GST RATE ON JOB WORK WITH AS PER NOTIFICATION 20 DATED 30.9.2019

[NILESH PITALE]

Respected Experts

My Clint Is works contactor ( As defined Under M VAT Act). He is Doing Job of plating & powder coating of Input goods Received from other Registered Person,for the same process we required Chemicals ,

as on date we are charging 18% GST, Now as per Notification No 20 we should charged 12% or Not, Whether we are cover under the said Notification.

Kindly Guide Us

Thanking You

[Rajagopalan Ranganathan]

Sir,

Since plating and powder coating will not bring any change in character and use of input goods received from other registered person it will be covered by Sl. No. (id) of Notification No. 11/2017-C.T. (Rate) dated 28.06.2017 as amended and the rate of tax is CGST 6%+SGST/UTGST 6%.

[KASTURI SETHI]

In the absence of the definition of 'manufacturing service' in the GST Acts, the issue has become debatable. The term,'manufacture' has been defined but 'manufacturing service' has not been defined. The 'manufacture' has relevance in this scenario.

[Atul Rathod]

Need to check whether the same amounts to manufacture.

As per my view- powder coating amounts to manufacture.

If manufacturing service by way of job work to registered person-12%

If manufacturing service by way of job work to unregistered person-18%

if service not amounts to manufacturing service-18% irrespective of registered person or unregistered person.

[KASTURI SETHI]

2008 (10) S.T.R. 317 (Tri. - Bang.) = 2008 (1) TMI 105 - CESTAT BANGALORE A.G. SHIBU Versus COMMISSIONER OF CUS., C. EX. & S.T., COCHIN

 

[HNA CharteredAccountants]

I think there are also decisions where it was held as the same amounts to manufacture.

[Atul Rathod]

Dear Kasthuri ji,

I think there are also decisions which held that the same amounts to manufacture.

[KASTURI SETHI]

Yes. There are. It depends upon chapter to chapter (Commodity to commodity) and Chapter note to that product pertaining to the period prior to 1.7.17 (Central Excise era).

Position under GST regime

The process of powder coating neither changes the character of the goods nor a new product is emerged. This process does not qualify to the definition of 'manufacture' provided .Section 2(72) of CGST Act.

[KASTURI SETHI]

The conflicting decisions pertaining to pre-GST era in this context have lost their relevance. We are to follow the definition of 'manufacture' under Section 2 (72) of CGST Act for all purposes.

AI Summary

Manufacture classification determines GST rate on plating and powder coating, affecting whether concessional or standard tax applies. Whether plating and powder coating job work qualify as manufacture under Section 2(72) CGST Act determines applicability of Notification No. 11/2017: if the process does not change the character or use of goods it is treated as job work covered by the notification and taxed at CGST 6% + SGST/UTGST 6% for registered recipients; if it amounts to manufacture, alternate tax treatment applies and, if not manufacture, the standard higher rate applies irrespective of recipient registration. Pre GST precedents are of limited relevance.