TaxTMI 
TaxTMI 
2021 (1) TMI 374
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.... this reason, refiner must evaluate material to calculate what percentage of pure gold it is. "Karat" a unit of measurement used to know the how much gold is in an alloy. A "karat" is one part out of 24. Pure gold is converted into 22K gold for manufacturing of gold jewellery or coins/ biscuits. To make it harder, manufacturers use other metals like platinum, silver or copper and this gold alloy can be used to make jewellery as well as coins/biscuits. 2.2 Process of refine gold:- The most accurate methods of refining gold is the fire assay method. This method is one of the industry standard processes for refining the gold. This process can require highly skilled workers to carry out meticulously. 3. The applicant submitted that they receive gold jewellery or coins/ biscuits (after melting old jewellery) from service recipient to refine pure gold and testing of purity of gold. All old gold jewellery or coins/biscuits collected by applicant are placed in vessel made up of magnesium and heated and melted at a temperature between roughly 1000 and 12000 degree Celsius in furnace. During the process all metals absorbs in the alloy and left only gold and silver. The available gold a....
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....levant provisions of GST law for service of refine gold are extracted as under : 6.1 Section 2(68) of Central Goods and Service Tax Act, 2017 (68) "Job work" means any treatment or process undertaken by a person on goods belonging to another registered person and the expression job work shall be construed accordingly; 6.2 Treatment or process (i) Definition of treatment as per Lexico UK Dictionary "Treatment" means the use of a chemical, physical or biological agent to preserve or give particular properties to something. (ii) Definition of "process" as per Collins English Dictionary A "process" is a series of actions which are carried out in order to achieve a particular result. 6.3 Section 2(94) of CGST Act, 2017 (94) "registered person" means a person who is registered under Section 25 but does not include a person having a Unique Identity Number. From the above definitions, it is clear that the process of refine gold belonging to a registered person is covered under the service of Job work. 6.4 Classification and rate of tax The applicant submitted that in view of the above, their interpretation regarding classification and r....
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....erpretation regarding classification and rate of tax for services of testing of gold are given below (Not. No. 11/2017-Ct (Rate) dated 28.06.2017 and read with Not. No. 11/2017-St (rate) dated 30.06.2017) Sl.No. Chapter Description of Service Rate (CGST+SGST) % Condition 21 Heading 9983 Other professional, technical and business services (iv) Other professional, technical and business services other than (i) and (ia) above and serial number 38 below. 18 8. The relevant provisions of GST law for services of refine of gold and testing of purity of gold as composite supply:- 8.1 Section 8(a) of CGST Act, 2017 The tax liability on a composite or a mixed supply shall be determined in the following manner, namely; (a) Composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply; and ................. 8.2 Section 2(30) of CGST Act, 2017 (30) "composite supply" means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination there....
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....he same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the GGST Act. 12. The applicant submitted that they are engaged in the work of refining of pure gold from old jewellery/coins received from the service recipient. They are also doing the work of conversion of gold jewellery into coins/biscuits as per the specification given by service recipient. Further, they are engaged in the work of testing of purity of gold and issue the certificate of purity of gold to the customer, who have supplied the gold to the applicant. Also the applicant carried out testing of purity of gold which are converted into pure gold from old gold (22K gold) jewellery or coins/ biscuits after carrying out the certain process to extract the pure gold. 13. We observe that the applicant has elaborated the process of conversion of old jewelley (22k) gold /coins/biscuits into pure gold of 24K. The applicant has submitted that following process is required to convert the old jewelley (22k) gold /coins/biscuits into pure gold of 24K. Purpose of refine gold:- Gold jewellery is n....
