In re Fine Electro Coating (GST AAR Maharashtra)
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 jobwork 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.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, MAHARASHTRA
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. FINE ELECTRO COATING, the applicant, seeking an advance ruling in respect of the following questions.-
1) Whether the process followed will be treated as a Service as per Schedule II – Point No. 3 and the activity to be treated as Job Work.
2) Whether Notification No. 20/2019 Central Tax (Rate) New Delhi, 30th September, 2019 – where GST Rate on Job work is reduced to 6% from 9% is applicable to the firm.
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 PFR THE APPLICANT
The submissions made by M/s Fine Electro Coating, the applicant, are as under:-
2.1 The applicant is engaged in rendering premium CED Coating and Powder Coating services. The firm also undertakes metal finishing coating services for various products and further offers (a) CED Coating for Metallic Components & auto parts (h) Coating on General Industrial equipments etc.
Process followed by the company for CED Coating and Powder coating:
CED Coating (Cathodic Electro Deposition):
2.2 Firm receives products (e.g. vehicle part, machine part, compressor part etc) from its customers through Delivery challan only; with the help & use of Machines, all the parts goes through Phospheting Treatment (PT Line- which helps mainly to clean the part and then it goes through Cathodic Electro Deposition (CED Line) for final coating – CED coating is a process which is done in order to increase the life span of auto components parts, here basic raw materials used is various types of Paints and use of consumables.
Powder Coating:
2.3 Firm receives products (e. g. Auto Parts) from its customers through Delivery challan only, here as per requirements of the customer the parts go through the Phospheting Treatment (PT Line) first and then for coating with the use of Powder coating gun Machine (Here main raw material consist of Powder which is type of paint only)
2.4 Taxable event in GST is the event which on its occurrence creates or attracts the liability’ to tax. The taxable event under GST shall be the supply of goods or sendees or both made for consideration in the course or furtherance of business. The taxable events under the existing indirect tax laws such as manufacture, sale, or provision of services shall stand subsumed in the taxable event known as ‘supply.’
2.5 Job Work as per Section 2(68) means any treatment or process undertaken by a person on goods belonging to another registered person and the expression ‘Job worker” shall be constructed accordingly.
2.6 ‘Supply ‘ should involve delivery of goods/services to another person, supply transaction requires something in return which may be in money/monetary terms or in any other form (except the activities specified in Schedule I which are deemed to be supply even if made without consideration). Here, the firm is getting consideration against activity of CED/Powder coating and hence treated as supply.
2.7 Though the treatment and processing is commonly understood as services, there is no implication that job work is purely services or that goods would not be used for such treatment or processing. However, Schedule II – Point No. 3 of the CGST Act, 2017 specified activities to be treated as supply of goods or services inter alia provides that any treatment or process which is applied to another person’s goods is supply of services. Such a deeming fiction in respect of job work is given effect to, further law requires that treatment or process undertaken by the job work is given effect to, further law requires that treatment or process undertaken by the job worker must be on goods belonging to another registered person.-
