TMI Blog2019 (10) TMI 564X X X X Extracts X X X X X X X X Extracts X X X X ..... is clearly proved by the fact that M/s. Volvo Sweden is also issuing credit notes to the dealers of the applicant and not just to the applicant, if such service is provided by the dealers. The transaction is a transaction within the country and is a composite supply of goods or services to the customers by the applicant and hence does not amount to export of services as M/s. Volvo Sweden is not the recipient of services provided by the applicant, but only pays the consideration to the provider of such services. The applicant is providing composite supply of goods and services to the customers where in the principal supply is that of goods or services depending on the nature of individual case - The transaction is an intra-State or inter-State transaction (but not export transaction) depending on the place of supply - Since this transaction is not an export of services, the transaction is not a Zero-rated Supply under the IGST Act. - KAR ADRG 32/2019 - - - Dated:- 12-9-2019 - SRI. HARISH DHARNIA, AND DR. RAVI PRASAD M.P. MEMBER Represented by: Sri Shivadass, Advocate. ORDER UNDER SECTION 98(4) OF THE CENTRAL GOODS SERVICES TAX ACT, 2017 AND UNDER 98(4) OF TH ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laims is done under the administration and purview of Volvo, Sweden. iii. Ordinarily, upon acceptance of the warranty claim, the applicant carries out services and repair work on the vehicles of the customers. iv. However, in cases where required, the applicant also provides for free replacement of the defective parts and provides services of fitting out of such replaced parts on the vehicles. v. The applicant invoices Volvo Sweden for claiming the amount spent on discharging such warranty obligations. vi. The reimbursement sought includes the cost of replaced product and the services provided including fixing of the parts, for the purposes of replacing the goods. vii. After processing of the claims by Volvo Sweden, they issue credit note to the applicant or its dealers in the form of Warranty Credit Note Acceptance (WCA) and thereby reimburses such expenses in convertible foreign exchange to the applicant and its dealers. d. The applicant submits that the that the supplies of parts for repair and replacement to the Indian customers of Volvo Sweden, along with the services of fitting out of defective parts, is a composite supply, where the principal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt parts is ancillary to the main supply. e. that that inference may be drawn from the agreement and the conduct of the parties that the supply from the Applicant towards Volvo Sweden is essentially a composite supply of services along with replacement of parts, where required, wherein the principal supply is that of supply of service of warranty. Therefore, in this instant case, the principal supply is that of the warranty service, to which ancillary is the supply of parts and replacement equipment. 5. The applicant also submits that in the instant case, the transaction of provision of warranty services is a supply of services and the location of the recipient of such service (Volvo Sweden) is outside India. Therefore, the place of supply can be determined by reference to Section 13 of the IGST Act, which provides for the determination of place of supply of services where either the recipient or the supplier is located outside the taxable territory. Section 13(1) of the IGST Act provides for the place of supply of service for different nature of services where the location of the service provider or location of recipient is outside India. As per Section 13(2), which is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice is outside India; (iv) the payment for such service has been received by the supplier of service in convertible foreign exchange; and (v) the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8. 10. The applicant submits that in case any service fulfils all the aforesaid conditions, the same can be considered as export of services. In the instant case, he states that all the aforesaid five conditions are being satisfied as tabulated herein: Sr.No. Conditions Remarks 1. The supplier of service is located in India. The applicant being the Supplier of service, is located in India. Hence condition is satisfied. 2. The recipient of service is located outside India. As submitted above, Volvo Sweden being recipient of services is located outside India. 3. The place of supply of service is outside India. As Section 13(2) of IGST Act wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same either himself or through his dealers. The sale price of the products is inclusive of the standard warranty and this amounts to supply of goods i.e. products. (b) The applicant is involved in providing warranty services for the products sold by the applicant and states that this services are provided to the customers on behalf of M/s. Volvo Sweden, and M/s. Volvo Sweden is reimbursing the amount spent on carrying out of services and repair work on the vehicles of the customers. (c) The applicant has clearly stated that the customer claiming warranty services approaches the applicant in case of a grievance regarding parts of the vehicle and not M/s. Volvo Sweden and the claim is processed by the applicant. The applicant claims that the processing of the warranty claims is done under the administration and purview M/s. Volvo Sweden and has not provided any details as to how M/s. Volvo Sweden processes the claim through the applicant, when both are claimed to be independent entities. It is pertinent to note that the customer claiming warranty services approaches the applicant where there is a grievance related to a part of the vehicle and this means that the defective ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; (b) import of services for a consideration whether or not in the course or furtherance of business; (c) the activities specified in Schedule I, made or agreed to be made without a consideration; and (d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II... That means a supply under the GST Act includes supply of goods or services or both made for a consideration by a person in the course or furtherance of business. There is a supply of goods or services from the applicant to the customer and what is the consideration needs to be seen. (g) Section 2(31) of the CGST Act defines consideration and the same is as under (31) consideration in relation to the supply of goods or services or both includes- (a) any payment made or to be made, whether in money or otherwise 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 but shall not include any subsidy given by the Central Government or a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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