In re lonbond Coatings Pvt. Ltd. (GST AAR Maharashtra)
The applicant is mainly engaged in to coating activities, which is mainly applied on goods belonging to customer and provides high performance Physical Vapor Deposition (PVD) and Plasma Assisted Chemical Vapor Deposition (PACVD) wear corrosion protection and decorative coatings. The applicant provides standard coating portfolios for the cutting, moulding and forming tool market and precision engineering & decorative components and to offer customized solutions for original equipment manufacturer (OEM) and end user customers. However in the subject case, the applicant, during the course of the final hearing has submitted that the questions raised in this application pertains only to new tooling received from original equipment manufacturer (OEM).
According to the applicant, these coatings are applied on products like 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, etc (hereinafter referred to as tooling) and these coatings enhances performance of the said mentioned tooling by increasing Oxidation Resistance, Wear Resistance, Improved Surface Roughness, etc.
The applicant has submitted that the tooling are received by it through Delivery challan only and the applicant, after carrying out the impugned processes sends the said tooling back to customers with invoices for job work charges.
According to the applicant’s submissions no new products emerge after the subject 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.
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, in view of the above we find that, the applicant is only a job worker and as a job worker, carries out processes on goods supplied by its principals.
Further, Hon’ble Supreme court in the case of Maruti Suzuki Limited Vs. CCE, New Delhi, 2015 (318) E.LT 353 (S.C) has also held that there is a distinction between processing and manufacture and that Electro Deposition (ED) Coating of anti-rust treatment to increase shell life of various component is merely a processing activity and not a complete manufacturing activity.
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 of Job work’
FULL TEXT OF THE ORDER OF AUTHORITY OF ADVANCE RULING, MAHARASHTRA
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. lonbond Coatings Pvt. Ltd. the applicant, seeking an advance ruling in respect of the following questions.
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?
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?
3. If No, what would be classification of services and rate of tax thereof?
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 ‘GST Act’ would mean CGST Act and MGST Act.
2. FACTS AND CONTENTION – AS PER THE APPLICANT
2.1 The present application has been filed under Section 97 of the CGST Act, 2017 and the MGST Act, 2017 by lonbond Coatings Pvt. Ltd., the applicant situated in Pune & Chennai.
2.2 The applicant is mainly engaged in to coating activities, which is mainly applied on goods belonged to customer and provides high performance Physical Vapor Deposition (PVD) and Plasma Assisted Chemical Vapor Deposition (PACVD) wear corrosion protection and decorative coatings. The applicant company provides high quality standard coating portfolios for the cutting, moulding and forming tool market and precision engineering & 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 refers to clause (68) of the Section (2) of the CGST Tax, 2017, wherein the term “job work” has been defined as, any treatment or process undertaken by a person on goods belonging to another registered person and the expression “job worker” shall be construed accordingly.
2.7 Since the applicant is providing coating on goods belonging to customers, the process would come within ambit of job work.
2.8 Sr. No. 26 of Notification No. 11/2017 CT-Rate dated 28 June 2017, Notification No. 20/2019-Central Tax (Rate) dated 30 September 2019, tries to bifurcate the activities in two parts, namely services in relation to manufacture and services in relation to job work and this fact is evident from the below entries:
