Case Law Details
In re Prag Industries (India) Pvt Ltd (GST AAR Uttar Pradesh)
The ruling addresses the question of tax liability under GST for the supply of goods as free replacements during the guarantee period without any consideration.
The AAR examines the applicant’s submission regarding the supply of goods as free replacements during the warranty period. The applicant argues that no consideration is charged for the replacement, and therefore, no GST should be levied separately. They contend that the original supply already included the charges for the warranty period.
The AAR refers to Schedule I of the CGST Act, which treats certain activities as supplies even if made without consideration. It includes the permanent transfer or disposal of business assets where input tax credit has been availed, supply between related persons or distinct persons in the course of business, and supply of goods by a principal to an agent or vice versa.
The AAR also cites a ruling from the AAR, Chennai, which states that no GST is chargeable on replacement parts provided under warranty without consideration. The value of the original supply already encompasses the charges for the warranty period.
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