The Tamil Nadu Authority of Advance Ruling (AAR) held that 5% GST on marine engines and spare parts.
The applicant has stated that they are importing outboard motors from Japan and selling the outboard motors to Fishermen, Boatbuilders, Defence Department and other agencies to fit in boats used for fishing purposes, patrolling, flood relief and rescue operations. They are also providing repairs and maintenance service for outboard motors, selling spare parts of marine engines, importing fishing hooks, agricultural equipment and motorcycle transmission chain sprockets and selling the same all over markets in India.
The applicant has stated that the outboard motors are designed to operate only in marine and fresh water and they can be operated only by fitting in a boat. The cooling system of the outboard motor is designed to take water through the propellers and hence the engine cannot be operated out of water. (Water-cooled engine not air-cooled). They have stated that the outboard motor cannot be utilized unless otherwise fitted on the boat, even for doing service they need to put it into a water tank to attend to the repairs and maintenance.
The applicant has sought the advance ruling on the issue Applicability of GST rate on marine engines pertaining to HS code 8407 and its spare parts without considering its general tax rate as per the entry of Schedule I, Sl.No.252 of GST Act dated 28.06.2017, being this engine forms a part of a fishing vessel of HS code 8902 and Applicability of GST rate 5% on marine engines pertaining to HS code 8407 and its spare parts without considering its general tax rate as per the entry of Schedule I, Sl.No.252 of GST Act dated 28.06.2017, being this engine forms a part of boats of HS code 8906 being supplied to defence department and other agencies used for patrolling/flood relief and rescue purposes.
The coram of K.Latha and T.G.Venkatesh ruled that applicability of GST Rate 5% on marine engines pertaining to HS code 8407 forming part of fishing vessels is not answered for lack of substantiating documents.
“Applicability of GST rate 5% on marine engines pertaining to HS code without considering its general tax rate as per the entry of Schedule I, SI. No.252 of GST Act dated 28.06.2017, being this engine forms a part of boats of HS code 8906 being supplied to defence department and Naval base, Cochin is available to the applicant when such engines are fit in vessels used for patrolling/flood relief and rescue purposes. Applicability of GST rate at 5% under SI.no.252 cited above is not available for spare parts of marine engines,” the AAR said.
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