TMI Blog2019 (4) TMI 1544X X X X Extracts X X X X X X X X Extracts X X X X ..... /07/2018-19 - - - Dated:- 18-3-2019 - SH. RAKESH KUMAR SHARMA, AND DR. PREETAM B. YASHVANT, MEMBER Present for the Appellant: Shri Rajaram Shetty, AVP, Ind. Taxation Shri Nitin Vijaivergia, Partner, Pricewaterhouse Coopers Pvt. Ltd. (Proceedings under Section 101 of the Central GST Act, 2017 read with Section 101 of the Rajasthan GST Act, 2017) At the outset, we would like to make it clear that provisions of both the Central GST Act, 2017 and Rajasthan GST Act, 2017 are same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central GST Act would also mean a reference to the same provisions under Rajasthan GST Act. 2. The present appeal has been filed under Section 100 of the Central GST Act, 2017 (hereinafter also referred to as CGST Act ) read with Section 100 of the Rajasthan GST Act, 2017 (hereinafter also referred to as RGST Act ) by M/s Sandvik 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. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts. 11. The impugned order has erred in concluding that the supply of parts under Agreement-2 is separately identifiable to the Appellant and the customer before provision of maintenance services. Held in Para 5.3 of the Advance Ruling Order: The Appellant's contention is that in both the situations the service is classifiable under Composite Service which is not tenable. Regarding the Agreement made for maintenance services in respect of machinery supplied in 2017, the Appellant is well aware about the parts which would suffer wear and tear and need to be replaced by the Appellant. Further, the Appellant in their Agreement named Equipment parts supply and Service Agreement in Schedule-D, also shows that in their daily/monthly log-sheet the Appellant has to mention the parts being replaced by them. It is evident that the Appellant can supply these parts individually and along with the package of the services... 12. The Appellant submits that the AAR has misinterpreted the said Schedule D information to contend that the Appellant is well aware about the parts that need replacement. It is important to note that the monthly log sheet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered under Mixed Supply. 17. The Appellant submits that the AAR has erred in interpreting the Agreement clauses and the intention of the parties to the Agreement. The intention of the parties to the Agreement is to ensure the uninterrupted operation of the equipment. This intention has been explained through relevant clauses of the Agreement in the succeeding paras. 18. As per Clause-D of the Agreement, the Appellant is required to a) supply spare parts required for the operation of the Equipment details of which are set out in Schedule-B ( Parts ), and b) Provide maintenance services as mentioned under Schedule-B ( Services'0 Further, as per Clause 6.1 of the Agreement, The Service Provider shall provide the guaranteed availability of the Equipment as specified in Schedule-D ( Guaranteed Availability ) 19. Therefore, the main intention of the Agreement is to ensure continuous operation of the equipment and whether such operation requires usage of goods is irrelevant till guaranteed availability of the equipment is ensured by the Appellant. 20. The guaranteed availability clause in the Equipment Parts Supply and Serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply there could be individual supplies and these supplies should not be naturally bundled in ordinary course of business. 27. In order to understand whether any service is naturally bundled or not, we may refer to the Education Guide issued by the Central Board of Excise and Customs ( CBEC ) now renamed as Central Board of Indirect Tax and Customs ( CBIC ). Para 9.2.4 of the Education Guide mentioned the following: Whether services are bundled in the ordinary course of business would depend upon the normal or frequent practices followed in the area of business to which services relate. Such normal and frequent practices adopted in a business can be ascertained from several indicators some of which are listed below- Perception of the consumer or the service receiver Majority of service providers in the in a particular area of business provide similar bundle of services The nature of various services Perception of the Service recipient Advertised as a single package Single Price Nature of various services 28. The Appellant reiterates that all the essential ingredients of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovision of healthcare services. In this case, the Hon ble High Court has held that dominant intention of Agreement is to render medical services and supply of medicines, surgical items, etc. is incidental to such supply. - The Hon ble Apex Court in the case of M/s Northern India Caterers (India) Ltd vs Lt. Governor of Delhi [(1980) 2 SCC 167] = 1978 (12) TMI 157 - SUPREME COURT OF INDIA has held that supply of food to customers should be construed as supply of service and not goods since the intention of the parties is to serve the food to the customers to their satisfaction. 33. Even in terms of Entry No. 25 of the Notification No. 11/2017- Central Tax (Rate), dated 28th June 2017, issued under the existing GST laws, Maintenance, Repair and Installation Services have been expressly covered under the schedule providing rate of GST applicable on different types of services with the SAC Code - 9987. 34. The Appellant has requested that the above mentioned Advance Ruling Order be modified to the extent that the activities performed under the Equipment Parts Supply and Services Agreement* should be categorised as Composite Supply where the principal s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvices. Since supply of the parts and services are known beforehand and can be supplied individually to the customers, these supplies fall under the category of Mixed Supply , as defined under Section 2(74) of the CGST Act. 40. We find that the Appellant are providing services to their clients, under twro Agreements namely (i) Comprehensive Maintenance Agreement (Agreement-i) and (ii) Equipment Parts Supply and Services Agreement (Agreement-2) . The subject appeal has been filed in respect of activities performed under Agreement-2, which have been held as Mixed Supply , as per Ruling given by the AAR . It is relevant to mention here that entering into two separate Agreements with their client(s) itself is an indication that the nature and quantum of supply of service(s) and/or spares/parts under these Agreements is not similar. This position is also clear on perusal of both the Agreements. The activities performed under first Agreement has been held by AAR as Composite Supply , whereas the activities performed under the second Agreement has been held as Mixed Supply . The Appellant contends that the activities performed under the second Agreement should also be pron ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pply means two or more individual supplies of goods or services, or any combination thereof made in conjunction with each other by a taxable person for a single price where such supply does not constitute a Composite Supply. We have already held in foregoing paras that the activities performed under the impugned Agreement, though comprises of two or more individual supplies of goods or services, cannot be held as Composite Supply . Consequently, such activities will fall under the category of Mixed Supply as per definition of Mixed Supply, under Section 2(74) of CGST Act, 2017. 45. The Appellant has relied upon the Ruling dated 16.05.2018 of AAR, UP in the matter of M/s GE Diesel Locomotive (P) Ltd., Shahjanpur = 2018 (10) TMI 257 - AUTHORITY FOR ADVANCE RULING - UTTAR PRADESH and Ruling dated 19.12.2018 = 2019 (3) TMI 656 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA in the matter of Cummins India Ltd., Pune. We find that though these Rulings are in the favour of the Applicants but since the exact nature of the activities under the respective Agreement(s) in these two cases are not before us, it is not possible to compare whether the Agreements in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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