TaxTMI 
TaxTMI 
2022 (3) TMI 1367
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.... Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression 'GST Act' would mean CGST Act and MGST Act. 2. FACTS AND CONTENTION - AS PER THE APPLICANT FACTS: The submissions made by M/s Precision Camshafts Limited, the Applicant, are as under:- 2.1 The applicant manufactures camshafts and sells the same to domestic as well as overseas customers. The overseas customers may be original equipment manufacturers ("OEM's") and use the camshafts for manufacturing engines such as Ford, General Motors do Brasil LTDA etc. or maybe machinist such as Musashi who would further supply the same to OEMs ("Machinist"). 2.2 The camshaft controls engine power, emissions and fuel consumption and are critical components of engines. The present advance ruling is being filed by the Applicant, in relation to transactions with the overseas OEMs/ Machinists. 2.3 The OEMs / Machinists place orders for camshafts on PCL, which are sent outside India. Since such supplies qualify ....
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.... prototype etc. • Post raising of such PO, the Applicant undertakes the manufacturing process, planning and development of the camshaft. Applicant's scope of work also includes contract review for OEM/Machinist specific requirements and tooling procurements; • Thereafter, the tooling procurement and internal validation is undertaken by the Applicant. In this regard, the following activities are undertaken by the Applicant: • • Tool designing - Applicant's development and tooling team prepares the required tooling design/drawings / sketches etc. • Tool Procurement - The tooling design data along with purchase requisition is forwarded to the purchase department for further procurement process; • Purchase team works with the third party approved vendor/s for manufacturing of the tools as per the tooling design; • Once the tools are manufactured, the tools are thoroughly inspected to confirm if all tools are as per the specifications. Once these are found to be as per specifications, the Applicant conducts a physical internal validation by manufacturing camshafts and confirms if ....
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....is relevant to note that contractually, an OEM/Machinist is bound to provide tools to the applicant. Applicant does not possess any technical capability to manufacture patterns and tools but has the technical expertise to develop examine and analyse the feasibility of a design, manufacturing process planning for tools which are critical to the manufacturing process. 2.13. Therefore, applicant in the present case, have two output activities (a) Supply of finished goods i.e. camshafts and (b) assistance in designing and development of patterns and tools used for manufacture of camshaft. 2.14 With respect to "Assistance in design and development of patterns used for manufacture of camshaft", the applicant is engaged in a composite supply of the following: a. Understanding the designs/drawing of patterns and tools used for manufacture of camshafts. b. Identifying third party who can manufacture the pattern and tools as per the design/drawings. c. Explaining and closely working with third party manufacturer to develop the patterns and tools to manufacture prototype / serial production camshafts. d. Engaging the third party manufacturers for supp....
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....upply is that of services for manufacture of fully functional camshaft. This is because on the basis of the skillset involved in designing and drawings of patterns that the tools are manufactured. Further the ownership of tools always remain with the overseas OEM and the Applicant has no rights to use the same for other customers. Also after the life span of the tools, the same would be scrapped by the Applicant. 2.21 Additionally, value of the activity performed by the Applicant, is driven by the assistance rendered in respect of manufacturing process planning and not the value of material used for manufacture of the tools per se also indicates towards the fact that the principal supply is the assistance involved in designs and drawings and development of prototype on the basis of which the entire efficiency of camshafts depends. Below mentioned data is reproduced on an illustrative basis: Name of the customer Value as per OEMs/Machinists PO (in INR) Value charged by the vendor Musashi Hungary Manufacturing Limited 16,72,692 1,28,325 General Motors do Brasil LTDA 94,75,200 71, 31,040 APPLICANT SUBMISSION DATED 11.08.2021:- 2.22 A perusal of Sect....
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....of catering on board and transport by air is a bundle offered by a majority of airlines. • The nature of the various services in a bundle of services will also help in determining whether the services are 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. For example, service of stay in a hotel is often combined with a service or laundering of 3-4 items of clothing free of cost per day. Such service is an ancillary service to the provision of hotel accommodation and the resultant package would be treated as services naturally bundled in the ordinary course of business. • Other illustrative indicators, not determinative but indicative of bundling of services in ordinary course of business are • There is a single price or the customer pays the same amount, no matter how much of the package they actually receive or use. • The elements are normally advertised as a package. The different elements are not available....
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....rty, the applicant has to issue intra/intra state tax invoice depending upon the nature of the transaction and collect and pay the applicable tax as per the provisions of the GST Acts." 3.7 As per above advance ruling order, the supply of die is not considered as export, because no movement was done of goods outside India. Hence, tax is leviable considering intra-state/interstate supply. 3.8 In the present case also, Applicant does not supply tool/pattern (goods) to OEMS/Machinist. The pattern/tool will always be in possession with and will be scrapped after life span by Applicant. The pattern/tool is not taken out of India. Hence, it cannot be treated as export. In view of this, Applicant is required to raise tax invoice addressed to the foreign buyer and since it is an intra-state/inter-state supply he has to collect the CGST and SGST/IGST whichever applicable, and discharge the liability, 3.9 In pre-GST era, Show cause notice was issued to M/s Precision Camshafts Ltd. in respect of non-inclusion of development cost in excisable goods, resulting in short levy of tax. Applicant has also shown the said supply as tooling income. Applicant has supplied pattern /tools to inte....
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....t to make available, the ns and tools needed for manufacturing the camshafts. 5.4 For making available, the patterns and tools needed for manufacturing the camshafts, the overseas OEMs / Machinists place an order on the applicant for assistance in designing and development of patterns and tools to manufacture the camshafts. The OEMs/Machinist outsource the tasks of designing and procuring the said patterns and tools to the Applicant by way of: (a) Assistance in designing and process planning for the manufacture of the tools; (b) Identifying and appointing third party vendors to manufacture such tools as per the approved specifications and (c) Coordinate with such third party vendors for manufacture of tools as per the approved specifications. 5.5 The tasks to be performed by the applicant as per para 5.4 above (which is as per the applicant's submissions), consists of supply of only services pertaining to designing and development of patterns and tools. No supply of goods is envisaged. The present advance ruling is filed by the Applicant, in relation to transactions with the overseas OEMs/ Machinists pertaining to the assistance in designing and....
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....rseas OEMs/Machinists, but they also actively identify and closely engage with third party vendors on behalf of the overseas OEMs/Machinists. The supply in the instant case consists only of service and there is no supply of goods. Such supply of services appears to be that of an intermediary service and, therefore, we now discuss the relevant provisions of the GST Laws. 5.9 The term 'intermediary' is defined under Section 2(13) of the IGST Act, 2017 as under- "intermediary" means a broker, an agent or any other person, by whatever name called, who arranges or facilitates the supply of goods or services or both, or securities, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own account" 5.10 The Applicant is located in India and in the subject case, in respect of patterns and tools, the applicant represents it's overseas OEMs/Machinist as their representative. The applicant actively identifies and closely engages with third party vendors, for manufacture of patterns and tools; by such third party vendors (on behalf of the overseas OEMs/Machinist). Thus, the applicant is effectively....