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TMI Blog2019 (4) TMI 1544X X X X Extracts X X X X X X X X Extracts X X X X ..... vik Asia Pvt. Ltd., Jaipur against the Advance Ruling No. RAJ/AAR/2018-19/21 dated 12.10.2018 = 2018 (11) TMI 1348 - AUTHORITY FOR ADVANCE RULING, RAJASTHAN. Brief Facts of the Case 3. Sandvik Asia Private Limited ('hereinafter also referred to as 'the Appellant') is a Private Limited Company holding GSTIN 08AACCS6638K1ZX. 4. The Appellant, inter alia, is engaged into the business of after sales support for the mining equipment manufactured by its overseas group entities which are imported by the customers into India. 5. With respect to after sales support, the Appellant provides maintenance services for the imported equipment(s) which includes repair and replacement of parts and tools. The maintenance services are rendered on the equipment(s) for a specific period as agreed with the customers from the commencement of mining operations depending upon the number of hours the equipments are operational or the quantum of output ton produced by the equipment(s) during the equipment life cycle. 6. In respect of the supply of parts under the proposed Agreements, the Appellant would supply parts falling under multiple GST rates such as 18%, 28%, etc. 7. The Appellant provides the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e parts that need replacement. It is important to note that the monthly log sheet would be filled by the Appellant and the customer at the end of the month after the goods and services have already been supplied. Therefore, supply of parts would already have taken place by the time the monthly log sheet is filled by the parties to the Agreement. Hence, it cannot be said that the Appellant would be well aware about the parts that need replacement before provision of maintenance services as the log sheet is filled only at the end of month after all the supplies during the month have already been supplied. 13. However, irrespective of the parts replaced for providing maintenance services, the consideration to be billed to the customer would still be on the basis of quantum of output produced by the equipment multiplied by the per ton rate. The record for the parts being replaced has been maintained by the Appellant for documentation purposes of the Appellant. 14. Main intention of the Agreement is to ensure that the equipment is available for operation to the customer on a continuous basis. The Appellant is required to provide supervision and maintenance services on a continuous bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... technical expertise of skilled engineers and not in relation to supply of spare parts. 21. The Appellant would be required to supply maintenance services which would be rendered through skilled engineering, labourers etc. stationed at the site. Hence, the use or consumption of goods/parts would be incidental to the primary supply of maintenance services. 22. It is also important to refer to Schedule-C of the Agreement which mentions about the consideration to be received by the Appellant as quoted below - "SERVICE PROVIDER CHARGES Rs.50 per metric ton for the feed material to each plant towards spares, wear, consumables, lubricants, grease, hydraulic oil and manpower after deduction of 10% feed towards natural fines. Note:- The quoted rates are exclusive to GST. GST to be borne by customer. Since the supply of spare parts and services are naturally bundled and remain composite, the GST rate of 18% will be applicable, which is explicitly defined in Clause 3.2" 23. Hence, it is clear that the Appellant would be charging to the customer on per ton basis irrespective of the quantum of goods used in the process of maintenance services. 24. The consideration to be charged by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rring to the definition of 'Composite Supply' under Section 2(30) of CGST Act: (i) There should be two or more taxable supplies of goods or services or both; (ii) The taxable supplies should be naturally bundled in the ordinary' course of business; (iii) The taxable supplies should be supplied in conjunction with each other in the ordinary' course of business; and (iv) One taxable supply should be a principal supply. 