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TMI Blog2021 (10) TMI 629X X X X Extracts X X X X X X X X Extracts X X X X ..... nder clause (id) Heading 9988. - GST-ARA-107/2019-20/B-73 - - - Dated:- 11-10-2021 - SHRI. RAJIV MAGOO, AND SHRI. T. R. RAMNANI, MEMBER PROCEEDINGS (Under Section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) The present application has been filed under Section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as the CGST Act and MGST Act respectively] by M/s. Garware Industries Limited, the applicant, seeking an advance ruling in respect of the following question. Whether as per Notification no. 20/2019 dated 30/0912019, services provided by Garware industries Limited falls under clause (id) Heading 9988. At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and PPF Films. 3. GPL also provide utility such as Electricity, Furnace Oil required for Job Work. 4. Freight terms: Freight, unloading and loading charges, if any, will be borne by GPL. 5. Credit terms: GPL will pay all the dues to GIL within 30 days from the invoice date. 6. GPL will depute its technical representatives at GIL plant to provide support of technical supervision during the manufacturing process to ensure quality output. B. STATEMENT CONTAINING APPLICANT'S INTERPRETATION OF LAW AND/OR FACTS 2.7 Vide Notification No. 20/2019-C.T.-(R) dt. 30.09.2019 the Law was amended as follows: GST on manufacturing services on physical inputs (goods) owned by others: (id) Services by way of job work other than specific entry: CGST @ 6% (iv) Manufacturing services on physical inputs (goods) owned by others other than specifically specified: CGST @ 9% 2.8 On which, Circular No. 126/45/2019-GST dt. 22/11/2019 has clarified following: It has been stated that the entry at item (id) under heading 9988 of Notification No. 11/2017-Central Tax (Rate) dated 28-06-2017 inserted with effect from 01-10-2019, prescribes 12% GST rate for all servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T. (Rate) which led to addition of Entry at Item (id) Services by way of Job Work other than (i), (ia), (ib) and (ic) Applicable GST Rate 12% and Entry at item (iv) got amended as Manufacturing services on physical input (goods) owned other than (1)(ia),(ib),(ic),(id),(ii), (iia) and (iii) above Applicable GST Rate 18% . 2.16 It has led to overlap between entry 26(id) and 26(iv) and therefore there arises a doubt in classification, for which subject application is filed. In our view the above process gets covered under the definition of Job Work which means any Treatment or process undertaken by a person on goods belonging to another registered person . 2.17 Looking at the above definition it is clear that, for a transaction to be Job Work three conditions should be satisfied a) Treatment/Process should be undertaken by a person; b) Such Treatment/process should be on Goods; and c) These Goods should belong to another registered person. 2.18 As the above conditions are satisfied it can be said the process is a Job Work Transaction. On combined reading of Eno)) (id) and Entry (iv) it was clear that both entry will cover situation where the manuf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rescribes 12% GST rate for all services of Job-work. 2. The entry at item (iv) which covers manufacturing services on physical inputs owned by others- rate of 18%, is redundant. 3. The entries at items (id) (iv) under heading 9988 read as under : 3 4 5 (id) Services by way of Job work other than (i), (ia), (ib) and (ic) above; 6 - (iv) Manufacturing service on physical inputs (goods) owned by others, other than (i), (ia), (ib), (ic), (id), (ii), (iia) and (iii) above 9 - 3.3 In view of the above, it is observed that w.e.f. 01.10.2019 if the process of job work amounts to manufacture, rate of tax is 18% and if the job-work process does not amounts to manufacture, rate of GST 12%. As per Circular No.126/45/2019-GST dated 22.11.2019 the applicant is defined that their job work in which category i.e. entries at item (id) and item (iv) under 9988 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 but they have not proved or submitted any documentary proof of their job-work co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all services of Job-work. 5. The entry at item (iv) which covers manufacturing services on physical inputs owned by others rate of 18%, redundant. 3.7 In view of the above, it is observed that w.e.f. 01.10.2019, if the job work process amounts to manufacture, rate of tax is 18% and if the job-work process does not amounts to manufacture, rate of GST 12%. 3.8 Section 2 (68) of CGST Act, 2017 defines job work as Job work 'means any treatment or process undertaken by a person on goods belonging to another registered person and the expression job worker' shall be construed accordingly. 