TaxTMI 
TaxTMI 
Clarification in respect of GST liability and input tax credit (ITC) availability in cases involving Warranty/ Extended Warranty, in furtherance to Circular No. 11/2023 (PP6-GST/82/2023) dated 14.08.2023
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....to Circular No. 11/2023 (PP6-GST/82/2023) dated 14.08.2023- Regarding. Ref: Circular No. 216/10/2024-GST, dated 26.06.2024, issued by Government of India, Ministry of Finance, Department of Revenue, CBIC, GST Policy Wing. ****** In the reference cited, the Government of India, Ministry of Finance, Department of Revenue CBIC, GST Policy Wing, has issued Circular No 216/10/2024-GST, dated 26.06.2024 based on the recommendations of the GST Council. Hence, following pari-materia circular is issued. Reference is invited to Principal Secretary/Commissioner of Commercial Taxes Circular No. 11/2023 (PP6-GST/82/2023) dated 14.08.2023 (herein after referred to as "the said circular") clarifying certain issues regarding GST liability and a....
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....n the extent of damage/ defect noticed in the said goods. However, Table in Para 2 of the said circular only clarifies in respect of the situations involving replacement of part/ parts and does not specifically refer to the situation involving replacement of goods as such. It is clarified that the clarification provided in Para 2 of the said circular is also applicable in case where the goods as such are replaced under warranty. 3.3 Accordingly, wherever, `any part,' `parts' and `part(s)' has been mentioned in Para 2 of Principal Secretary/Commissioner of Commercial Taxes Circular No. 11/2023 (PP6-GST/82/2023) dated 14.08.2023, the same may be read as 'goods or its parts, as the case may be'. 4. Clarification in re....
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....cost on the distributor, are all covered in the scenario specified in point (b) of Sr. No.4 of Para 2 of the said Circular. Therefore, GST liability as well as liability to reverse ITC in cases covered by the said scenario should be similar to that in respect of the scenario covered in point (b) of S. No. 4 of Para 2 of the above circular. 4.3 Accordingly, to specifically clarify in respect of such a scenario, in column 3 of the table in Para 2 of the said circular, against S. No. 4, after point (c), point (d) shall be inserted as below: "(d) There may be cases where the distributor replaces the goods or its parts to the customer under warranty by using his stock and then raises a requisition to the manufacturer for the goods or....
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....ay be the OEM or third party. In such cases, the supplies being made by different suppliers cannot be treated as part of the composite supply. It is, therefore, clarified that in cases, where agreement for extended warranty is made at the time of original supply of goods, and the supplier of extended warranty is different from the supplier of goods, the supply of extended warranty and supply of goods cannot be treated as the composite supply. In such cases, supply of extended warranty will be treated as a separate supply from the original supply of goods. 5.2 It has also been represented that in cases where extended warranty is sold subsequent to the original supply of goods, the same should be considered as supply of services only where....