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.... jewellery or coins/biscuits converted into pure gold (24K gold) and carried out testing of purity of gold. 16. Now we take up the chronologically wise all the questions on which Advance Ruling is sought by the applicant. The applicant has sought clarification that whether the activity as discussed in Sr. No. 15 (1) & (2) provided to registered person will be covered under the definition of job work under section 2 (68) of CGST Act, 2017 and also what is the classification of Service and rate for the service provided to registered and unregistered person. 17. To decide whether the said activity gets covered under the definition of job- work or otherwise, we have to refer to the definition of Job-work as provided under CGST Act and Rules, 2017. 17.1 Job-work is defined under Section 2(68) of Central Goods and Service Tax Act, 2017, which is read as under: (68) "Job work" means any treatment or process undertaken by a person on goods belonging to another registered person and the expression job work shall be construed accordingly; 17.2 From the above definition, it is clear that job work involves (i) two persons, (ii) goods and (iii) process/treatment on the good....
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....es but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply; 18.3 The term "Registered person" is defined under Section 2 (94) of CGST Act, 2017, which is defined, as under: (94) "registered person" means a person who is registered under section 25 but does not include a person having a Unique Identity Number 18.4 In the instant case, the applicant is a person, who is carrying out the process of refining the pure gold from old gold jewellery and coins/biscuit and converting the old gold jewellery into coins/biscuits, as per the specification of the customer. Both the said processes are being done on old jewellery and/or coins/biscuits i.e. on the goods and the goods i.e. old jewellery and/or coins/biscuits belonging to another registered person. The applicant being a job worker satisfies all the necessary ingredients to carry out job work activity. Hence, we can conclude that the said process of refining of pure gold on old jewellery or coins/biscuits and converting the old gold jewellery into coins/biscuits, as per the specification of the r....
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....wellery manufacturing services 541 998894 Musical instrument manufacturing services 542 998895 Sports goods manufacturing services 543 998896 Game and toy manufacturing services 544 998897 Medical and dental instrument and supply manufacturing services 545 998898 Other manufacturing services nowhere else classified Hence, service of refining pure gold from old jewellery and coins/biscuits and converting the jewellery into coins/biscuits, as per the specification of the registered person and un-registered person, merits classification under Service Accounting Code (SAC) 9988. 21. To determine GST rate of service classifiable under SAC 9988, we refer the Notification No. 11/2017-CT (Rate) dated 28.06.2017, as amended. The relevant entry No. 26 of Notification No. 11/2017-CT(Rate), as amended vide various Notifications, is as under : 26 Heading 9988 (Manufacturing services on physical inputs (goods) owned by others) (i) Services by way of job work in relation to- (a) Printing of newspapers; "(b) Textiles and textile products falling....
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.... - 21.1 In view of the said entry No.(i) (c) of 26 of Notification No. 11/2017-CT (Rate) dated 28.06.2017, the rate of GST for the service of refining pure gold from old jewellery and coins/biscuits and conversion of gold jewellery into coins/biscuits, as per the specification belonging to the registered person, covered under Job-work would be leviable to GST @ 5 % i.e. {CGST 2.5% +SGST 2.5%}. Further, GST rate for the aforesaid services provided on physical input (goods) owned by un-registered person would be leviable GST @ 18% i.e. {9% CGST + 9% SGST} in terms of entry No. (iv) of Notification No. 11/2017-CGST (Rate) dated 28.06.2017. In this regard, CBIC vide Circular No. 126/45/2019GST dated 22.11.2019 has clarified the following: "I am directed to say that doubts have been raised with regard to scope of the notification entry at item (id) under heading 9988 of Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017 inserted with effect from 1-10-2019 to implement the recommendation of the GST Council to reduce rate of GST on all job work services, which earlier attracted 18% rate, to 12%. It has been stated that the entry at item (id) under heading 9988 of ....
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....ery or coins/ biscuits (after melting old jewellery) from service recipient/customer for testing of purity of gold. All old gold jewellery or coins/biscuits collected by applicant are placed in vessel made up of magnesium and heated and melted at a temperature between roughly 1000 and 12000 degree Celsius in furnace. In this process, all metals absorbs in the alloy and left only gold and silver. The available gold and silver is heated in Nitric acid to separate the silver from gold. The remaining pure gold is weighted to determine the percentage of purity. Upon completion of process and analysis, the applicant issues the certificate of purity of gold. After that, a certificate of purity with pure gold has been given to the recipient of service/customer. 24. To determine the classification of service of testing of purity of gold, we refer Annexure to the Notification No. 11/2017-CT (rate) dated 28.06.2017 for the classification of the said service. The relevant entry No. 296 of the said Annexure is read, as under: 296 Heading 9983 Other professional, technical and business services 324 Group 99834 Scientific and other te....
