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2021 (10) TMI 1160 - AAR - GSTClassification of services - job work service or not - activity of reshelling of old sugar mill rollers - HSN Code - whether is treatable as a job work service under SAC 9988 or is treatable as a repair/maintenance service under SAC 9987? taxable at 12% GST in terms of clause (id) of Sr. No.26 of Notification No.11/2017-CT(R), dt.28.06.2017 or will continue to attract 18% GST as earlier? HSN Code - HELD THAT - Applicant receives old and worn out sugar mill rollers from its customers who have actually used the said goods and such use has resulted in wear and tear. The applicant make the said rollers reusable. As per section 2(68) of the CGST Act, 2017 jobwork means, 'any treatment or process' undertaken by a person on goods belonging to another registered person and the expression jobworker shall be construed accordingly' - the sugar mill rollers are not brought into existence by the applicant in the subject case, rather the said rollers are already in existence, have been used to an extent which has resulted in wear and tear. Repairing of the impugned rollers signify working on same goods which are already in existence. The already existing goods (old and worn out rollers) are worked on so that the defects get removed and the same are ready for reuse. There is no new product emerging. The supply of service in the subject case is nothing but repair done on some old and used product to make it reusable. The impugned rollers were already a finished product which have been used for a period of time and suffered damages which are being rectified by the applicant. On receipt of the worn out roller, the shell which is made of cast iron is broken into pieces. The shaft is left untouched. The broken pieces of cast-iron are melted after addition of nominal material to compensate for the worn out and lost part of the shell, etc. This material is recast and shrunk on the shaft. This process involves heating of the shell and inserting the shaft vertically. On coiling the shell the casting grips the shaft. Thereafter the shell is machined and grooved. Then this Sugar Mill Roller is delivered to the customer - the identity of the impugned goods remains the same before and after performing the process. An example would be of a Television Set which has stopped working due to certain reasons like, failure of a circuit, etc. When such a Television set is taken up for correcting the malfunction in order to make it workable, it cannot be construed that the concerned mechanic has manufactured a Television or has conducted jobwork which has resulted in a Television. SAC 9987 covers under its ambit Maintenance, repair and installation (except construction) service - The subject activity of re shelling old and worn out and unusable sugar mill rollers is an activity of repair and squarely falls under SAC 9987. Since the said activity of reshelling of old sugar mill rollers is neither manufacturing nor job work, it will continue to attract 18% GST and not 12% GST in terms of clause (id) of Sr. No.26 of Notification No.11/2017-CT(R), dt.28.06.2017.
Issues Involved:
1. Classification of the activity of reshelling of old sugar mill rollers as job work service under SAC 9988 or repair/maintenance service under SAC 9987. 2. Applicable GST rate for the activity of reshelling of old sugar mill rollers: whether 12% GST or 18% GST. Issue-wise Detailed Analysis: Issue 1: Classification of Reshelling Activity Applicant's Contentions: The applicant, M/s. S. B. Reshellers Pvt. Ltd., argued that the activity of reshelling old sugar mill rollers is a repair/maintenance service under SAC 9987. They cited precedents from the Hon'ble Supreme Court and Tribunal, which classified similar activities as repair services under the Central Excise regime. They maintained that this classification should continue under the GST regime, despite some customers suggesting it could be considered a job work service under SAC 9988 due to procedural compliance with Rule 55 and Rule 45 of the CGST Rules, 2017. Authority's Observations and Findings: The authority examined the nature of the reshelling process, which involves making old, worn-out sugar mill rollers reusable. It was determined that this process does not result in the manufacture of a new product but rather repairs existing products. The authority noted that job work, as defined under Section 2(68) of the CGST Act, involves processing raw materials or semi-finished goods, which was not the case here. The sugar mill rollers were already finished products that had been used and worn out. Therefore, the activity did not fit the definition of job work under SAC 9988 but was instead a repair service under SAC 9987. Issue 2: Applicable GST Rate Applicant's Contentions: The applicant contended that the activity of reshelling old sugar mill rollers should continue to attract 18% GST as a repair/maintenance service under SAC 9987. They argued that the concessional 12% GST rate under Sr. No. 26 of Notification No. 11/2017-CT(R) applies only to job work services classified under SAC 9988, which involves manufacturing services. Authority's Observations and Findings: The authority agreed with the applicant's interpretation. It was concluded that the reshelling activity is a repair service under SAC 9987 and does not qualify for the concessional 12% GST rate. Instead, it continues to attract the standard 18% GST rate applicable to repair and maintenance services. Conclusion: 1. The activity of reshelling old sugar mill rollers is classified as a repair/maintenance service under SAC 9987. 2. The said activity will attract 18% GST, not 12%, as it does not qualify as a job work service under SAC 9988. Order: The authority ruled that the reshelling of old sugar mill rollers is a repair/maintenance service under SAC 9987 and will attract 18% GST.
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