TaxTMI 
TaxTMI 
2020 (8) TMI 522
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....2017) by M/s Volvo-Eicher Commercial Vehicles Limited, 66/2, Embassy Prime, 502, 5th Floor, B Wing, Bagmane Tech Park, CV Raman Nagar, Bengaluru- 560093 (herein after referred to as Appellant) against the advance Ruling No. KAR/ADRG 32/2019 dated 12-09-2019 = 2019 (10) TMI 564 - AUTHORITY FOR ADVANCE RULING, KARNATAKA. Brief Facts of the case: 3. The Appellant is a joint venture between the Volvo Group and Eicher Motors Limited which came into effect in July 2008. They are in the business of selling Volvo branded trucks and thereafter providing after sales support services, including warranty services for Volvo branded trucks and buses in India. 4. In terms of the arrangement between the Appellant and M/s. Volvo Sweden, the Appellant undertakes the distribution and aftermarket support of Volvo products in India. The Appellant sells its products with a standard warranty of 1 to 2 years, the cost of which is included in the cost of sale of products. The Appellant is responsible for the servicing of warranty claims of its customers and the onus to reimburse such expenses incurred for discharging the warranty obligation lies with M/s. Volvo Sweden. In pursuance to this agreement, th....
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.... of services, the transaction is not a "Zero-rated Supply" under the IGST Act. 8. Aggrieved by the said ruling of the AAR, the present appeal has been filed before this Authority. The Appellant also filed an application for condonation of delay of 19 days in filing the appeal stating that the concerned authorised personnel of the Company were engaged in the Statutory Audit under the Companies Act 2013 and hence were unable to provide the documentation required for filing the appeal within the due date i.e. 20.10.2019. The Appellant filed their appeal on the following grounds: 8.1. The Appellant submits that the lower Authority has held that there is a supply of parts and services to the customers for a consideration which amounts to a supply transaction with the Appellant being the supplier and the customer being the recipient of services; that this is based on an erroneous understanding of the definition of 'consideration' under Section 2(31) of the CGST Act which defines consideration to include 'any payment made, whether by the recipient or by any other person'. The Appellant submits that the definition of 'consideration' under GST is only an inclusive definition and hence the....
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.... undertaken by the dealer during the warranty period is for meeting the obligations of the manufacturer and is therefore a supply made to the manufacturer, even though beneficiary may be the customer / buyer of the vehicles. The Appellant relied on the case of Blue Star Ltd Vs Commissioner of Service Tax, Mumbai - 2016 (46) STR 59 (Tri-Mum) = 2014 (12) TMI 25 - CESTAT MUMBAI to drive home the point that the activities undertaken towards warranty obligations of the manufacturer are services provided to the manufacturer and not the customer; that there is no supply from the Appellant to the customer as no consideration is paid by the customer to the Appellant. 8.4. The Appellant submitted that the transaction relates to supply of services of warranty from the Appellant to M/s Volvo Sweden with the customers located in India who are the beneficiaries; that the recipient of the supply in the present transaction is Volvo Sweden and not the customer. The Appellant either provides warranty services and/or also provides to replace defective parts if it is found to be provided for under the warranty obligation. However, in no case is there a mere transfer of goods without any service being....
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.... tax is payable by the appellant. 8.7. They refuted the findings of the lower Authority that the transaction between the Appellant and M/s Volvo Sweden is a mere facet of the transaction between the Appellant and the customer, wherein part of the payment is received from M/s Volvo Sweden. They submitted that this finding completely disregards the fact that there is no privity of contract between the customer in India and M/s Volvo Sweden. They also refuted the finding of the lower Authority that there is no clarity on how the acceptance of warranty claim is made and by whom. They submitted that the application for Advance Ruling had clearly stated that the acceptance of the warranty claim is at the behest of M./s Volvo Sweden based on verification of the documents sent by the Appellant to Volvo Sweden who may or may not accept such warranty claim. They emphasised on Section 2(93) of the CGST Act which provides for the definition of 'recipient of service' which is, in a case where consideration is payable, the person liable to make such payment; that in this case, the consideration for such services is wholly payable by M/s Volvo Sweden and hence they alone are the recipients of se....
