GST on Maintenance & Repair services of commercial & industrial machinery

In re Sandvik Asia Pvt. Ltd. (GST AAR Rajasthan)

Q1. Whether on facts and circumstances of the case, 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 Central Goods and Service tax Act, 2017 (CGST Act) and Rajasthan State Goods and Service Tax Act, 2017 (RJ SGST Act) [collectively referred to as the ‘GST Act’] or as mixed supply under Section 2(74) of GST Act?

A1. 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.

Q2. In case the said agreements are considered as composite supply, what is the principal supply between goods and services?

A2. 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.

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