FA, 2020 amendment increasing...
The fact of the Case
The applicant was engaged in supplying marine pressure-tight and non-pressure tight cables designed for use in warships.
It received orders from the Defence Machinery Design Establishment (DMDE), Department of Defence Research and Development under the Ministry of Defence, Government of India for the supply of Marine-pressure tight and Non-Pressure right cables, specially made and designed for use in the warships.
It filed a motion for advance judgment to determine applicability or determination of liability to pay taxes on the supply of such cables. It claimed that these cables were very essential and integral to warships, without which warships could not function.
The Authority for Advance Ruling noted that essential parts of a ship/vessel would be such essential components/parts of a ship/ship without which the ship/vessel would not be completed and without which the ship would not exist.
There could be some additional equipment, which was required to be made available on a ship as a measure of statutory compliances under various marine acts such as Walkie-talkie, Binoculars, Life Jackets, Lifeboats, etc. but the ship would still be a ship without this equipment.
However, the applicant did not provide the reason why these cables could be so essential or so integral part of a warship, without which the warship would not exist or would not be complete.
In the absence of these details, it would not be possible for us to decide whether the subject matter would be parts of a warship or otherwise and thereby left with no option but to decide based on the records available as well as on the merits of the case.
Hence, it was held that marine pressure-tight cables and the marine non-pressure tight cables manufactured and supplied by the applicant to the Navy would not be parts of the warship and hence the benefit of reduced rate of GST of 5% would not be available.
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