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TMI Blog2022 (3) TMI 540X X X X Extracts X X X X X X X X Extracts X X X X ..... e hearing. Since no new product comes into existence after the process conducted by the applicant on the goods supplied by its principals, therefore the process undertaken will come under the purview of jobworker as defined under Section 2 (68) of the GST Act, 2017. Thus, it is found that, the applicant is only a job worker and as a job worker, carries out processes on goods supplied by its principals. 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 - 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). The activity of the Applicant fits the definition of Job work under the present law. Further, in terms of the Apex court s ruling also, activity of coating is only a process undertaken on goods. Therefore, the activity undertaken by the applicant is covered under the definition o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... & decorative components and to offer customized solutions for original equipment manufacturer (OEM) and end user customers. 2.3 PVD coatings such as TiN, TiCN, AITiCrN (Ultra), CrN, Maximizer, Crosscut, Hardcut, HLC, Concept, Ultra-Cast, and most advanced "Plus" Coatings, enhance performance of Cutting Tools, Stamping Tools, PDC Molds, Automobile Components and Industrial Products by increasing oxidation Resistance, Wear Resistance, Improved Surface Roughness and much more. 2.4 These coatings are applied on Gear Cutting Tools, HSS Tools, SC Tools, Piercing Punches, Press Tools, cold rolls, Dies & Molds, PDC Dies, Hot Forging Tools, Cold Forging Tools, Extrusion Tools, plastic injection Molding Tools, Valves, Tappets, Piston Rings, Tableting Punches, Gears and All wear & tear parts, so and so forth. 2.5 Typically, such coatings are applied on new as well used tools, dies, moulds, components etc which are received by applicant on delivery challans. Applicant processes these tooling by applying high performance coatings and sends those back to customer with invoice for job work charges. B. STATEMENT CONTAINING APPLICANT'S INTERPRETATION OF LAW AND/OR FACTS 2.6 The applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the goods manufactured. 2.10 Hence, SAC Code 9988 also includes part of the process from entire manufacturing process. It is not relevant whether the job worker process amounts to manufacturer or not. 2.11 GST council in the 37th meeting held on 20th September, 2019 at Goa has considered to reduce tax rate on Job work services. Further, the Government has issued Notification No. 20/2019-Central Tax (Rate) dated 30 September 2019 wherein the following entry has been added: (id): Services by way of job work other than (i), (ia), (ib) and (ic) above 2.12 Pursuant to the same clarification on scope of the notification entry at item (id), related to job work, under heading 9988 of Notification No. 11/2017-Central Tax (Rate) dated 28-06-2017-Circular No. 126/45/2019-GST dated 22nd November 2019 has been issued which states 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 services by way of job work. This makes the entry at item (iv) which covers "manufacturing services on physical inputs owned by others" with GST rate of 18%, redundant. The entri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supplied by their customers, they charge servicing charges/ coating charges to their customers. The purchase orders, invoices raised indicate that they receive goods for coating. 3.2 Since the goods are received from the customers for coating processing, prima facie it can be said that the applicant did job work on the goods supplied. The definition of job work as per Section 2(68) of CGST Act, 2017 is as under: "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. 3.3 The definition of "manufacture" as per Section 2(72) of CGST Act, 2017 is as under: "Manufacture" means processing of raw material or inputs in any manner that results in emergence of new product having a distinct name, character and use and the term "manufacturer" shall be construed accordingly. The applicant does only coatings on the product supplied, after coating no new product having a distinct name, character emerges, therefore the activity carried out by the applicant does not appear to fall under the definition of Section 2(72) of CGST Act, 2017. 3.4 Notification No. 11/2017 CT-Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red by the applicant in the application. It appears from this Section note that the same was issued for charging value of the service. 3.7 In view of the above legal position it appears that the activity carried out by the applicant falls under Sr.No.26 (iv) of Notification No. 11/2017 CT-Rate dated 28.6.2017 as amended as "Manufacturing services on physical inputs (goods) owned by others, other than (i), (ia), (ib), (ic), (id), (ii), (iia) and (iii) attract GST @ 18%. 04. HEARING 4.1 Preliminary hearing in the matter was held on 20.08.2021. Authorized representatives of the Applicant, Shri. Amar Pawar, AGM, Finance & Accounts and Shri. Mahesh Bandre, CA were present. The Concerned Jurisdictional officer was absent. The Authorized representatives made oral submission with respect to admission of their application. 4.2 The application was admitted and called for final hearing on 18.01.2022. The Authorized representatives of the applicant, Shri. Mahesh Bandre & Shri Nilesh Saboo CA were present. The Jurisdictional officer was absent. The authorized representatives stated that applicant wants ruling only about job work carried out on goods received form registered tax payers/OEMs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect process been carried out by the applicant. The basic characteristics of the product have not been lost. Thus, in view of the contention of the applicant that they are a jobworker, we now discuss the specific issue hereon. 5.7 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'. 5.8 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" 5.9 The product that comes into emergence after the coating process is not the different product but the process undertaken by them only enhances the performance of the said products. No new products emerge a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 (51 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 (51of 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 (51of 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 69010010 in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975);"; '(i) manufacture of handicraft goods. 2.5 "(ia)Services by way of job work in relation to- (a) manufacture of umbrella; (b) printing of all goods falling under Chapter 48 or 49, which attract CGST @ 6per cent 6 "(ib) Services by way of job work in relation to diamonds falling under chapter 71 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Notification No.11/2017-Central Tax Rate dated 28.06.2017 as amended by Notification No. 20/2019- Central Tax (Rate) dt. 30.09.2019 attracting 12% GST. This would answer the applicant's second question. 5.20 In view of the answer to the second question, the third question is not answered. 06. In view of the extensive deliberations as held hereinabove, 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) NO.GST-ARA-41/2020-21/B-28 Mumbai, dt. 08/03/2022 For reasons as discussed in the body of the order, the questions are answered thus - Question 1: - Whether the activities carried out by the applicant qualifies for job work in view of the section 2(68) of the CGST Act, 2017. Answer:- Answered in the affirmative. Question 2: - If yes, whether GST rate of 12% or 18% would be applicable in view of Sr. NO. 26 (id) and (iv) of the Notification No. 11/2017 CT-Rate dated 28 June 2017 as amended vide Notification No. 20/2019 CT- Rate dated 30 Sep 2019? Answer:- In view of the above discussions, GST rate of 12% would be applicable under Sr. No. 26 (id) of Notification No. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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