Ruling on GST Rate & SAC for Electroplating Services: Clarity on Taxation for Manufacturers

The case involved determining the GST rate and Service Accounting Code (SAC) for electroplating services provided by a partnership firm. The firm's electroplating activities were classified under SAC 9988, "Manufacturing services on Physical Inputs owned by others." The applicable GST rate was set at 9% CGST and 9% SGST until 30.09.2019, and subsequently reduced to 6% CGST and 6% SGST for job work services provided to registered persons from 01.10.2019. This ruling clarified the tax rate and SAC classification for electroplating services.

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Issues Involved:
1. Rate of Tax on GST for Electroplating
2. SAC Number for Electroplating

Issue-Wise Detailed Analysis:

1. Rate of Tax on GST for Electroplating:

The applicant, a partnership firm engaged in electroplating, sought clarity on the rate of GST applicable to their services. The firm receives components from customers, performs electroplating, and returns the finished products. The process involves various steps, including acid cleaning and quality checks.

Upon examination, it was determined that the applicant's activities fall under the category of "Supply of Service" as per Para 3 of Schedule II of the CGST Act, which states, "Any treatment or process which is applied to another person’s goods is a supply of services."

The relevant Service Accounting Code (SAC) for electroplating was identified as SAC 9988, which pertains to "Manufacturing services on physical inputs owned by others." This category includes services performed on physical inputs owned by units other than the service provider, characterizing them as outsourced portions of a manufacturing process.

The applicable rate of GST for such services was determined based on several notifications:

- Notification No. 11/2017-C.T.(Rate) dated 28.06.2017: Initially, the rate was set at 9% CGST and 9% SGST for manufacturing services on physical inputs owned by others.
- Amendments through subsequent notifications: Various amendments were made, including Notification No. 20/2019-C.T.(Rate) dated 30.09.2019, which reduced the rate to 6% CGST and 6% SGST for job work services provided to registered persons.

Summary of Applicable Rates:
- Up to 30.09.2019: 9% CGST and 9% SGST irrespective of whether the goods are owned by registered or unregistered persons.
- From 01.10.2019:
- For goods belonging to registered persons: 6% CGST and 6% SGST.
- For goods owned by unregistered persons: 9% CGST and 9% SGST.

2. SAC Number for Electroplating:

The SAC number for the electroplating services provided by the applicant was identified as SAC 9988, which covers "Manufacturing services on physical inputs owned by others." This classification is appropriate as the electroplating process performed by the applicant is a part of the manufacturing process of their customers, who retain ownership of the components throughout the process.

Ruling:

1. The activity of electroplating undertaken by the applicant is classified under SAC 9988 - "Manufacturing services on Physical Inputs owned by others."
2. The applicable rate of tax:
- Up to 30.09.2019: 9% CGST and 9% SGST.
- From 01.10.2019:
- For goods belonging to registered persons: 6% CGST and 6% SGST.
- For goods owned by unregistered persons: 9% CGST and 9% SGST.

This ruling provides clarity on the GST rate applicable to the electroplating services provided by the applicant and the appropriate SAC classification for these services.

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