3.9 As per Circular No.126/45/2019-GST dated 22.11.2019, applicant is claiming that their job work falls under entry (id) and they attract GST rate of 12% under 9988 of Notification No. 11/2017-C.T(R) dated 28.06.2017; but they have not submitted any documentary proof of their job-work covered under category of (id) under 9988 with GST rate of 12%. It is pertinent to note that the goods are sent by GPL to GIL for manufacturing process and not for service process. 3.10 In view of the above, the applicant's application for advance ruling may be rejected and benefit of Ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted that after the treatment/work on the Plain Polyester Films provided by GPL, the basic characteristics of the product have not been lost. It is just a different commercial product. In view of the contention of the applicant that they are a job worker, we now discuss the specific issue hereon. 5.5 Job work is just a process undertaken by a job worker on goods belonging to a principal. Job work may or may not amount to manufacture. Further, a job worker may or may not use some portion of his material. Job work has been defined under section 2 (68) of the CGST Act, 2017 to mean any treatment or process undertaken by a person on goods belonging to another registered person and the expression 'job worker shall be construed accordingly'. 5.6 Whereas the term 'manufacture' has been defined under section 2(72) of the GST Act, 2017 to mean processing of raw material or inputs in any manner that results in emergence of a new product having a distinct name, character and use and the term manufacturer shall be construed accordingly 5.7 The applicant has submitted that the product that comes into emergence (Dyed/ Laminated ITS Films), after they conduct p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arges, are received by the applicant. IV. The goods after processing are returned back within one year. V. No new product emerges after the process is carried out by the applicant on the goods which belong to GPL. VI. The applicant receives only job charges from GPL for the services rendered. 5.11 Since no new product comes into existence after the process conducted by the applicant on the raw materials supplied by GPL, therefore the process undertaken will come under the purview of job-work as defined under Section 2 (68) of the GST Act, 2017. Thus, in view of the above we find that, the applicant is only a job worker to GPL and as a job worker, carries out processes on goods i.e. Polyester Films supplied by the principal i.e, GPL. 5.12 The relevant provisions of Notification No.11/2017-Central Tax Rate dated 28.06.2017, as it existed prior to 01.10.2019 is as under:- SrNo. Chapter, Section or Heading Description of Service Rate (per cent.) Condition 26 Heading 9988 (Manufacturing services on physical inputs (goods) owned by others) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es and textile products falling under Chapter 50 to 63 in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975); ; (c) all products other than diamonds, falling under Chapter 71 in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975); ; (d) Printing of books (including Braille books), journals and periodicals; (da) printing of all goods falling under Chapter 48 or 49, which attract CGST @ 2.5per cent, or Nil; (e) Processing of hides, skins and leather falling under Chapter 41 in the First Schedule to the Customs Tariff Act, 1975 (5 1 of 1975). (ea) manufacture of leather goods or foot wear falling under Chapter 42 or 64 in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) respectively; ; (f) all food and food products falling under Chapters 1 to 22 in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975); (g) all products falling under Chapter 23 in the First Schedule to the Customs Tariff Act. 1975 (51 of 1975), except dog and cat food put up for retail sale falling under tariff item 23091000 of the said Chapter; (h) manufacture of clay bricks falling under tariff item ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther than (i), (ia), (ib), (ic), (id), (ii), (iia) and (iii) above. 9 5.14 From the discussions above, we find that, the services provided by the applicant does not fall under (i), (ia), (ib), (ic) of the above mentioned notification. We have already found that the impugned services supplied by the applicant are in the nature of jobwork. We further find that the said services do not fall under entries at items (i), (ia), (ib) and (ic) above. Therefore we find that the subject supply of services will be covered by the residuary entry at item (id) of the said notification, namely, Services by way of job work other than (i), (ia), (ib) and (ic) above. 5.15 In view of the above, we hold that the impugned services supplied by the applicant to GPL are in the nature of job work services, classifiable under Entry at item (id) under heading 9988 of Notification No.l 1/2017-Central Tax Rate dated 28.06.2017 as amended. 06. In view of the above discussions, we pass an order as follows: ORDER (Under Section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) For reasons ..... X X X X Extracts X X X X X X X X Extracts X X X X
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