The Gujarat Authority of Advance Ruling (AAR) ruled that the 18% GST is applicable on Nuts & Bolts, Bollards, Fascia pads, Frontal frames & washer.

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The applicant M/s. Trelleborg Marine Systems has submitted that under the erstwhile Indirect tax regime, the applicant was subjected to the levy of VAT’ and ‘CST’ respectively. The applicant, being a trading entity, was not required to be registered under the Central Excise legislation. Since the classification under Gujarat VAT is not derived by any HSN except for specific/few goods, classification adopted by Applicant was a subject matter of dispute between VAT authorities and the Applicant; that under the classification mechanism provided under Gujarat VAT legislation, there were two predominant rates of VAT in force viz. 5% (4% + 1% additional tax) and 15% (12.5% + 2.5% additional tax) and for the former category, goods were specifically enlisted whereas the latter tax rate applied as a residual tax rate on all other goods.

In the erstwhile regime, the applicant had classified each product under its specific category provided under 5% tax rates but this classification was disputed by the VAT Department, without providing sufficient grounds for substantiation; that subsequent to the change in the Indirect tax legislation and considering the way in which the manner for classifying goods and services has undergone a change, they seek to understand the correct classification of their products under the GST regime. Therefore, the applicant has sought the advance ruling on various issues.

Firstly, the clarification was sought in respect of classification of the products namely Bollards, Bolts, nuts, screw, washer etc. known as fixtures, Frontal Frames, Fascia Pads, Buoys, Chains/ Swivel/ D-Shackle/Chain tensioner, Rubber Fender (both types) under GST and applicable tax rate thereon in accordance with Notification No. 01/2017 dated June 28, 2017.

The coram of Sanjay Saxena and Mohit Agarwal ruled that the 18% GST is applicable on Bollards, Bolts, Nuts, Screw, Washer, Frontal Frames, Fascia Pads, Chains and Swivel/D- Shackle/ Chain tensioner; 5% GST is applicable on Buoys; and 18% GST on Rubber Fender (both types) from November 15, 2017 onwards.

Secondly, whether the supply of a few products such as frontal frames with fascia pads along with fixtures as a complete set, would qualify as a composite supply or not? If the supplies would qualify as composite supply, what would be the classification of this bundle and applicable tax rate thereon in accordance with Notification No.01/2017 dated June 28, 2017. The Authority ruled that supply of products such as frontal frames with fascia pads along with fixture as a complete set, would qualify as a mixed supply. The said ‘mixed supply’ can be classified as supply of any of the three supplies i.e. Frontal frames (Tariff heading 73269080) OR Fascia pads (Tariff heading 39201099) OR Fixtures (Tariff heading- 73181500/73181600/73182200), and the GST applicable thereon will be 18%.

Thirdly, whether supply of goods i.e. fender panel system along with services such as assembly, installation & supervision service would qualify as composite supply or not? If the supplies would qualify as composite supply, what would be the classification of this bundle and applicable tax rate thereon in accordance with Notification No.1/2017 dated June 28, 2017. The AAR held that supply of goods i.e. fender panel system along with services such as assembly, installation & supervision service would not qualify as a composite supply or a mixed supply. Accordingly, the second part of the question becomes ‘not applicable’.

Lastly, Whether supply of installation service where usage of chemical is essential to provide effective service would qualify as composite supply or not? If the supplies would qualify as composite supply, what would be the classification of this bundle and applicable tax thereon in accordance with Notification No.11/2017 dated June 28, 2017 The Authority held that supply of installation service where usage of chemical is essential to provide effective service qualifies as ‘Composite supply’ for the reasons discussed hereinabove. The said ‘Composite supply’ will be classified as ‘Installation Services (other than Construction) (Service Code-998739) and the GST applicable thereon will be 18%.

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