30. In a recent Advance Ruling, in the matter of M/s GE Diesel Locomotive Private Limited, Shahjanpur (U.P.) = 2018 (10) TMI 257 - AUTHORITY FOR ADVANCE RULING - UTTAR PRADESH, it has been held by the Authority for Advance Ruling, U.P. that comprehensive maintenance services in relation to railway locomotives is a Composite Supply of maintenance services. 31. There are also few judicial pronouncements, wherein, maintenance services has been held as the dominant intention in a comprehensive annual maintenance. Reliance is placed on following case laws : a) Revathi Equipment Limited Vs Commissioner of Central Excise and Service Tax, Coimbatore [2018-TIOL-2613-CESTAT-MAD] = 2018 (6) TMI 793 - CESTAT CHENNAI b) Hindustan Aeronautics Ltd vs State of Karnataka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xation and Shri Nitin Vijaivergia, Partner, PricewaterhouseCoopers Pvt. Ltd. & Authorised Representative appeared on behalf of the Appellant. They reiterated the submissions made in their appeal memorandum. Discussion and Findings 36. We have carefully gone through the Appeal papers filed by the Appellant, the Ruling of the AAR, as well as oral submissions made at the time of Personal Hearing held on 12.03.2019. We find that the Appellant had requested for Ruling on the activities performed under two Agreements viz. (1) Comprehensive Maintenance Agreement and (2) Equipment Parts Supply and Services Agreement. 37. The Rajasthan Authority for Advance Ruling (AAR) in its Ruling No. RAJ/AAR/2018-19/21, dated 12.10.2018 = 2018 (11) TMI 1348 - AUTHORITY FOR ADVANCE RULING, RAJASTHAN, pronounced the activities performed under the 'Comprehensive Maintenance Agreement' (Agreement-i) as the Composite Supply, while the activities performed under other Agreement viz. 'Equipment Parts Supply and Service Agreement' (Agreement-2), were held as Mixed Supply. 38. The Appellant is satisfied with the Ruling related to 'Comprehensive Maintenance Agreement' as Composite Supply. However, they are no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments Parts Supply' has been separately and specifically indicated in the title of the Agreement-2. 41. Clause-D of the introductory para on page-2 of the Agreement-2 is reproduced as under for ease of reference :- "The Customer wishes to appoint the Service Provider for a) supply of spare parts required for the operation of the Equipment details of which are set out in Schedule-B ("Parts"), b) the provision of maintenance services as specifically set out in schedule-B (Services)." On perusal of the aforesaid clause, it is very much clear that the said Agreement is not a composite maintenance Agreement but an Agreement for supply of goods and supply of services separately. 42. Further, on perusal of Schedule-B of the Agreement-2, we find that supply of following equipments will not be covered under this Agreement:- "1. Cone Crusher : Mains shaft assy, Top shell assy, Bottom shell assy and Gear assy, Dust collar , Hub, Hydraulic cylinder cover, Hydroset cylinder, Piston. 2. Jaw Crusher : Frame assy, Swing jaw and flywheels, Eccentric shaft, Bearing housing." We find that by the language of Agreement itself, it is clear that the Appellant is to supply all parts other t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... COURT OF INDIA, (3) HCL Info Systems Ltd and Anr. vs Commissioner of Taxes and Ors [(2005) 1 Gauhati Law Reports 586] = 2004 (11) TMI 534 - GAUHATI HIGH COURT (4) Tata Main Hospital vs The State of Jharkhand & Ors. [2007 (9) TMI 599] = 2007 (9) TMI 599 - JHARKHAND HIGH COURT (5) M/s Northern India Caterers (India) Ltd vs Lt. Governor of Delhi [(1980) 2 SCC 167] = 1978 (12) TMI 157 - SUPREME COURT OF INDIA 47. On perusal of these case laws, we find that these case-laws relate to erstwhile Indirect Tax law's i.e. Service Tax or Value Added Tax or Sales Tax and not to the provisions of CGST Act, 2017. Further, Agreements under these case law's are also not available with us. Hence we are not able to compare whether the Agreements involved in these cases are identical to the impugned Agreement-2 or not. 48. In view of above, we hold that the activities performed by the Appellant under Agreement-2 will fall under the category of "Mixed Supply", and therefore we do not find any reasons to interfere with the Ruling dated 12.10.2018. passed by the Rajasthan Authority for Advance Ruling, Goods and Services Tax, Jaipur. Accordingly, we pass the following order :- ORDER 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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