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....ay of 19 days in filing the present appeal. The impugned order of the AAR dated 12.09.2019 was received by the Appellant on 20.09.2019. In terms of Section 100(2) of the CGST Act, every appeal to this Authority should be filed within a period of 30 days from the date on which the Advance Ruling order is communicated to the aggrieved party. The proviso to Section 100(2) empowers this Authority to condone the delay in filing the appeal by another period of 30 days. In this case, the due date for filing the appeal was 20-10-2019 but the Appellant has filed the appeal on the 8th November 2019 after a delay of 19 days from the due date for filing appeal. The Appellant has stated that the delay had occurred due to the reason that the concerned authorised personnel of the Company were engaged in the Statutory Audit under the Companies Act 2013 and hence were unable to provide the documentation required for filing the appeal within the due date. Considering the averments made by the Appellant, we are of the view that the delay caused in filing the appeal has been sufficiently explained. The delay in filing the appeal is hereby condoned in exercise of the power vested in terms of the provis....
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....onsibility) for the distribution of products and the provision of the services on the terms and conditions set forth herein. 6.2. The Distributor shall, within the Area of Responsibility, set up, maintain and develop premises necessary and suitable for the fulfilment of the Distributor's responsibilities under this Agreement. 6.3. If the Distributor cannot fulfil its obligations as set out in this Agreement in the entire Area of Responsibility with its own resources, the Distributor shall appoint Authorised Dealers and/or Authorised Repairers in all areas where sufficient sales and service coverage cannot be provided by the Distributor. 16.1. The Distributor shall use its best efforts to sell each year, within the Area of responsibility, the quantities of products per brand as determined by the Parties in the Business Plan. 17. Services 17.1. The Distributor undertakes to provide services as determined by the parties or - if an agreement cannot be reached - as decided by VIPL. 17.2. The Distributor shall ensure that the sales contract with the customer (i) provides that the customer is entitled to free of charge, pre-delivery service, service inspections and warranty an....
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....rocedures as may be determined by VIPL from time to time. 15. The Volvo Truck International Warranty guidelines submitted by the Appellant in their appeal memorandum reveals that every Volvo truck comes with a 12 month vehicle warranty (from the date of delivery with unlimited mileage) and the 24 month driveline warranty (valid for a period of 24 months from the date of delivery or upto 3,00,000 kms whichever occurs first). The Volvo Truck International warranty is subject to the condition that the vehicle has been serviced and maintained in accordance with Volvo recommendations, the vehicle has been used for the purpose for which it is intended and the driver has operated the vehicle in accordance with Volvo instructions. The warranty covers the costs for replacement or repair of defective Genuine Volvo Parts but no other losses, costs or damage whether direct, indirect or consequential. The warranty does not cover equipment and other parts already covered by the respective manufacturer's own warranty. Volvo Trucks Corporation undertakes to remedy, free of charge, established defects in material or faulty workmanship existing at the time of delivery or coming into existence durin....
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....rs who purchase the Volvo vehicle are entitled to free of charge pre-delivery inspection and free of cost replacement and repairs during the warranty period. Post warranty period, the service of repair and maintenance of the vehicles are on chargeable basis which the customer will pay. In the case of a repair and replacement of a part during the warranty period, it has been undertaken by Volvo Group, as part of its International warranty terms, that the cost of the part and the cost of the service involved in fixing the part is reimbursed to the Distributor. It is an established trade practice that during the warranty period, the manufacturer is obliged to provide the repair and maintenance of the machinery, equipments, vehicles, etc. A warranty is a commitment given by the manufacturer to provide repair, service, replacement, or refund of a product for a certain time period subject to certain conditions. It is also well settled that the cost of repairs and services during warranty period are a part of the cost of the products. 18. In the instant case, the Volvo vehicle which is sold by the Distributor -Appellant is covered by the International Warranty given by the manufacturer V....
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....te Government: Provided that a deposit given in respect of the supply of goods or services or both shall not be considered as payment made for such supply unless the supplier applies such deposit as consideration for the said supply; 20. A reading of the definitions given in Section 2(93) and 2(31) of the CGST Act, indicates that the person who is required to make a payment for getting a job done is the recipient of service. To illustrate, if a manufacturer A is under obligation to provide free repair service during a specified warranty period to his customers in respect of some goods sold to them and he engages B to provide the services of free repairs during warranty period to his customers C 1 , C2, C3, and for this he pays to B, the recipients of the service provided by B would be A, not the customers C1, C2, C3 Accordingly, the recipients of the service supplied by the Appellant during the warranty period, will be the manufacturer Volvo Sweden as it is at their behest that the Appellant has undertaken the activity of repair and/or replacement of parts to the customer during the warranty period. The reimbursement received from Volvo Sweden is in the nature of consideration p....