GST NOT LEVIABLE ON FREE OF COST SUPPLY DURING WARRANTY PERIOD – (GST AAR KARNATAKA)
KARNATAKA AUTHORITY FOR ADVANCE RULING GOODS AND SERVICES TAX
Case Name: South Indian Federation of Fishermen Societies (GST AAR Karnataka) Appeal Number: Advance Ruling No. KAR ADRG 74/2021 Date of Judgement/Order: 06/12/2021
RULING
The marine engine and its spare parts supplied for fishing vessel (for use as part of the fishing vessel- CTH 8902) shall attract GST at the rate of 5% [2.5%-CGST + 2.5%-KGST) as per entry at Sl.No.252 of Schedule I of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017. If it is supplied for use other than as parts of fishing vessels GST shall be applicable at the rate of tax on such goods under the respective Customs Tariff Heading classified.
The provision of material and labour during warranty period without consideration (free of cost) does not come under the purview of supply in terms of Section 7 of the CGST Act, 2017 and no GST is leviable in such free of cost replacements/ labour services.
The activity of repair of fishing vessels is a composite supply involving supply of material/ spares which is ancillary to the predominant supply of services. The supply is appropriately classifiable under Heading 9987-998714 – Maintenance and repair of transport machinery and equipment and vide Sl.No. 25(ii) of the notification No. 11/2017-Central Tax dated 28.06.2017 the supply is liable to GST at the rate of 18% (9%-CGST+9%-KGST).
The puff insulated ice boxes are appropriately classifiable under Customs Tariff Heading 3923 10 30 – Articles for the conveyance or packing of goods, made of plastics – Boxes, cases, crates and similar articles – Insulated ware. The said articles falling under Customs Tariff Head 3923 are liable to GST at the rate of 18% [9% -CGST +9%-KGST] as per entry at Sl.No.108 of Schedule III of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017.
Marine engines supplied for use as part of vessel falling under Customs Tariff Heading 8906, which are used by the Department of Defence and other agencies for patrol, relief and rescue operations, then the marine engine as part of such vessel will only attract GST at the rate of 5% [2.5% -CGST +2.5%- KGST] as per the said entry.