Case Law Details
In re Spraymet Surface Technologies (Pvt.) Ltd. (GST AAR Karnataka)
Section 2 (68) of CGST Act, 2017 defines job work as, ‘any treatment or process undertaken by a person on goods belonging to another registered person’. Further Schedule II, in relation to Section 7 of the CGST Act 2017, prescribes the activities or transactions to be treated as supply of goods or supply of services. Clause 3 of the said Schedule II prescribes that ‘any treatment or process which is applied to another person’s goods is a supply of services‘. In the instant case the applicant undertakes thermal spray / metal or metal alloy coating on the goods / material belonging to another person i.e. the principal. Therefore the work undertaken by the applicant amounts to job work and is a supply of services.
Now we proceed to examine the classification of the job work being provided by the applicant. It is an admitted fact that the job-work being provided by the applicant is nothing but metal coating of the goods belonging to other persons in different methods i.e. thermal spray, plasma spray, HVOF spray, Powder flame spray & wore flame spray. The Explanatory Notes to the Scheme of Classification of Services specifies that SAC 9988 covers Manufacturing services on physical inputs owned by others and SAC 998873 covers Other fabricated metal product manufacturing and metal treatment services which includes metal treatment and coating services, general machining services, cutlery, hand tool and general hardware manufacturing services and other fabricated metal product manufacturing services not elsewhere covered. In the instant case the applicant’s services are indubitable metal treatment/coating services and hence merit classification under SAC 998873.
The Notification No.20/2019-Central Tax (Rate) dated 30.09.2019 specifies the rate for job work in relation to diamonds, bus body building and all other rest of the items.
Now we invite reference to the Circular No. 126/45/2019-GST dated 22.11.2019 wherein a clarification, on scope of the notification entry at item (id), related to job work, under heading 9988 of Notification No.1/2017-Central Tax (Rate) dated 28.06.2017, at para 4 has been issued, which stipulates that entiy at item (iv) covers only such services which are carried out on physical inputs (goods) which are owned by persons other than those registered under the CGST. The applicant, in the instant case has not furnished required information so as to decide whether the goods received by them for job work belong to an unregistered person or not. Thus the job work undertaken by the applicant gets covered under item (id) of SL.No.26 of Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 in case the owner of the goods (Principal) is registered under CGST and attract GST @ 12% and if the principal is unregistered the impugned job work gets covered under item (iv) of SL.No.26 of Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 and attracts GST @ 18%.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
