The Tamil Nadu Authority of Advance Ruling ( AAR ) has held that GST not attracts for warranty services rendered exclusively without combining any other service charges or incidental expenses.
The applicant, South Indian Federation of Fishermen Societies is a Charitable Society formed under the Travancore-Cochin Literacy Scientific and Charitable Societies Registration Act, 1955. They are engaged in undertaking various welfare activities for the poor fisherman in South India for the last forty years. They provide the fishermen necessary fishing requisites at concessional rate. Fishing boats and Ice boxes are manufactured by them while Marine engines for fishing vessels are imported from outside India. These items are subsequently transferred to their Branches in various places in South India for supply to the fishermen.
The applicant approached Authority of advance ruling seeking clarification in respect of GST application on supply of materials and labour charges incurred during the warranty period, free of cost.
The applicant has submitted 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. The consideration received on original supply of fishing vessels includes the consideration for the promise to repair or replace the machines during Warranty period, without any additional charge, Hence, there is no GST payable on the deemed value of supply made during warranty period free of cost.
The Coram of Sri. T.G.Venkatesh, I.R.S., Additional Commissioner/Member, and Smt. K.Latha., M.Sc., (Agri), Joint Commissioner (ST)/ Member has held that “As parts are provided to the customer without a consideration under warranty, no GST is chargeable on such replacement. The value of supply made earlier includes the charges to be incurred during the warranty period. Therefore the replacement of the goods and service rendered during the warranty period without consideration does not attract GST separately. The warranty card, issued by the applicant has a condition that during the time of repair, transportation expenses and all other expenses have to be borne by the boat owner. If such cost are incurred by the applicant on behalf of the boat owner and is combined with warranty charges, taxes are applicable. Hence in cases where warranty services are rendered exclusively without combining any other service charges or incidental expenses incurred while rendering the warranty services, only will not attract GST”.
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