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TMI Blog2020 (12) TMI 1299X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. - UP ADRG 70/2020 - - - Dated:- 21-12-2020 - SHRI ABHISHEK CHAUHAN AND SHRI DINESH KUMAR VERMA, MEMBER Represented by : Shri Rajesh Kumar Gupta (Director), Shri Mukul Gupta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers, 6593 Long for both ends 2 No 3 15 Thk MS Hexagonal Bushing to Suit 80 dia Fill Pipe (110 O.D.) 2 No 4 150mm long 100mm dia nozzle with flange in manhole covers. 1 No 5 80 x 50 MS Hexagonal Bushing Threaded on Both Sides (80 O.D.) to Suit 50 dia Pipe 5 No 6 Standard Lifting Eyes 40 Internal Dia (as per details) 2 No 7 Holding Down Brackets, including buried portion as per sketch/ drawing 8 No 8 25 dia Bolt with Hexagonal Heads, 520 Long with RH Threads 8 No 9 25 dia Bolt with Hexagonal Heads, 200 Long with LH Threads 8 No 10 225 Long Turn Buckles as per Details 8 No 11 75 x 50 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. 880 x 10 Thk, Manhole Cover with 24 Nos. 14 dia Holes and 3mm Fire Fly Gasket 1 No. 9. 6 mm thick m.s. pad plate for dip rod to be welded inside shell plate 1 No. 10. 12 sq.mm aluminium dip rod 3791 long graduated on one side in cm 1/5 cm. 1 No. 11. 40 Internal dia x 390 Long Lifting Eye made out of 25 dia MS Rod (as per Details) 2 No. 12 Holding Down Bracket Welded to Tank Shell (as per Details) 12 No. 13 225mm Long Turn Buckle (as per Details) 12 No. 14 25 dia x 970 Long Bolt with Hexagonal Head and RH Thread 12 No. 15 25 dia x 200 Long Bolt with Hexagonal Head and LH Thread 12 No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ates to produce the Tank. (i) Further, the proportion of weight and value of the components and material used by the applicant over and above the steel plates is quite substantial in the process of fabrication of tank on the basic material of steel plate as provided on FoC basis by IOCL. (j) the final product in form of Tanks, which results from the above activity of fabrication, is delivered to retail outlet site of the IOCL or its designated dealer subject to the unloading there at and after quality check at the premises of applicant before the delivery. (k) the loading and transportation of FoC Steel Plates from IOCL premises to applicant premises and delivery unloading of finished fabricated Tanks from applicant premises to designated site of IOCL is charged and billed separately by applicant to IOCL (but in case of Gurgaon and Delhi Divisional offices, the loading and transportation of Steel Plates is included in the fabrication charges and is not separately billed) thereby also charging similar rate of tax under the same HSN code i.e. the HSN code of the main supply. (l) At present, the applicant company is charging 18% rate of GST under the HSN code 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eferred to in Schedule II (d) Further as per Schedule-II which provides Activities or Transactions to be treated as Supply of Goods or Supply of Services in Entry No. 3 it states that Treatment or process- Any treatment or process which is applied to another person s goods is a supply of services (e) as per Section 2 (68) of the CGST Act, 2017, 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 (f) definition of Job Work has three major limbs which is the basis for classifying any supply under the scope of Job Work i.e. i. Treatment or Process ii. By any Person on Goods iii. Belonging to another Registered Person. (g) the term Treatment or Process have not been defined anywhere under the GST Law. As per Lexico Dictionary powered by Oxford process means A series of actions or steps taken in order to achieve a particular end As per Wikipedia process means A process is series or set of activities that interact to produce a result; it may occur once-only or be recurrent or periodic. (h) On the basis o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ards. This entry levy GST at a rate of 18%.The applicant falls under the item (iv) up to 30/09/2019 i.e. before amendment in the Principal Services Rate Notification. However, the issue arose post amendment i.e. whether the applicant is covered in entry item (id) or (iv) of the said heading 9988. (o) Both the above discussed competing entries belong to the same Heading 9988 with description Manufacturing services on physical inputs (goods) owned by others, other than (i), (ia), (ib), and (ic), (id), (ii), and (iia) and (iii) above . However, the insertion of Entry (id) w.e.f. 01/10/2019, a distinction between the services of job-work amounting to manufacture and that not amounting to manufacture can be made out. (p) While the definition of job work does not include the term manufacture but process and treatment , the term manufacture as used under SI No. 26(iv) of the Services Rate Notification has been specifically defined under the GST law. Hence, the entry under Si. No. 26(id) dealing with job work is to be read in exclusion of the job work dealing with manufacture . Such exclusion from the entry concerning manufacturing is also apparent from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer;] and the word manufacturer shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account] (t) under the present regime of GST Law under Sub-section (72) of Section 2 of the CGST Act, 2017 defines the term manufacture 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 . (u) the supply of goods or a supply of service are absolutely mutually exclusive concepts in themself with no overlapping under the GST law