EQUIPMENT PARTS SUPPLY AND SERVICE AGREEMENT” BY SANDVIK ASIA PVT. LTD. IS A MIXED SUPPLY UNDER SECTION 2(74) OF THE CGST ACT
RAJASTHAN APPELLATE AUTHORITY FOR ADVANCE RULING
GOODS AND SERVICES TAX
Before the Bench of:
1. Sh. Rakesh Kumar Sharma, Member (Central Tax)
2. Dr. Preetam B. Yashvant, Member (State Tax)
Case Title :- M/s Sandvik Asia
(GST AAAR RAJASTHAN)
Appeal No. RAJ/AAAR/APP/07/2018-19 dated 20.12.2018
Advance Ruling No. RAJ/AAR/2018-19/21 dated 12.10.2018
Date of Judgement/Order-18th March 2019
BRIEF OF FACT
Para No. 5. With respect to after sales support, the Appellant provides maintenance services for thc 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 prodused by the equipment(s) during the equipment life cycle.
Para No. 6. In respect of the supply of parts under the proposed Agreernents, the Appellant would supply parts falling under multiple GST rates such as 18%, 28%, etc,
Para No. 8. Under the said Advance Ruling Older, the Rajasthan Authority for Advance Ruling CST, Jaipur ( hereinafter referred to as “AAR”) has held that the activities performed under Agreement-1 shall be classified as “Composite Supply”, where principal supply would be the supply of maintenance services. In respect of Agreement-2, the AAR has held that the services provided under the said Agreement are classifiable as “Mixed Supply” under Section 2(74) of CGST/RGST Act, 2017.
Para No. 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.
Para No. 40. We find that the Appellant are providing services to their clients, under two Agreements namely (i) “Comprehensive Maintenance Agreement” (Agreement-I) and (ii) “Equipment Parts Supply and Senices 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 pronounced/held as the Composite Supply. We find that the language of both Agreements is self explanatory- In first Agreement, emphasis is on comprehensive maintenance of equipments in second Agreement, supply of parts as well as their maintenance is explicitly and separately mentioned. Even Title of the Agreements, as mentioned above, also indicate this Though supply of parts/spares is involved in both the Agreements , the phrase ‘Equipments Parts Supply’ has been separately and specifically indicated in the title of the Agreement-2.
Para No. 43. From above, it is elident that under the second Agreement i.e. • EAuipment Parts Supply and Service Agreement’ , both the supplies i.e. supply of service and supply of parts are not integral to each other unlike supplies involved in Agreement-I .. Hence, it is not a case of two or more taxable supplies which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply.
ORDER
Para No. 49. We uphold the Advance Ruling rendered by the Rajasthan Authority for Advance Ruling, Goods and Services Tax* Jaipur their Ruling No. RAJ/AAR/2018-19/21 dated 12.10.2018, in respect of activities performed by the Appellant under ‘Equipment Parts Supply and Services Agreement’ (Agreement-2), which has been held as “Mixed Supply” as defined under Section 2(74) of the Central CST Act, 2017 Consequently , the Appeal filed by the Applicant/Appellant i.e. M/S Sandvik Asia Pvt. Ltd., Jaipur, is not legally sustainable and hence is liable to be dismissed and we hold accordingly.
