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Principal supply shall be of services where goods & services both are supplied under AMC contracts

March 12, 2019[2019] 103 taxmann.com 124 (AAR - MAHARASHTRA)
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GST : Where applicant company, engaged in business of manufacturing diesel and natural gas engines, was providing after sales services to its customers which included supply of spare parts, maintenance services, rebuilding of engines and batteries, since supply of maintenance service was for a single price with supply of spare parts/goods, thus, supply of both goods and services were made in conjunction with each other in ordinary course of business, same was to be considered as a composite supply of service where principal supply was service and supply of goods was incidental to such supply of service

• The applicant company was engaged in business of manufacturing diesel and natural gas engines which was supplied to their end customers. It also provided after sales services to its customers on account of engines supplied by them which included supply of spare parts, maintenance services, rebuilding of engines and batteries. The applicant executed an Annual Maintenance Contract (AMC) with end customers to provide maintenance services to its customers for a fixed charge. If in the course of providing the maintenance services, the applicant was required to utilize consumables, parts etc., and the value for such parts or consumables were recovered from the applicant under AMC.

• An instant application was preferred by the applicant before the Authority for advance ruling to decide the taxability of the above said transaction.

• Since the supply of maintenance service in the instant case is for a single price with supply of spare parts/goods as and when required the supply of both, goods and services are made in conjunction with each other in the ordinary course of business and therefore considering the provisions of the GST Laws supply of services/goods in the present case is naturally bundled, with the supply of goods being incidental to the supply of services and therefore such contract are to be considered as a composite supply of service where the principal supply is service and the supply of goods is incidental to such supply of service.

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