9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (12) TMI 1299 - AAR - GSTClassification of supply - Supply of Goods or Supply of Service - job work service or not - Rate Contract for Fabrication and Transportation of 20 KL 70 KL Horizontal Tanks including transportation of Steel Plates from its Depot to Applicant s works - rate of tax - applicability of Circular No. 126/45/2019-GST dated 22/11/2019 - HELD THAT - The applicant is presently classifying the same supply of goods and charging GST @ 18% under HSN code 7309 and there is no change in composition of final product and process of fabrication of steel tanks. As per submission of the applicant, only steel plates are being provided by IOCL on free of cost basis to the applicant and all other structural items/material fittings required for the tank are to be arranged by the applicant - The applicant had also submitted that the proportion of weight and value of the components and material used by them in the process of fabrication of tank on the steel plates provided on FoC basis by IOCL is quite substantial (Para 1.10 of Statement of relevant facts). As such, it is not a case that entire inputs required for fabrication of tanks are provided by M/s IOCL but substantial items are used by the applicant during the process. The nature of supply in the instant case is supply of goods. The activity performed by the applicant in the process of supply of tank is not covered in the services by way of job work or in manufacturing service under Notification No. 11/17-CT(Rate) date 28.06.2017. The legislature has defined job-work and manufacture separately. As such, the legislature does not intend to cover a treatment or process resulting into a distinct commodity under the scope of job work. The steel plates and tank are different commodities and after processing on steel plates, a new product Tank has been manufactured which is distinct in name, character and use. The fabrication of tank from steel plates supplied free of cost froth M/s IOCL is manufacture as per CGST Act, 2017. Accordingly, supply of tanks by the applicant is supply of goods.
Issues Involved:
1. Classification of supply as 'Supply of Goods' or 'Supply of Service'. 2. Applicability of Circular No. 126/45/2019-GST dated 22/11/2019. 3. Correct HSN/SAC code applicable. 4. Applicable Rate of Tax of GST. Detailed Analysis: Issue 1: Classification of Supply The applicant, engaged in fabricating tanks from steel sheets supplied free of cost by IOCL, also uses self-procured items (e.g., angle stiffeners, hexagonal bushings, lifting eyes, brackets, consumables like welding electrodes, and gas). The applicant transports steel plates from IOCL to their works and delivers the fabricated tanks back to IOCL. The primary question is whether this activity constitutes a 'Supply of Goods' or 'Supply of Service'. The applicant initially classified the supply under HSN Code 7309 (supply of goods) with an 18% GST rate but also suggested that the activity falls under SAC 9988 (manufacturing services on physical inputs owned by others) with an 18% GST rate up to 30.09.2019. The authority observed that the applicant uses substantial self-procured items in the fabrication process, making it a supply of goods rather than a service. The final product (tank) is distinct in name, character, and use from the initial steel plates, thus constituting manufacturing. Issue 2: Applicability of Circular No. 126/45/2019-GST Given the classification of the supply as 'Supply of Goods', the question of the applicability of Circular No. 126/45/2019-GST, which pertains to job work services, does not arise. Issue 3: Correct HSN/SAC Code The correct HSN code for the supply is determined to be 7309, which pertains to "Reservoirs, tanks, vats and similar containers for any material (other than compressed or liquefied gas), of iron or steel, of a capacity exceeding 300 liters, whether or not lined or heat-insulated, but not fitted with mechanical or thermal equipment." Issue 4: Applicable Rate of Tax of GST Based on the classification as 'Supply of Goods' under HSN 7309, the applicable rate of GST is 18% (9% CGST and 9% SGST or 18% IGST). Ruling: 1. Nature of Supply: The nature of supply is 'Supply of Goods'. 2. Applicability of Circular No. 126/45/2019-GST: Not applicable as the nature of supply is 'Supply of Goods'. 3. Correct HSN/SAC Code: HSN 7309. 4. Applicable Rate of Tax of GST: The rate of GST is 18% (9% CGST & 9% SGST or 18% IGST). This ruling is valid within the jurisdiction of the Authority for Advance Ruling Uttar Pradesh and subject to the provisions under Section 103(2) of the CGST Act, 2017 until declared void under Section 104(1) of the Act.
|
