Confussion on levy of gst issue of consideration

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

06 February 2018 Dear Experts,
I'm working in electronic company. The issue is, our company sales it's product in warranty period in case any defects in warranty period. The company will replace the defective parts. However as per section 2(31) of CGST act. 2017 replacement of parts freely under warranty period is not within ambit of consideration Hence No GST on replacement of goods under warranty period.

Pls clarify :- am I right....

Thank & Regards
Rohit Chandra

Udaya Chandran

Udaya Chandran (Expert)
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07 February 2018 As per my opinion, since there is no consideration in this supply and not covered in Schedule I, this is not supply.

Moreover, please refer the FAQ by the department:

Question 20: What would be the tax liability on replacement of parts
(no consideration is charged from a customer) under a warranty and
whether the supplier is required to reverse the input tax credit?
Answer: As parts are provided to the customer without a consideration
under warranty, no GST is chargeable on such replacement. The value
of supply made earlier includes the charges to be incurred during the
warranty period. Therefore, the supplier who has undertaken the
warranty replacement is not required to reverse the input tax credit on
the parts/components replaced.

Querist : Anonymous

Querist : Anonymous (Querist)

08 February 2018 Sir :- can we send the goods for replacement under warranty by delivery challan as per my opinion as per rule 55(1) goods can be send by delivery challan liquid gas, good for job work, good other than the supply. Since replacement of goods under warranty period is not supply Hence parts can be send by delivery challan at places of our authorized service Centre,

Pls share your views.....

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Udaya Chandran

Udaya Chandran (Expert)
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08 February 2018 Yes, you can send the goods under delivery challan.

Querist : Anonymous

Querist : Anonymous (Querist)

14 February 2018 Sir one more question :- we have our authorized service Centre across the country. Since it is not supply Hence No GST is to be levied also the Spare parts can be send by delivery challan but the actual issue is we are delhi based company, assume a tamilnadu based our service center has send one part requirement. From here we can send the part by delivery challan the service Centre will replace the part and they will send us the defective part.

So problem is how the service Centre will send us the defective parts

Udaya Chandran

Udaya Chandran (Expert)
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14 February 2018 As per my opinion, DC may be enough. Please have a second opinion also.

Querist : Anonymous

Querist : Anonymous (Querist)

15 February 2018 Sir even in my opinion DC is enough to send the defective parts.

Sir many our service centers had asked, let me illustrate :- suppose we have send the parts for replacement by delivery challan. The parts will be delivered at service Centre so whether the service centres need to show these parts in their GST return or not however it not not purchase for them.

If they will not enter than how they will send us the defective parts