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TMI Blog2020 (3) TMI 241X X X X Extracts X X X X X X X X Extracts X X X X ..... Nadu is a partnership firm and are registered under GST with GSTIN 33AABFE5239N1ZC (hereinafter called the Applicant). They are one of the electroplaters in Chennai and doing Zinc Platting for their customers in Automobile, General Engineering and Electrical & Electronic Industries. The applicant has sought Advance Ruling on: 1. Rate of Tax on GST for Platting; 2. SAC Number for Platting. The Applicant has submitted the copy of application in Form GST ARA - 01 and also submitted a copy of Challan evidencing payment of application fees of Rs. 5,000/- each under sub-rule (1) of Rule 104 of CGST rules 2017 and SGST Rules 2017. The applicants have elaborated their nature of work as below: 2. The applicant has stated that they receive the job from their customers against the delivery challan. On receipt of the job they do acid cleaning on the same and as per the customer specification they are doing the platting on the job, on completion of platting the job will be checked by their quality department and returned to the customer against their invoice. With respect to their platting process, they are using 'Zinc Anode/Hydrochloric Acid/Zinc Brighter/Zinc Additive/Caustic Soda. 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess parameters may vary depending upon the part profile and customer requirements. The applicant has also elaborated their process of Zinc Plating as bellow: ZINC PLATING PROCESS STEP 1: INCOMING INSPECTION - The process helps to verify the incoming parts from the customer to avoid pre abnormalities before electroplating. STEP 2: DEGREASING - To remove oil contents from the parts. STEP 3: WATER RINSE - To ensure the removal of previous processes chemical traces. The more the water rinse, better will be the effectiveness. STEP 4: ACID PICKLING - To initiate the plating process by removing impurities on the parts and to improve the plating adhesiveness. STEP 5: WATER RINSE - To ensure the removal of previous processes chemical traces. The more the water rinse, better will be the effectiveness. STEP 6: PRE DIP - It is an another activation process which stimulates the plating and acts as a catalyst too. STEP 7: ZINC PLATING - Zinc electroplating is done in this process STEP 8: INPROCESS INSPECTION - Process of checking and ensuring whether the plating is done properly or not. STEP 9: WATER RINSE - To ensure the removal of previous processes chemical traces. The mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecifications of the customer, the applicant raises invoice charging applicable GST and return the components stating 'outward supply' in the E-way bills. The components are owned by the applicants' customers and are sent to the applicant for electroplating and return back. The final product is also owned by the applicants' supplier. 6.2 Para 3 of the Schedule II of the CGST Act, specifies certain activities to be treated as supply of goods or supply of services, in accordance to which "Any treatment or process which is applied to another person's goods is a supply of services". Therefore, the supply of the applicant is that of 'Supply of Service'. 6.3 Having decided that the supply is one of service the relevant Service code is ascertained as under. SAC 9988 as per the Explanatory notes is given under: 9988 Manufacturing services on physical inputs owned by others The services included under Heading 9988 are performed on physical inputs owned by units other than the units providing the service. As such, they are characterized as outsourced portions of a manufacturing process or a complete outsourced manufacturing process. Since this Heading covers manufacturing services, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inyl acetate)]; or (b) by dissolution or chemical treatment of natural organic polymers (for example, cellulose) to produce polymers such as cuprammonium rayon (cupro) or viscose rayon, or by chemical modification of natural organic polymers (for example, cellulose, casein and other proteins, or alginic acid), to produce polymers such as cellulose acetate or alginates. 2.5 - (ii) Manufacturing services on physical inputs (goods) owned by others, other than (i) above. 9 - 7.2 The above Notification is amended vide 20/2017-C.T.(Rate) dated 22.08.2017 as under: (vi) against serial number 26.-(a) in column (3). in item (i).- (A) for sub-item (b), the following sub-item shall be substituted, namely:- "(b) Textiles and textile products falling under Chapter 50 to 63 in the First Schedule to the Customs Tariff Act. 1975 (51of 1975),"; (B) the Explanation shall be omitted, (b) for item (ii) in column (3) and the entries relating thereto in columns (3), (4) and (5). the following shall be substituted, namely: - (3) (4) (5) "(ii) Services by way of any treatment or process on goods belonging to another person, in relation to- (a) printing of newspapers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and word (ia), (ii) and (iia)" shall be substituted; 7.4 Notification No. 01/2018-C.T.(Rate) dated 25.01.2018 amended the entry further as under: (j) against serial number 26, in column (3),- (A) in item (i), after sub-item (e), the following sub-item shall be inserted, namely: - "(ea) manufacture of leather goods or footwear falling under Chapter 42 or 64 in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) respectively;"; (B) for item (iii) and the entries relating thereto in columns (3), (4) and (5), the following shall be substituted, namely: - (3) (4) (5) "(iii) Tailoring services. 2.5 - (iv) Manufacturing services on physical inputs (goods) owned by others, other than (i), (ia), (ii), (iia) and (iii) above. 9 -"; 7.5 Notification No. 20/2019 -C.T.(Rate) dated 30.09.2019 amended the said entry further as under: (m) against serial number 26, in column (3), in item (i), in clause (c), alter the words "products", the figures and words other than diamonds," shall be inserted; (n) against serial number 26, in column (3), after item (ia) and the entries relating thereto in columns (3), (4) and (5), the following shall be inserted, namely: - (3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rker and the principal The rate reduction to 5% would lead to demand of refund at the hand of job-worker. Therefore instead of reducing the rate on job work services in the engineering and automobile sector from 18% to 5%, the same may be reduced to 12% The rate of GST on all job work services, which are not currently eligible for the 5% rate may be reduced to 12%. However the rate of GST applicable on Bus Body Building shall remain @18% as inputs used for bus body building are at higher rate of 28% or 18% Revenue implication of the proposal is Rs. 1100 Crores approximately. Thus amount shall shift as liability from job-worker to the principal and is therefore not a loss of revenue Thus, the applicable rate of tax from 30.09.2019, is given vide entry 26(id) of Notification No. 11/2017-C.T.(Rate) as amended by Notification No. 20/2019-C.T.(Rate) dated 30.09.2019, which is @ 6% CGST in cases when the goods are owned by another Registered person as in such cases the applicant supply engineering services as job-work and the applicable rate of tax in cases when the goods are owned by unregistered persons continues @9% CGST as per Si.No. 26(iv) of Notification No. 11/2017-C.T.(Rate) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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