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....r both, or any combination thereof which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply'. Under the GST Act, a composite supply would mean a supply consisting of two or more taxable supplies of goods or services or both or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply. We find that applicant proposes to provide more than two taxable supplies to the recipient. In respect of supply, which consists of more than two taxable supplies and to fall within the ambit of composite supply, it will be necessary for us to determine whether a particular supply is naturally bundled in the ordinary course of business or otherwise. The Flyers issued by the Central Board of Excise and Customs ('CBEC') for composite supply have provided guidance on how to determine whether supplies are naturally bundled in the ordinary course of business as below: "Whether services are bundled in the ordinary course of business would depend upon the normal or frequent practices followed in the a....
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.... (ii) They should be naturally bundled and supplied in conjunction with each other in the ordinary course of business; and (iii) There should be one principal supply. 29. The above conditions have been examined in the present case, as under: 29.1 There should be more than two supplies of goods or services or both: The applicant is providing services of (i) refining of pure gold from old jewellery and coins/biscuits and (ii) testing of purity of gold. Accordingly, they are providing more than two above services. 29.2 They should be naturally bundled and supplied in conjunction with each other in the ordinary course of business: The applicant is providing services of (i) refining of pure gold from old jewellery and coins/biscuits and (ii) testing of purity of gold to their customer. Both these services are independent services as such customer can take the service either (i) or (ii) Or both. These two service are not naturally bundled in ordinary course of business as such it totally depends upon the customer whether he wants to avail either both the service or one service on their old jewellery and coins/biscuits. 29.3 There should be....
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....; 30.1 The Flyers issued by the Central Board of Excise and Customs ('CBEC') for mixed supply have provided guidance on how to determine whether supplies are mixed supply: In order to identify if the particular supply is a Mixed Supply, the first requisite is to rule out that the supply is a composite supply. A supply can be a mixed supply only if it is not a composite supply. As a corollary it can be said that if the transaction consists of supplies not naturally bundled in the ordinary course of business then it would be a Mixed Supply. Once the amenability of the transaction as a composite supply is ruled out, it would be a mixed supply, classified in terms of a supply of goods or services attracting highest rate of tax. 31. There is no dispute that applicant's supplies consist of two supplies. It is also not in dispute that the supplies are made in conjunction with each other if customer demands. We have already observed in aforesaid paras that each of the supplies can be supplied separately as they are not dependent on each other and one supply of goods does not occasion the supply of other goods. Further, in the foregoing paras, it has already been ruled out th....
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....cal inputs (goods) owned by others, other than (i), (ia), "(ib), (ic), (id)," (ii), (iia) and (iii) above. 9 - (iv) The relevant entry No. 21 of Notification No. 11/2017-CT(Rate), as amended, vide various Notifications, is applicable for the supply of testing of purity of gold service and same is re-produced, as under : 21 Heading 9983 (Other professional, technical and business services) (i) Selling of space for advertisement in print media. 2.5 - (ii) Other professional, technical and business services other than (i) above. 9 - 32.2 In view of the above, it is observed that the higher GST rate of tax of a particular supply of Service is 18 % i.e.[ 9% CGST+9%SGST]. Hence, we are of the view that supply of service of refining of pure gold and testing of purity of gold is a mixed supply and GST rate would be 18 % {9% CGST + 9% SGST}. 33. Now we take up the fourth question of the applicant that what are the consequence if, the applicant charged more or less the rate of services of refining gold than the actual rate. 34. The above question on which applicant sought advance ruling is very vague and hypothetical question because the applicant in....