The Kerala Authority for Advance Ruling (AAR) ruled that, when the rates are quoted separately for the supply of spare parts/ accessories and the supply of service, then Repair Rate Contract can’t be considered as a composite supply.
The ruling was made by the bench consisting of B.G. Krishnan & B.S. Thyagarajababu on an application filed by M/s. Vista Marine and Hydraulics.
The applicant, who was engaged in the business of rendering repairing service of boats and, vessels along with the supply of spare parts and accessories, entered into a Repair Rate Contract with Naval Ship Repair Yard. The necessary spare parts/accessories and repair service are provided by the applicant.
The question raised here was whether the supply of spare parts/accessories and repair service can be considered as composite supply wherein the principal supply is repair service and hence the rate of tax for all the supplies, consisting of spare parts/accessories and repair service, be taken as l8%?
The Authority ruled that the, “Repair Rate Contract entered by the applicant with the Naval Ship Yard; the supply of spares/accessories and repair service are distinct and separately identifiable supplies for which the rates are quoted differently; work orders are issued separately specifying the spares/accessories to be supplied and the services to be supplied and the rates applicable thereon as per the rates quoted in the Repair Rate Contract”.
The Authority further pointed out that the “Repair Rate Contract provides for revision of rate of supply of spares/accessories separately and fall clause is also provided for the supply of spares/accessories”.
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