations the question raised by the applicant is that Whether on facts and circumstances of the case, the maintenance services rendered on customers' equipment under the two agreements i.e. comprehensive maintenance services agreement and suppl....
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....ontention of the applicant regarding "Comprehensive Maintenance Contract", that the services would be classifiable under the Composite Services, we are of the view that Services supplied under the said contract are to be treated as composite services and the tax rate applicable on the principle supply would also be applicable on the other services. Question no.2 5.7 The Second question arises on the basis of first question. The concept of principle supply is applicable only in supply of composite service. As already discussed, the applicant is supplying both type of services i.e. mixed supply and composite supply. There is no concept of principle supply in mixed supply. 5.8 The concept of principle supply is under Composite supply. On going through the contents of the Integrated Contract, we are of the view that in composite supply, the applicant is mainly providing operation and maintenance services of the machines supplied by them and hence, the principle supply would be the same i.e. operation and maintenance services. In the present case, main issue is to ensure the uninterrupted operation of the equipment through supply of maintenance services. For the provision of su....
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....ST is (CGST @ 9% of the taxable value, SGST @ 9% of the taxable value) or IGST @ 18% of the taxable value. 5.13 For the supply of mixed services, the applicant is liable to pay the highest rate of tax as per Section 8(b) of the CGST Act, 2017. Section8(b) of the CGST act is as below: "a mixed supply comprising two or more supplies shall be treated as a supply of that particular supply which attracts the highest rate of tax." Question 4 5.13 The applicant has also made a query about the place of supply, whether in the facts and circumstances of the case, what shall be the relevant place of supply and type of tax which needs to be discharged? (i.e. CGST & SGST or IGST). 5.14 The place of supply can be determined as per Chapter V of IGST Act, 2017. Section 10 of IGST Act relates to place of supply of goods and Section 12 of IGST relates to place of supply of services. As the applicant is supplying the parts of the machinery and also providing the services of operation and maintenance, accordingly the place of supply will be determined as per Section 10 or Section 12 of the IGST Act. We find that the determination of place of supply as requested by the applicant cannot b....