TaxTMI 
TaxTMI 
2022 (3) TMI 540
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.... classification of services and rate of tax thereof? At the outset, we would like to make it clear that the provisions of both the 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 2.1 The present application has been filed under Section 97 of the CGST Act, 2017 and the MGST Act, 2017 by lonbond Coatings Pvt. Ltd., the applicant situated in Pune & Chennai. 2.2 The applicant is mainly engaged in to coating activities, which is mainly applied on goods belonged to customer and provides high performance Physical Vapor Deposition (PVD) and Plasma Assisted Chemical Vapor Deposition (PACVD) wear corrosion protection and decorative coatings. The applicant company provides high quality standard coating portfolios for the cutting, moulding and forming tool market and precision engineering & decorativ....
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....onds 1.5 (ic) Services by way of job work in relation to bus body building 18 (id) Services by way of job work other than (i), (ia), (ib) and (ic) above 12 (ii) Services by way of any treatment or process on goods belonging to another person, in relation to - printing of specified books which attracts CGST @ 2.5% 5 (iia) Services by way of any treatment or process on goods belonging to another person, in relation to - printing of specified books which attracts CGST @ 6% 12 (iii) Tailoring services 5 (iv) Manufacturing services on physical inputs (goods) owned by others, other than (i), (ia),(ib),(ic),(id), (ii), (iia) and (iii) above 18 2.9 Section note to SAC 9988 Manufacturing services on physical inputs owned by others: The services included under Heading 9988 are performed on physical inputs owned by units other than the units providing the service. As such, they are characterized as outsourced portions of a manufacturing process or a complete outsourced manufacturing process. Since this Heading covers manufacturing services, the output is not owned by the unit providing this service. Therefore the value of the service....
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....to other (principal) following position emerges Principal Manufacturer/person sending goods for process Rate Registered person 12% Unregistered person 18% 2.15 In view of the above, services provided by the applicant would qualify as job work services under Section 2(68) of the CGST Act. Further, the subsequent amendment to the Notification No. 11/2017 and circular issued to that effect makes it clear that the services rendered to registered person would attract 12% GST and 18 % in case of services rendered to unregistered person. 03. CONTENTION - AS PER THE CONCERNED OFFICER: Officer Submission dated 11.02.2022: 3.1 M/s. ionbond coatings Pvt. Ltd., Pimpri, Pune - 411018, the applicant are engaged in the business of coating activities, which is mainly applied on goods belonging to customer. They provide high performance Physical Vapor Deposition and Plasma assisted chemical vapor deposition wear corrosion protection and decorative coatings, the components/ raw material/ goods are suppplied by their customer to them for specific coating on the product. Most of their customers are OE Customers. Thus their main activity is coating on the goods supplied by....
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.... the customers are sending their material on which coating is required to be done. It appears that for doing coating, the applicant uses some raw material/ chemicals etc which are not supplied by their customers and the same are under their scope. Coating on the job as mentioned by the applicant in their application appears to be a type of manufacturing service and the coating activity is one type of manufacturing service and therefore it appears that their activity can be held as "manufacturing services on the goods owned by others, therefore appears to fall under Sr. No.26 (iv) of the Notification No. 11/2017 CT-Rate dated 18.6.2017 as amended. 3.6 Further section note to SAC 9988 defines "The services included under heading 9988 are performed on physical inputs owned by units other than the units providing the service. As such, they are characterized as outsourced portions of a manufacturing process or a complete "outsourced manufacturing process. Since this heading covers manufacturing service, the output is not owned by the unit providing this service. Therefore, the value of the services in this heading is based on the service fee paid, not the value of the goods manufactu....
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..... The applicant provides standard coating portfolios for the cutting, moulding and forming tool market and precision engineering & decorative components and to offer customized solutions for original equipment manufacturer (OEM) and end user customers. However in the subject case, the applicant, during the course of the final hearing has submitted that the questions raised in this application pertains only to new tooling received from original equipment manufacturer (OEM). 5.4 According to the applicant, these coatings are applied on products like Gear Cutting Tools, HSS Tools, SC Tools, Piercing Punches, Press Tools, Cold Rolls, Dies & Molds, PDC Dies, Hot Forging Tools, Cold Forging Tools, Extrusion Tools, Plastic Injection Molding Tools, Valves, Tappets, Piston Rings, Tableting Punches, Gears and All wear & tear parts, etc (hereinafter referred to as tooling) and these coatings enhances performance of the said mentioned tooling by increasing Oxidation Resistance, Wear Resistance, Improved Surface Roughness, etc. 5.5 The applicant has submitted that the tooling are received by it through Delivery challan only and the applicant, after carrying out the impugned processes send....
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....by the applicant. IV. No new product emerges after the process is carried out by the applicant on the goods which belong to the customers (OEMs). 5.12 Since no new product comes into existence after the process conducted by the applicant on the goods supplied by its principals, therefore the process undertaken will come under the purview of jobworker as defined under Section 2 (68) of the GST Act, 2017. Thus, in view of the above we find that, the applicant is only a job worker and as a job worker, carries out processes on goods supplied by its principals. 5.13 The relevant provisions of Notification No.11/2017-Central Tax Rate dated 28.06.2017, as amended, by Notification No. 20/2019- Central Tax (Rate) dt. 30.09.2019 , is as under:- Sr.No. Chapter, Section or Heading Description of Service Rate (per cent.) Condition 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 under Chapter 50 to 63 in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975);"; (c) all products othe....
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....ices 2.5 (iv) Manufacturing services on physical inputs (goods) owned by others, other than (i), (ia), (ib), (ic), (id), (ii), (iia) and (iii) above. 9 5.15 From the discussions made above, we find that, the services provided by the applicant does not fall under (i), (ia), (ib), (ic) of the above mentioned notification. We have already found that the impugned services supplied by the applicant are in the nature of jobwork. We further find that the said services do not fall under entries at items (i), (ia), (ib) and (ic) above. Therefore we find that the subject supply of services will be covered by the residuary entry at item (id) of the said notification, namely, Services by way of job work other than (i), (ia), (ib) and (ic) above. 5.16 Further, Hon'ble Supreme court in the case of Maruti Suzuki Limited Vs. CCE, New Delhi, 2015 (318) E.LT 353 (S.C) has also held that there is a distinction between processing and manufacture and that Electro Deposition (ED) Coating of anti-rust treatment to increase shell life of various component is merely a processing activity and not a complete manufacturing activity. 5.17 The activi....