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2019 (11) TMI 993 - AAR - GSTLevy of GST - machines given to the customers under RRC/PRC models - supply of reagents along with the machine rental and services in a RRC/PRC contract - Separate supply or mixed supply or composite supply? - rate of tax for the service of machine under RRC/PRC models - Valuation for the purpose of GST - Time of supply - eligibility for the input tax credit on the purchase of machinery for use in RRC / PRC contracts. Whether the applicant is liable to pay GST on the machines given to the customers under RRC/PRC models? - HELD THAT:- There is an act of supply of equipment and in the second clause of the definition of “consideration”, it is seen that the monetary value of any act or forbearance, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person. There is a clear inducement of supply of goods from the distributor and hence the monetary value of the act of supply of goods in the form of equipments would be the consideration for the supply of equipments. Since the monetary value of this transaction is Rs.NIL, this cannot be considered as the consideration - Hence, the delivery of equipments by the applicant to the end-customer without any charge under this model would not amount to a supply under the Act. Whether the supply of reagents along with the machine rental and services in a RRC/PRC contract is a separate supply or a mixed supply or composite supply? - If considered as composite supply, what is principal supply? - HELD THAT:-It is very clear from the contract that the applicant has detached the supply of equipments from the supply of reagents, in that the supply of reagents can be made either by himself or by his authorised distributor, at the discretion of the applicant. Since the delivery of equipments is not treated as a supply as per the provisions of the Act, there cannot be a composite supply involving it. Further, since the supply of goods in reagents and the supply of services in tolerating an act are not supplied in conjunction, they also do not form the composite supply. Value of the supply of the supplies involved in the contract - HELD THAT:- The supplies of the reagents and the supplies of the services discussed above in paragraph 7.5.3 are taxable on the respective values determined as per Section 15 of the CGST Act / SGST Act. This would be normally on the value for which invoice is raised, which would be the transaction value. But in case of the provision of equipments free of cost, the same does not amount to supply and is only a usage of a fixed asset for the purpose of business and would be a cost on the sale of reagents. What is the rate of tax for the service of machine under RRC / PRC models? - HELD THAT:- Considering the fact there is a transfer of the right to use the equipments for a consideration, the value of such supply is taxable at the same rate of central tax as on the supply of like goods involving the transfer of title in goods. In this case, the goods are equipments which are covered under the HSN Code 9027 8090 - Hence the rental services supplied in relation to the equipments without transfer of title in goods in case of PRC contract is liable to a tax of 9% under the CGST Act and 9% under the KGST Act - The reagents are covered under HSN code 3822 0090 and taxable at 12% - The tax rate applicable on the supply of services in the nature of “an act agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act” for which a consideration is received, the same are covered under Entry No. 35 and is taxable at 18%. Whether the applicable is eligible for the input tax credit on the purchase of machinery? - HELD THAT:- Since the equipments are capitalized in the books of account, and are used in the course or furtherance of business, they form the “capital goods” of the applicant. The act of claiming depreciation on the value of these assets under the Income Tax Act, 1961 also points to the fact that they are capitalized in the books of accounts of the applicant - Since the applicant is using the goods in equipments, as capital goods, in the course or furtherance of his business, he is eligible to take the credit of input tax charged on any supply of such goods. But this is subject to the condition and limitation prescribed for capital goods in sub-section (3) of section 16 and also under section 17.
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