Classification of Thermal Spray Services for GST

The authority classified the applicant's thermal spray or metal coating services as job work under SAC 998873, subject to GST rates based on the principal's registration status under the CGST and KGST Acts. The ruling clarified the classification and taxation of the services, ensuring compliance with relevant laws.

---

---

Issues:
Classification of service as job work under CGST Act, 2017 and KGST Act, 2017.

Analysis:
The applicant, engaged in thermal spray or metal coating services, sought an advance ruling to determine if their activity qualifies as job work under Section 2(68) of the CGST Act, 2017. They provide various coatings using metal powders, carbide powders, and wires rods for engineering applications. The process involves receiving material from clients, performing the required job, and returning the material. The applicant uses consumables that contribute significantly to the service cost. They applied for the ruling under Section 97(2)(a) of the CGST Act, which was admitted based on the issues raised.

During the personal hearing, the applicant's authorized representative reiterated the facts. The authority considered the submissions and relevant provisions of the CGST and KGST Acts. The applicant's service involves applying thermal spray or metal coating on materials provided by the client, making it a supply of services. The nature of the services provided, including various coatings and processes, was thoroughly examined.

The authority clarified that job work involves any treatment or process on goods belonging to another registered person. The applicant's services fell under this definition as they coat materials belonging to the principal. The classification of the job work was determined to be under SAC 998873, covering metal treatment and coating services. The applicable GST rate depended on whether the principal was registered under the CGST/KGST Act, with rates of 12% or 18% specified based on the registration status.

In conclusion, the authority ruled that the applicant's activity constitutes job work under SAC 998873, with the applicable GST rate determined by the registration status of the principal. The ruling provided clarity on the classification and taxation of the services provided by the applicant, ensuring compliance with the CGST and KGST Acts.

---