Repair services provided to fulfil warranty obligation involving supply of parts to be classified as composite supply of services

Last updated: 26 April 2021

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The Uttar Pradesh AAR has ruled that warranty repair services provided by motor vehicle dealers, which include the supply of replacement parts, are to be classified as a composite supply of services. The primary supply is the repair service itself, with the parts being incidental to fulfilling the warranty obligation. This classification applies when the repair service is the main offering, parts are replaced as part of the ordinary course of business, and the dealer is reimbursed for both labour and parts.

Court :
AAR, Uttar Pradesh

Brief :
The AAR, Uttar Pradesh in the matter of Premier Car Sales Ltd. [Order No. 29 dated 11, March, 2019] has held that, repair services carried out under an agreement, by the Assessee engaged in sale of motor vehicles parts and accessories, to fulfill the warranty obligation, which also involved supply of parts could be classified as a composite supply of services under Section 2(30) of the Central Goods and Services Tax Act, 2017 ('CGST Act'), where the principal supply is services and the supply of parts is incidental to such supply of services.

Citation :
Premier Car Sales Ltd. [Order No. 29 dated 11, March, 2019]

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Judgement posted by

Bimal Jain

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FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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