Case Law Details
In re Kunnassery Poulose Joy, Asian Industries (GST AAR Kerala)
n the case of Kunnassery Poulose Joy vs. Asian Industries, the Authority for Advance Ruling (AAR) in Kerala addressed several issues related to the job work of powder coating and the handling of delivery notes and e-way bills under the GST regime. The applicant, Kunnassery Poulose Joy, runs a business that specializes in powder coating services for metal components provided by customers. The core issues raised by the applicant pertained to procedural aspects of issuing delivery notes and e-way bills when the principal (customer) does not provide them, and how to correctly represent the value of job work in these documents.
The applicant’s primary concern was whether they, as a job worker, could issue a delivery note and e-way bill in the absence of a delivery note from the principal. Additionally, the applicant sought clarity on how to represent the value of the goods in the delivery note and e-way bill both before and after the job work. They also requested guidance on any other related questions that might arise from these issues.
The AAR clarified that the provisions of the Central Goods and Services Tax Act, 2017 (CGST Act), and the Kerala State Goods and Services Tax Act, 2017 (KSGST Act) are similar, except for certain specific provisions. Therefore, references to the CGST Act include analogous provisions under the KSGST Act.
In their application, the applicant explained that they perform powder coating on metals sent by the principal and that often these goods are transported directly from the supplier to the job worker. Post job work, the finished goods are returned to the principal. The applicant noted that they generate e-way bills and delivery notes based on the supplier’s invoice and their service invoice. They highlighted issues with generating e-way bills using only the SAC codes for services, which led to discrepancies and issues with tax authorities.
Despite various attempts to resolve these procedural issues through consultations with GST authorities and adjustments to the e-way bill portal, the applicant faced continued challenges, including the withholding of consignments due to mismatched values. The applicant referenced Circular No. 38/12/2018 from the CBEC, which did not fully address their specific concerns.
The AAR reviewed the applicant’s request and noted that the questions posed did not fall within the specific categories eligible for advance ruling under Section 97(2) of the CGST Act. These categories include the classification of goods or services, applicability of notifications, determination of supply values, admissibility of input tax credit, tax liability, and registration requirements. Since the questions about the issuance of delivery notes and e-way bills did not align with these categories, the AAR concluded that they could not provide a ruling on these issues.
Additionally, the AAR observed that the applicant had been served with a notice for discrepancies between declared outward supplies and e-way bills, indicating that the applicant’s advance ruling request came after the initiation of proceedings against them. The authority noted that no new questions or additional details were provided by the applicant during the personal hearing to further clarify or expand on the issues.
In summary, the AAR’s decision was that no ruling could be given on the questions raised by the applicant, as they did not fall within the purview of the advance ruling provisions specified under Section 97(2) of the CGST Act. Consequently, no comments were made on related or associated questions.
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, KERALA
1. Shri Kunnassery Poulose Joy, Proprietor, Asian Industries, Palluruthy, Ernakulam (herein after referred to as the applicant) is a service provider, doing powder coating carried out on the metal provided by the customers.
2. At the outset it is clarified that the provisions of the Central Goods and Services Tax Act, 2017 (herein after referred to as CGST Act) and the Kerala State Goods and Services Tax Act, 2017 (herein after referred to as KSGST Act) are same except for certain provisions. Accordingly, a reference herein after to the provisions of the CGST Act. Rules and Notifications issued there under shall include a reference to the corresponding provisions of the KSGST Act, Rules and the Notifications issued there under.
The applicant requested advance ruling on the following.
3.1. Whether job worker can issue delivery note and e-way bill if the principle is not issuing the. delivery note.
3.2. Value to be shown in delivery note and in e-way bill by the job worker pre and post job work
3.3. Any other related or associated questions which may come as a result of questions as listed in 1 & 2 above.
4. Contentions of the Applicant
4.1. The applicant is a registered tax payer under GST Act, engaged in job work of Aluminium Powder Coating. which is termed as anodization on aluminium sections/hinges/rods etc., provided by the customers or principal. The applicant carried out the process as per the direction from the principal about the colour and texture of the powder coated on the metal. After completing the process of powder coating, the finished metal is returned to the principal.
4.2. The applicant submits that, in most of the cases, the goods are sent directly by the supplier on behalf of principal to the applicant. In such cases, the goods are transported based on invoice & e-way bill generated by supplier. After the job work, the goods are returned to the principal based on supplier invoice, service invoice and c-way bill issued by the job worker. In the e-way bill,. the applicant shows the value of goods as per supplier invoice and in addition to above also shows the value of service bill issued by the applicant
4.3. The applicant submits that, even though there is no need to show service portion in e-way bill, the procedure was adopted after lots of consignment of various registered persons involved in job work were confiscated and were later released by the GST authorities on payment of fine. The applicant has contacted various GST authorities but none of them directed the applicant as to the procedure to be followed for transporting the material including the generation of e.-way bill. Later e-way bill portal was updated on 17-03 2021 thereby e.-way bill can’t be generated with only SAC codes for services. The confusion of the applicant is still not getting resolved on how to generate an e- way bill for transporting the goods after completing the job work.
