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TMI Blog2022 (3) TMI 1299X X X X Extracts X X X X X X X X Extracts X X X X ..... , KANYAKUMARI, TAMILNADU-629193 (hereinafter called the Applicant) are registered under GST with GSTIN33AACTS0090G1ZS.The applicant has sought Advance Ruling on the following questions: 1. 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 2. Whether GST leviable on supply of materials and labour charges incurred during the warranty period, free of cost 3. Rate of tax applicable for collection made towards supply of materials and labour charges towards repair of fishing vessel of heading 8902 4. Rate of tax on puff insulated ice boxes used by fishermen in fishing vessels for reducing spoilage and maintaining good hygiene. 5. Rate of tax on marine engine coming under HSN Code 8407 supplied to Defence Department for patrol, flood relief and rescue operations. The Applicant has submitted the copy of application in Form GST ARA - 01 and also submitted a copy of Challan evidencing payment of application fees of Rs. 5,000/- each under sub-rule (1) of Rule 104 of CGST rules 2017 and SGST Rules 2017. 2.1 The applicant has stated that they are a Charitable Society formed under the Travancore-Coc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... portion of the clarification as below: "10.1 Applicability of GST on marine engine: It is clarified that supply of marine engine for fishing vessel falling under Tariff item 8408 10 93 of the Customs Tariff Act, 1975 would attract GST rate 5% by virtue of S.No. 252 of Schedule I of the Notification No.01/2017 Central Tax (rate) dated 28.06.2017." The applicant has stated that their product is also marine engine exclusively used by poor fishermen on fishing vessels of HSN 8902. Hence, they have contended that the above Circular is directly applicable in their case. 2.3 The applicant has stated that they are giving six months warranty on fishing vessels sold to the customers. Under this warranty period, fishing vessels are repaired free of cost. In other words, the applicant is not collecting any consideration against the supply of goods and services during warranty period, from the purchasers of fishing vessel. Since there is no consideration for the supply, no GST is payable by the applicant on this transaction. Value of materials to be supplied and services to be provided during warranty period are also taken in to account and included in sale price, on which GST is duly paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have also stated that this item will not come within Sl. No 108 of Schedule III of Notification 01/2017 CT (rate) - Articles for: the conveyance or packing of goods, of plastics: stoppers, lids, caps and other closures, of plastic, attracting 18% GST under CTH 3923. They have stated that the puff insulated ice boxes are not packing material or just article for conveyance of goods. The primary intention of ice boxes is to keep the fish fresh without spoilage. Further, they have stated that they are also supplying marine engines to Defence Department for patrol, flood relief and rescue operations, This supply will come within Customs Tariff heading 8906 - 'other. Vessels including war ships and life boats other than rowing boats.' As per Entry No. 252 of Schedule I of Notification No. 01/2017 Central (Rate) dated 28,06.2017, parts of goods of headings 8901, 8902, 8904,8905, 8906 and 8907 falling under any chapter of the Customs Tariff attracts GST at the rate of 5%. Therefore, they have contended that the marine engines supplied for use as part of Warship and Life boats falling under Customs Tariff Heading 8906 (Serial No. 250 of Schedule I of Notification No. 01/2017 Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether such boxes have to be used only in the fishing vessels or can be used as stand alone. If so, the reasons for claiming it under entry no.252. v. The principal place of business declared is SIFFS Boatyard, Enayam, Vilavancode Taluk, Kanyakumari and the additional place of business is at ECR Road, Villupuram District. However, in the invoice copies submitted, it is observed that the tax invoice for sale of spares has been issued from Shop no.24/3A1 at Nagapattinam. They were asked to clarify as to which is the additional place of business declared by them and how do they operate from an address at Nagapattinam. They were also asked to clarify from which places their sales is effected and a copy of invoice issued /purchase order from each such place of sale effected to fishermen, defense department etc may be furnished. vi. Tax invoices and practice followed during pre-GST and GST regime. vii. Whether returns have been filed. 3.2 The applicant vide their letter (received on 13.01.2022) submitted the following documents/facts. 1. Copies of tax invoice No. OKP21 / 1 DT 04/05/2021 & SKP21/47 DT 27/10/2021 -documentary evidence for supply of marine engines and spare parts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stered in Tamilnadu state. Last year, they have relocated a branch functioned at Vedaranyam (listed in serial number 5 under branch details as per GST registration certificate) in Nagapattinam district to Nagapattinam Puthur area Shop No. 24/3A1. Due to the impact of Covid 19 and the related restrictions, registration updation process with GST could not be completed in time. Though the updation processes were initiated on 09/07/2021, they were not able to complete it because of a validation error in the name of members of their board. They are still in the process of rectification of these issues to update the registration of relocated business branch before GST department. They have furnished GST registration certificate with additional business places and the copies of some tax invoices issued from their business places to fishermen customers. Further, the applicant vide their letter dated 13.01.2022 has submitted the amended GST registration certificate. 4. The Centre Jurisdictional authority who has administrative control over the applicant has stated that there are no pending proceedings on the issue raised by the applicant in the Advance Ruling application and has submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficers. Applicant is a Charitable Society formed under the Travancore-Cochin Literacy Scientific and Charitable Societies Registration Act, 1955, engaged in undertaking various welfare activities for the poor fishermen in South India for the last forty years. They have been manufacturing Fishing boats and ice boxes, importing Marine engines for fishing vessels from outside India and providing the fishing requisites at concessional rates to the fishermen,. The applicant has sought Advance Ruling on the following questions: 1. 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 2. Whether GST leviable on supply of materials and labour charges incurred during the warranty period, free of cost 3. Rate of tax applicable for collection made towards supply of materials and labour charges towards repair of fishing vessel of heading 8902 4. Rate of tax on puff insulated ice boxes used by fishermen in fishing vessels for reducing spoilage and maintaining good hygiene. 5. Rate of tax on marine engine coming under HSN Code 8407 supplied to Defence Department for patrol, flood relief and rescue operati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these engines i.e., if they become part of fishing vessels or other vessels including warships and life boats other than rowing boats. Thus the rate of tax at 5% is based on the end use these engines are put to and is available only for the vessels defined as above. 7.3 Applicant has relied on Para 10.1 of Circular no.52/26/2018-GST dt. 09.08.2018 is reproduced as under: "10.1 Applicability of GST on marine engine: Reference has been received seeking clarification regarding GST rates on Marine Engine. The fishing vessels are classifiable under heading 8902, and attract GST @ 5%, as per S. No. 247 of Schedule I of the notification No. 01/2017-Central Tax (rate) dated 28.06.2017. Further, parts of goods of heading 8902, falling under any chapter also attracts GST rate of 5%, vide S. No. 252 of Schedule I of the said notification. The Marine engine for fishing vessel falling under Tariff item 8408 1093 of the Customs Tariff Act, 1975 would attract a GST rate of 5% by virtue of S. No. 252 of Schedule I of the notification No. 01/2017-Central Tax (rate) dated 28.06.2017. 10.2 Therefore, it is clarified that the supplies of marine engine for fishing vessel (being a part of the fish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicant has not produced documents establishing details of spare sales, this authority is constrained to ascertain whether the spares supplied are parts of goods of vessels falling under chapter 8902. In this scenario, for want of documentary substantiation, no ruling is offered with respect to spares. 8.1 The next question taken up for consideration is whether GST is leviable on supply of materials and labour charges incurred during the warranty period, free of cost. Applicant has submitted a copy of the warranty card issued and warranty bill no. BTP2O/R274 dt. 02.02.2021 and the corresponding entry in their TALLY against the warranty bill. From the above documents, it is seen that the warranty is issued for 6 months subject to satisfaction of certain terms and conditions. The tally entry shows that the warranty repair has been offset by credit entry from Repair Debtors which shows that no amount has come into the account of the applicant and that the provision for Repair has been debited. Thus the documentary proof shows that the repairs are done free of cost during the warranty period. Further they have stated that the value of materials to be supplied and service provided d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. SDM21/358 dt. 29.11.2021 Filter engine oil, Gasket Drain plug 8421, 4016 18% And 28% Nil 5. SKP21/54 dt. 26.11.2021 Impeller, water pump 8413 28% 18% 6. SMT21/266 dt. 30.11.2021 Plug Spark, Fibre washer 8511, 8409 28% NIL 7. SCL21/225 dt. 30.11.2021 Cable Assy. Throttle 8409 28% 18% From the above invoices, it is seen that the spares and labour charges are treated as separate transactions and have been taxed at the appropriate rates. To decide on the nature of activity supplied, if composite or not, the terms of such activity should be known. That is, it should be made clear if the activity of rendering repair or maintenance services of fishing vessels/boats etc involves supply of both goods/spare parts and services in conjunction and are naturally bundled with each other in the ordinary course of business to be treated as composite supply. This fact can be ascertained only from the contract entered into for rendering such service. In the instant case, applicant has not submitted any such contract for reference. However they have relied on the CBIC Circular No, 47/21/2018 - GST dated 08.06.2018 which provides as follows: "2. How is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as parts of fishing vessels under entry no.252 of Annexure-I of Notification No. 01/2017-C.T (Rate) dated 28.06.2017. 9.2 To avail the concessional rate of 5% under entry no. 252 cited supra, goods supplied should be part of goods falling under Chapters 8901, 8902, 8904, 8905, 8906, 8907. The subject Puff insulated ice box is only used independently to keep the fish fresh and it does not become a part of the vessels as provided in the notification. Such boxes cannot be considered as part of the vessels and are in no way connected to the vessels. Their main purpose is to keep the fish fresh and prevent decay and has nothing to do with the vessels or operation of such vessels. Hence the product cannot be considered as a part of fishing vessel falling under Customs Tariff Heading 8902 and hence is not eligible for the concessional rate of GST as per entry at SI.No.252 of Schedule I of Notification No.01/2017 Central Tax (Rate) dated 28.06.2017. 10. Applicant has further stated that they are supplying marine engines to Defence department for patrol and flood relief and rescue operations and such engines supplied would also be eligible for GST at the rate of 5% as per no.252 of Annex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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