TaxTMI 
TaxTMI 
2019 (7) TMI 758
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....he 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 PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus- "STATEMENT OF RELEVANT FACTS HAVING A BEARING ON THE QUESTION(S) ON WHICH ADVANCE RULING IS REOUIRED. [15.1] The Applicants are mainly engaged in the manufacture of sugar mill rollers by using their own raw material required to manufacture the sugar mill rollers. [15.2] They are supplying the said sugar mill rollers so manufactured by them on payment of GST [as per Sr.No.330 of Sch.-III to Notfn. No.1/2017-CT(R), dt. 20.06.2017], by classifying the same under HSN 8438 at the agreed price between them & customers. [15.3] The said sugar mill rollers are getting worned out due to repeated use over the period of time and in that case the said worned out sugar mill rollers are supplied by the cust....
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.... the above said three situations, applicants are manufacturing shells of required size by using their own raw material, then are mounting the said shell on the shafts & are carrying out the further machining operations for creating groves on the said shells and are fitting the rings etc. accessories on the said sugar mill roller and are returning the same to the customer. Till June' 17, the above said activity of converting the bare shaft into ready to use sugar mill roller was being treated as manufacturing of new sugar mill roller (in the light of Hon'ble Supreme Court's decision in the case of Lal Woollens and Silk Mills (P) Ltd. V/s. CCE, 1999 (108) ELT-7 = 1999 (4) TMI 78 - SUPREME COURT) and accordingly the Applicants were paying C.Ex. Duty at the appropriate rate on the said sugar mill rollers on the assessable value which was the aggregate of their agreed charges (which were decided by taking into consideration the value of their skill, labor and raw material to be used by them) and the declared cost of the shaft/beam supplied by the customer (free of cost). From July' 17, under GST regime also the Applicants have continued to treat the activity in above said three situat....
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....pplying to the customer, the value of the said additional consideration is includible in the price of the said goods supplied and GST has to be paid thereon. The Hon'ble Bombay High Court in the case of Tata Johnson Controls Automotive Ltd. .CCE, 2017 (7) GSTL-271 = 2017 (8) TMI 344 - BOMBAY HIGH COURT has held that the tooling's/patterns supplied free of cost by the customer and used by the supplier in the manufacture of the goods to be supplied to the said customer is treatable as additional consideration and hence is includible in the price of the said goods for payment of GST. In the light of the said decision the cost of the shaft/beam supplied by the customer free of cost and used by the Applicants in the manufacture of sugar mill roller to be supplied to the said customers is treatable as additional consideration for the purpose of Sec. 15(1) read with Rule 27 of the CGST Rules, 2017 and hence the said cost is bound to be includible in the value of the supply of sugar mill roller by the Applicants to the respective customer. Such transaction, Prior to GST falls under services. However, sometimes the customers are sending only the bare shaft taken out of the old sugar mill ....
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....missions. Jurisdictional Officer Sh. Manmohan Wayadande, Supdt" Div-III, Kolhapur Commissionerate appeared. We heard both the parties. 05. OBSERVATIONS We have gone through the facts of the case. The issue put before us is in respect of activity of conversion of bare shafts/ new shafts/forged bar and to convert them into sugar mill shafts and then into ready to use sugar mill roller by applying own skill, labor and raw material as a supply of goods or supply of services and its value of supply for the purpose of levy of GST. The issue would be on the lines thus - Applicant is a registered person under GST ACT & is mainly engaged in the manufacture of sugar mill rollers by using their own raw material. In some cases sugar mill rollers are getting worned out due to repeated use over the period of time and the said worned out sugar mill rollers are supplied by the customers to the applicant for the purpose of making them reusable as sugar mill rollers. The said activity is popularly referred to as, 're-shelling of old sugar mill rollers'. The nature of activity of manufacture of sugar mill roller involves three types of transactions as below: a) Where customers are sending only....
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....rk' we reproduce the definition of 'job work' under the GST as under: Section 2 (68): "job work" means any treatment or process undertaken by a person on goods belonging to another registered person and the expression "job worker" shall be construed accordingly. From the combined reading on the definition of job work as aforesaid and the procedure of job work as prescribed u/s 143 of the CGST Act and Rule 45 of GST Rules, it is the principal who will send inputs to the job work for undertaking any treatment or process that may or may not amount to manufacture and will bring back same after the completion of job work. Thus the person who send goods to the job worker is a principal and the person who undertakes treatment/ processing is a job worker. In this case we find that applicants are receiving old roller, bare shaft, beams from the customer of the applicant under the cover of Rule 55 Challans. The applicant are then fitting the Shell manufactured out of their own raw material on the said shaft and then machining the same and further fitting the required accessory thereon and thus bringing into existence a usable sugar mill roller or new sugar mill roller which is no doubt a ....
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....actured different goods. We must hasten to add that addition or application of minor items by the job worker would not detract from the nature and character of his work. For example, a tailor entrusted with a cloth piece and asked to stitch a shirt, a pant or a suit piece may add his own thread, buttons and lining cloth Similarly, a factory may be supplied the shoe uppers, soles etc. by the customer and the factory applies its own thread or bonding material and manufactures shoes therefrom and supplies them back to the customer, charging only for its work; the nature of its work does not cease to be job work. Now, let us look at the process involved in this appeal. All that Modipon does is to supply steel pipes. The appellant purchases guide rings and strengthening rings from the market. It fits these rings into those steel pipes by itself or gets them fitted in another unit. Thereafter, adopters are fitted on the sides of the cops and then the plastic sleeves are fitted on the cylinders of the cops. This is not a case where the rings and the adopters and sleeves are supplied by Modipon. It is not suggested that the value of rings, adopters and sleeves is very small vis-a-vis the....
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....d by the customer is includible in the value of the said supply for the purpose of payment of GST? We have already observed in the preceding para that the transaction of converting the bare shaft or beams supplied by the customer into ready to use sugar mill roller by using applicants own material would amount to manufacture and is supply of goods under the GST Act . However, applicant submits that the customers are sending old sugar mill roller, new shaft or forged bar free of cost for conversion into usable sugar mill roller and wants clarity whether the cost of said input supplied by the customer constitute value of supply for the purpose of levy of tax under GST. To answer this question we refer to provisions of Section 15 of the GST Act, related to the value of taxable supply as below: Section 15- (1) The value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply. (2) The value of supply shall include- a. any taxes, duties, cesses, fees an....
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....it is observed that price is not the sole consideration for the supply and hence sub-section (1) has no application in the present case but sub-section (4) is most appropriate for determination of the value of supply. As per chapter IV, value of supply is determined by applying provision of Rule 27 to Rule 31. However, we find that Rule 27 is the most appropriate and applicable rule for determination of value of supply in the present case. The relevant rule is reproduced herein below: The Rules are provided in the chapter IV of CGST RULES for DETERMINATION OF VALUE OF SUPPLY. Rule 27 "Where the supply of goods or services is for a consideration not wholly in money, the value of the supply shall",- a. be the open market value of such supply; b. if the open market value is not available under clause (a), be the sum total of consideration in money and any such further amount in money as is equivalent to the consideration not in money, if such amount is known at the time of supply; c. if the value of supply is not determinable under clause (a) or clause (b), be the value of supply of goods or services or both of like kind and quality; d. if the value is not determinable under....