Classification of supply—In the instant application question placed before authority is that—
Whether the maintenance services rendered on customers’ equipment under the two agreements i.e. comprehensive maintenance services agreement and supply of parts and services agreement which also includes supply and replacement of spare parts should be classified as ‘composite supply’ under Section 2(30) of CGST Act, or as mixed supply under Section 2(74) of GST Act?
In case the said agreements are considered as composite supply, what is the principal supply between goods and services?
n case services are considered as the principal supply, what tax rate should be applicable?
In respect of the said agreements, what shall be the relevant place of supply and type of tax which needs to be discharged? (i.e. CGST & SGST or IGST).
Held that— In the present case the applicant can supply the parts or services individually or any combination thereof on a single price which is appropriately covered under mixed supply.
However, the contention of the applicant regarding “Comprehensive Maintenance Contract”, that the services would be classifiable under the Composite Services, we are of the view that Services supplied under the said contract are to be treated as composite services and the tax rate applicable on the principle supply would also be applicable on the other services.
The Second question arises on the basis of first question. The concept of principle supply is applicable only in supply of composite service. As already discussed, the applicant is supplying both type of services i.e. mixed supply and composite supply. There is no concept of principle supply in mixed supply.
The consumption of goods vary substantially depending on the wear and tear of the equipment, however the consumption of services which would be critical may not vary substantially as these engineers would be stationed at the mine site and accordingly perform maintenance activities on the equipment at regular intervals. Therefore, the predominant element in the composite supply would be provision of maintenance services and the supply of goods would be ancillary to such services - the supply of maintenance services should be considered as the principal supply and the supply of other goods or services shall be ancillary to such principal supply.
Rate of GST— The service code for Maintenance and repair services of commercial and industrial machinery is 9987171 and the prescribed rate of GST is (CGST @ 9% of the taxable value, SGST @ 9% of the taxable value) or IGST @ 18% of the taxable value.
Place of supply— The determination of place of supply as requested by the applicant cannot be decided by the authorities for Advance Ruling constituted under Section 96 of SGST Act, 2017. The Authority constituted under the said section can determine or pronounce Advance ruling only on the issues specified under Section 97 (2) of CGST/SGST Act, 2017 and determination of place of supply has not been specified under Section 97 (2). In view of above we are not giving any finding in respect of place of supply.
Ruling— 1. The activities performed under the ‘Comprehensive Maintenance Contract’ are to be treated as a composite supply of services and the activities performed under ‘Equipment Parts Supply and Services Agreement’ are to be treated as Mixed Supply.
2. In respect of the activities performed under ‘Comprehensive Maintenance Contract’, the supply of Operation & Maintenance services is the principal supply and the supply of other services are ancillary to such principal supply.
3. The service code for Maintenance and repair services of commercial and industrial machinery is 9987171 and the prescribed rate of GST is 18% (CGST @ 9% of the taxable value, SGST @ 9% of the taxable value) or IGST @ 18% of the taxable value. For the supply of mixed services, the applicant is liable to pay the highest rate of tax as per Section 8(b) of the CGST Act, 2017.
4. As the query raised by the applicant does not fall in the categories mentioned under Section 97 (2) of CGST/SGST Act, 2017, hence the same is accordingly disposed off.[AUTHORITY FOR ADVANCE RULING, RAJASTHAN]  5 TAXLOK.COM 019 (AAR-RAJASTHAN)