except as provided in Section 8 i.e. Composite Supply or Mixed Supply as well as Principal Supply u/s 2(74). The aforementioned concepts may hence form a basis for determination of whet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. (z) Hence, it is clear that a supply of goods on FoC basis for delivering the property back to IOCL would not result in a change of ownership with the applicant for the sole reason that neither part of the goods and materials so supplied accrues to or is retained by the applicant (as has been stated above). (aa) The concept of job work established under the excise duty jurisprudence laid by the Hon ble Supreme Court and inapplicable in the present context in the case of Prestige Engineering (India) Ltd. and Ors. v. Collector of Central Excise, Meerut and Ors. (01.09.1994 - SC) MANU/SC/0863/1994 is laid as follows: 19. Now, let us look at the process involved in this appeal. All that Modipon does is to supply steel pipes. The appellant purchases guide rings and strengthening rings from the market. It fits these rings into those steel pipes by itself or gets them fitted in another unit. Thereafter, adopters are fitted on the sides of the cops and then the plastic sleeves are fitted on the cylinders of the cops. This is not a case where the rings and the adopters and sleeves are supplied by Modipon. It is not suggested that the value of rings, adopters and sl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is performed is called the Principal for the purposes of section 143 of the CGST Act. The said section which encapsulates the provisions related to job work, provides that the registered principal may, without payment of tax, send inputs or capital goods to a job worker for job work and, if required, from there subsequently to another job worker and so on Subsequently, on completion of the job work (by the last job-worker), the principal shall either bring back the goods to his place of business or supply (including export) the same directly from the place of business/premises of the job worker within one year in case of inputs or within three years in case of capital goods (except moulds and dies, jigs and fixtures or tools). . 5...Further, it is clarified that the job worker, in addition to the goods received from the principal, can use his own goods for providing the services of job work ... (af) In light of the above clarification where it has been stated that the job worker can use his own goods in addition to the goods received from the principal, this activity is squarely covered under the ambit of Job Work in accordance to the provisions of GST Law. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtant to firstly determine the correct nature of the supply whether it is of Goods or of Services. (al) After determination of the nature of the impugned activity, an in depth analysis of the appropriate HSN or SAC code needs to be made in view of the established and prescribed procedure for classification of goods or services. (am) A reference to the Service Rate Notification above indicate that a rate of 12% shall be applicable on service of fabrication by way of job work other than (i), (ia), (ib) and (ic) of the relevant entry stated above. It is clear that IOCL shall fall within the definition of the Principal and the activity as has been defined and elaborated by relevant circulars is that of a job work eligibility to a GST rate of 12%. (an) If the questioned supply qualifies as manufactured goods then HSN code of the final product needs to be analyzed, the following entry specifying the rate of GST applicable on the supply of tank shall be noted. S.No. HSN Code Description Rate of Tax 223 7309 Reservoirs, tank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng required- (1) classification of any goods or services or both; (2) applicability of a notification issued under the provisions of this Act; (5) determination of the liability to pay tax on any goods or services or both; (7) whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both, within the meaning of that term . At the outset, we find that the issue raised in the application is squarely covered under Section 97(2) of the CGST Act 2017. We therefore, admit the application for consideration on merits. 10. We have gone through the submissions made by the applicant and have examined the same. We observe that the applicant has sought advance ruling on the following questions- I. What should be the Correct Classification with respect to the nature of Supply i.e. whether the questioned supply tantamount to Supply of Goods or Supply of Service on the basis of the facts of the whole activity as mentioned above and supported by the documents enclosed/discussed here under? II. Whether Circular No. 126/45/2019-GST dated 22/11/2019 shall at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... N 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 (as detailed in para 11 above) required for the tank are to be arranged by the applicant. The various consumable e.g. welding electrodes, Gas etc are also part of process of fabrication of tanks. All these constitute the value of this work undertaken by the applicant and the same is chargeable from M/s IOCL. 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. We are therefore of the view that the nature of supply in the instant case is supply of goods. 15. We are also convinced that the activity performed by the applican ..... X X X X Extracts X X X X X X X X Extracts X X X X
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