4.4. In most of the cases, the principal will be unregistered persons as he is the customer for whom the materials are anodized. However, since he is not registered, he cannot generate e way bill. So the supplier of the materials transports the same to the job worker on behalf of the principal and the job worker carries out the job work and after finishing the job work, the finished materials send back to the principal. At the time of sending the goods back to the principal, the job worker cannot generate e-way bill based on the service invoice issued by them, because the system does not allow to generate e-way bill using the SAC code. So the job worker generates an e way bill with HSN code and adds the value of the material including the job work charges. However, in more than one case, such consignments have been withheld by the officials sighting the mismatch in value of the goods transported, which results much burden of tax liabilities to the applicant.
4.5. Further the applicant submits that, the circular No.38/12/2018 dated 26th March 2018 issued by CBEC tries to clarify the position, but it still does not throw much light on the job workers issue, narrated above. Hence the applicant requested to clarify on whether they can issue delivery challan, if the principal is not issuing the same for movement of goods back to principal after job work. Also it is necessary to clarify whether the additional value of service charge, collected by the applicant for job work, is to be added with the value of goods in the delivery challan and e-way bill.
5. Comments of the Jurisdictional Officer
The application was forwarded to the jurisdictional officer as per provisions of section 98 (1) of the CGST Act. The Jurisdictional officer has reported that the applicant has been served with a notice GST ASMT-10 on 23.02.2021 for the variation in outward taxable supply, declared through GSTR 3B returns for the year 2019-20, amounting to Rs. 4,61,96,811.00, which does not match with the e-way. bills generated.
6. Personal hearing
The applicant was granted opportunity for personal hearing on 01/12/2023 through Virtual Mode. Shri. P. Santharam Shenoy, Chartered Accountant and Authorized Representative, represented the applicant. The applicant filed detailed statement of facts along with the application. He requested to issue the ruling on the basis of the submissions made by them in the application and during the personal hearing.
7. Discussion and Conclusion:
7.1. The issue was examined in detail. At the outset it has to be examined whether the questiOns on which advance ruling is sought are admissible as per the provisions of the COST Act 2017 governing advance ruling. As per section 95(a) of the COST Act read with section 103 of the Act, the term “advance ruling” means a decision provided by this Authority to the applicant on matters or on questions specified in sub-section (2) of Section 97, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant and the ruling is applicable to only such person and the jurisdictional officer of such person. Thus it can be seen that only an applicant who satisfies the condition mentioned in section 95 can apply for advance ruling.
7.2. Sub-section (2) Section 97 of the CGST / SGST Act states that the questions on which advance ruling is sought shall be in respect of the following.
(a) Classification of any goods or services or both:
[b) Applicability of a notification issued under the provisions of this Act;
(c} Determination of time and value of supply of goods or services or both;
(d) Admissibility of input tax credit of tax paid or deemed to have been paid;
(e) Determination of the liability to pay tax on any goods or services or both
(f) Whether the applicant is required to be registered,
(g) 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;
7.3. As far as the first two questions on which advance ruling is sought are concerned, they do not fall under the purview of any of the clauses of section 97(2) of the CGST/KSGST Act 2017. Moreover section 98 of the Act specifies the procedures to be followed on the processing of receipt of an advance ruling application. As per subsection (1) of section 98, the authority shall forward a copy of the application to the concerned jurisdictional officer, if necessary, call upon him to furnish the relevant records. Sub section (2) of section 98 provides that the authority can either admit or reject the application after examining the application and records called for and hearing the applicant and the jurisdictional officer either directly or through authorized representative. Further, it is provided that the authority shall not admit the application where the question raised in the application is already pending or decided in any proceedings in. the case of an applicant under any of the provisions of this Act.
7.4. On a combined reading of the above provisions governing advance ruling under the CGST Act it is evident that the authority shall not admit the application where the question raised in the application is already pending or decided in any proceedings in the case of an applicant under any of the provisions of the CGST/SGST Act.
7.5. The Jurisdictional officer has reported that the applicant has been served with a notice GST ASMT-10 on 23.02.2021 under Sect. 61 of the CGST/SGST Act 2017 to the applicant for the discrepancies that the declared outward supply turnover and tax payments does not match with the c-way bills generated during the year 2019-20. The applicant has put in the application for advance ruling only after proceedings were initiated against him by the jurisdictional officer.
7.6. The applicant does not raised any other related or associated questions in connection with the first two questions, listed in I & 2 through the application, at the time of personal hearing.
In the light of the facts and legal position as stated above, the following ruling is issued:
RULING
Question No. 1. Whether job worker can issue delivery note and c-way bill if the principle is not issuing the delivery note.
Question No.2. Value to be .shown in delivery note and in e-way bill by the job worker pre and post job work.
RULING: ( Q Nos. 1 &, 2 above) :- No ruling can be given since the questions on which advance ruling is sought do not fall under the purview of any of the clauses of sub-section (2) of section 97 of the CGST Act.
Question No.3.. Any other related or associated questions which may come as a result of questions as listed in 1 & 2 above.
RULING: No comments
