2021 (11) TMI 393 - AAR - GST

Classification of services - rate of GST - providing job work services by carrying out the process such as anodizing, plating on the materials sent by its customers on job work basis i.e., manufacturing services on physical inputs (goods) owned by others - Whether the job work services provided by the applicant are covered under clause (id) or clause (iv) of entry number 26 of Notification No.11/2017-Central Tax(Rate) dated 28-06-2017 for the heading 9988 or not? - HELD THAT - The applicant is engaged in providing job work services by carrying out the processes such as anodizing, plating on the materials sent by their customers and returns the said material back to the respective customers. In this regard the applicant sought advance ruling on the issue that whether their activity is covered under clause (id) or clause (iv) of the entry number 26 of Notification No. 11/2017-Central Tax (Rate), as amended, and consequential rate of GST applicable to their activity. Applicability of circular No.126/45/2019-GST dated 22-11-2019 - HELD THAT - It could be inferred from the circular that the job works defined under Section 2 (68) of the CGST Act i.e. job work services by way of treatment or processing undertaken by a person on goods belonging to another registered person are covered under clause (id) of entry number 26 of the Notification 11/2017-Central Tax (Rate) dated 28.06.2017, as amended, and clause (iv) of the notification supra covers only services which are excluded under clause (id) and also carried out on physical inputs (goods), owned by the unregistered person/s - In the instant case the applicant provides the job work services on the goods belonging to registered persons and hence are covered under clause (id) of entry number 26 of the Notification 11/2017-Central Tax (Rate) dated 28.06.2017, as amended and accordingly attract GST rate of 12%.

Summary

Issues:
Applicability of GST rate for job work services provided to registered persons under Notification No.11/2017-Central Tax (Rate) dated 28-06-2017 as amended.

Analysis:
The Applicant, a Private Limited Company engaged in job work services, sought an advance ruling on the applicable GST rate for their activity under Notification No.11/2017-Central Tax (Rate) dated 28-06-2017. The specific question was whether their services fall under item number (id) attracting 12% tax rate or item number (iv) attracting 18% tax rate. The application was deemed admissible under Section 97(2)(b) of the CGST Act 2017.

The Applicant provides job work services by anodizing, plating, and painting materials sent by customers, returning them post-treatment. The SAC Code for their services is 998873. The issue at hand was the interpretation of the applicable rate of GST for their job work services.

The Jurisdictional Assistant Commissioner opined that the Applicant's services are covered under both item (id) and item (iv) of Notification No.11/2017-Central Tax (Rate) dated 28-06-2017 as amended. However, they should pay GST at 12% when providing services to registered persons and 18% when provided to unregistered persons from 01-10-2019 onwards. For services provided until 30-09-2019, the GST liability would be 18% regardless of the recipient's registration status.

The core issue revolved around determining whether the job work services provided by the Applicant fell under clause (id) or clause (iv) of entry number 26 of the Notification. Referring to Circular No.126/45/2019-GST, it was clarified that services by way of treatment or processing on goods belonging to registered persons are covered under clause (id) attracting a 12% GST rate.

In conclusion, the Authority ruled that the job work services provided by the Applicant, involving treatment or processing on goods belonging to registered persons, fall under clause (id) of entry number 26 of Notification No.11/2017-Central Tax (Rate) dated 28-06-2017, attracting a GST rate of 12%.