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2020 (1) TMI 1384 - AAR - GSTSupply of service by the HO to BO - applicant is providing maintenance services, supply of spare parts for a consideration in the course of or furtherance of business - charges in lieu of maintenance services recovered by the HO from the BO - input GST credit - nput tax credit distribution method from HO to BO? HELD THAT:- The HO has entered into an exclusive agreement with its BO’s for providing preventive and routine maintenance. The very intention is to provide the maintenance services i.e. to upkeep of aircraft which shall be the principal supply of service - It is necessary here to discuss that the HO is charging a mark up over and above the cost of assurance services, cost of spare parts and any other cost incur in relation to upkeep and maintain the aircrafts, thereby adding value to the cost and hence, incurring a taxable supply of service as per the provisions of CGST Act, 2017. That on the basis of Section 25 (5) of the CGST Act, the applicant opined that the HO and BO, being two separate GST registrations, qualify as distinct persons under the GST regime. Hence, basis entry 2 of Schedule I of the CGST Act, any supply of goods or services from the HO to BO would be covered in the scope of supply and trigger a levy of GST - It is irrelevant to admit that the said charge towards maintenance of aircrafts from HO to BO is merely an internal MIS entry and should not be looked at as provision of services by HO to BO because they both have separate GST registrations and qualify as distinct persons under the GST regime - the charges of maintenance from HO to BO shall qualify as supply of service and GST is payable on the said charges recovered from BO’s. Input tax credit distribution method from HO to BO - HELD THAT:- The ISD is the ‘recipient’ as defined under section 2(93) of the CGST Act as it is the person making payment of consideration for the supply of goods or services. The very basis of the ISD related provisions under the CGST Act is that the ISD is not a supplier of goods or services, does not make any ‘outward supply’ under section 2 (83) of the CGST Act but is entitled to distribute credit under the provisions related to distribution of ISD under the CGST Act and the rules made there under - It is also important to note that the ISD mechanism is meant only for distributing the credit on common invoices pertaining to input services only and not goods (inputs or capital goods) - Therefore, in the present case, the input GST credit pertaining to services only on the procurement made by HO towards maintenance of aircraft (including lease thereof) shall be distributed by way of input service distributor mechanism and the credit pertaining to goods (including capital goods) shall be distributed by way normal registration mechanism.
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