The Karnataka Authority for Advance Ruling ( AAR ) has denied the GST concession as the service of supply of test bunch equipment was not an ingredient in building aircraft.
In the instant case the applicant Test Measures Spherea Solutions Limited was the subsidiary company of Spherea Test and Services which was established abroad. The parent company Spherea Test and Services had sold two test bunch equipment related to aeronautics to customers in India. The applicant had sought advance ruling on whether the services provided by the company to its parent company related to test bunches in the name of maintenance, repair and overhaul(MRO) could be classified under the head of 9987i(a) of No 25i(a) of notification No. 11/2017 Central Tax rate, that is whether the company could avail 5% of GST concession under the mentioned head.
Nikhil Jain, on behalf of the applicant contended that the applicant’s service could be categorised as the maintenance, repair and overhaul(MRO) under the head of9987i(a) No.25i(a) of notification No. 11/2017 Central Tax rate as the maintenance, repair and overhaul in respect of aircraft, aircraft engines and other aircraft components and parts. He further contended that the company was eligible for the 5% GST concession rate.
The authority of MP Ravi Prasad (state Member) and Kiran Reddy T (Central Member) observed that the GST concession rate of 5% would not be applicable as the equipment was not an aircraft component or part. The authority further held that the test bunch equipment had only the function of testing the airworthiness of aircraft and denied the GST concession rate of 5% to the company.
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