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TMI Blog2021 (12) TMI 721X X X X Extracts X X X X X X X X Extracts X X X X ..... rty years. They provide the fishermen necessary fishing requisites at concessional rate. Fishing boats and Iceboxes are manufactured by the Applicant while Marine engines for fishing vessels are imported from outside India 3. The applicant has sought advance ruling in respect of the following questions: i. Rate of tax on Marine Engines coming under HSN Code 8407 and its spare parts exclusively used as part of fishing vessel of heading 8902. ii. Whether GST leviable on supply of materials and labour charges incurred during the warranty period, free of cost. iii. Rate of tax applicable for collection made towards supply of materials and labour charges towards repair of fishing vessels of heading 8902. iv. Rate of tax on puff insulated ice boxes used by fishermen in fishing vessels for reducing spoilage and maintaining good hygiene. v. Rate of tax on marine engine coming under HSN Code 8407 supplied to Defence Department for patrol, flood relief and rescue operations 4. Admissibility of the application. The question is about "determination of the liability to pay tax on any goods or services or both" and hence is admissible under Section 97(2)(e) of the CGST Act 2017 5. B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .06.2017. However, such supply should be for use as parts of fishing vessels. Para 2. Whether GST leviable on supply of materials and labour charges incurred during the warranty period, free of cost. This issue has been clarified in Sectorial FAQs by CBIC, for IT/ ITES Sectors as under: Question 20: What would be the tax liability on replacement of parts (no consideration is charged from a customer) under a warranty and whether the supplier is required to reverse the input tax credit? Answer: As part are provided to the customer without a consideration under warranty, n GST is chargeable on such replacement. The value of supply made earlier includes the charges to be incurred during the warranty period. Therefore, the supplier who has undertaken the warranty replace is not required to reverse the input tax credit on the parts/ components replaced. It appears that the above clarification applies for the instant case also. Para 3. Rate of tax applicable for collection made towards supply of materials and labour charges towards repair of fishing vessel of heading 8902. The supply of maintenance and repair service of fishing vessels is a classifiable under SAC 998714 and is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ach other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the KGST Act. 8. We have considered the submissions made by the applicant in their application for advance ruling as well as the submissions made by applicant and his authorized representatives during the hearing. We also considered the issue involved on which advance ruling is sought by the applicant and relevant facts. 9. The transaction relating to the first question sought by the applicant is verified. It is an admitted fact that the applicant is classifying marine engines under Customs Tariff Heading 8407 21 00- Outboard motors -Marine Propulsion engines. Further the Fishing vessels, factory ships and other vessels for processing or preserving fishery products fall under Customs Tariff Heading 8902 and is liable to GST at the rate of 5% as per entry at SI.No.247 of Schedule I of Notification No.01/2017-Central Tax (Rate) dated:28.06.2017. 10. In the instant case, the applicant admitted to be supplying marine engines (HSN 8407 21 00) and spares for fishing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vered at the time of supply of principal goods. However, the tax on the same would have been paid at the time of principal supply of goods; as such costs are included in the price of principal goods supplied. Therefore the replacement of the goods and service during the warranty period without consideration does not come under the purview of supply and no GST is leviable in such case. 12. The third question sought by the applicant pertains to rate of tax applicability on supply of materials along with labor charges incurred towards repair of fishing vessels. In this regard the applicant has furnished copy of the bill only and not furnished any of the contract/agreement entered with customers for supply of repair or maintenance service of fishing vessels. Upon verification of the bill raised by the applicant to Neendakara Boatyard, Kollam, Kerala it is ascertained that the applicant is charging taxes at the applicable rate of tax on goods and charging tax at the rate of 18% on service vide SAC 9987 (Maintainenance, repair and installation service). 12.1 The activity of rendering repair or maintenance services of fishing vessels/boats etc involve supply of both goods/spare parts an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to Rate of tax on marine engine falling under HSN Code 8407 supplied to Defence Department for patrol, flood relief and rescue operations. The marine engines are supplied for use as part of vessels used by the Defence and other agencies for patrol, relief and rescue operations fall under Customs Tariff Heading 8906-Other vessels including warships and lifeboats other than rowing boats. As per entry at Sl.No.252 of Schedule I of Notification No.01/2017 Central Tax (Rate) dated 28.06.2017 parts of goods of heading 8901,8902, 8904, 8905, 8906, 8907 falling under any chapter of the Customs Tariff attracts GST at the rate of 5%. Therefore, if the marine engines are supplied for use as part of vessel falling under Customs Tariff Heading 8906, which are used by the Department of Defense and other agencies for patrol, relief and rescue operations, then the marine engine as part of such vessel will only attract GST at the rate of 5% as per the said entry. 15. In view of the foregoing, we rule as follow RULING i. The marine engine and its spare parts supplied for fishing vessel (for use as part of the fishing vessel- CTH 8902) shall attract GST at the rate of 5% f2.5%-CGST + 2.5%-KGST) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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