Whether supply of spare parts / accessories and repair service where principal supply is repair service is taxable at 18% or not as a composite supply ?

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Whether supply of spare parts / accessories and repair service where principal supply is repair service is taxable at 18% or not as a composite supply ?

Here is an Ruling by AAR, Kerala on the issue.

AUTHORITY FOR ADVANCE RULING, KERALA

M/S. VISTA MARINE AND HYDRAULICS

Classification of supply – composite supply or not – supply of spare parts / accessories and repair service – principal supply is repair service – taxable at 18% or not?

It is held that  the supply of spares parts / accessories and repair service are distinct and separately identifiable supplies for which the rates are quoted differently and 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 can’t be considered as a composite supply.

Where a supply involves supply of both goods and services and the value of such goods and services supplied are shown separately, the goods and services would be liable to tax at the rates as applicable to such goods and services separately.

No.- KER/58/2019

Dated.- September 16, 2019

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