PAINTING WORK - JOB WORK SERVICE OR PAINTING SERVICE, Goods and Services Tax - GST

[SSOE SSOE]

Dear Sir/Madam

We (registered person) are providing painting services to our Gst registered clients namely -

1.Painting of cargo containers

2.Painting of industrial gas cylinders

3.Painting of Iron structures like racks

4.Painting of Oil tanks etc.,

Whether we have to treat it as job work service or painting service ?

“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;

Posts / Replies

[Alkesh Jani]

Shri

First instance, it seems to be job work, but when Job work is undertaken, the principal has to declare the place of job worker as the additional place of business and activities are performed at the place of job worker. Further, location of supplier and location of the recipient is also required to be taken into account. If we peruse the definition of inputs, the cargo containers etc., are likely to be capital goods, if so, it is out of ambit of inputs. As supplier may not be aware of capital goods or inputs, it is not wise to treat this as “Job work”.

Further, the activity undertaken in the instant case can also be classified under maintenance and repair service HSN Code 998711. Further, the painting service as given under HSN Code 995473, as per explanatory note, painting services is within the group of ‘Building completion and finishing services.’

The query needs some clarification such as, where the activity is undertaken? The Colour (material) is of the supplier or of the recipient? Is it a contractual base or otherwise?

Thanks

[KASTURI SETHI]

Sh.Alkesh Jani Ji,

Your views are full of substance. HSN 995473 starts with, "This service includes ---------." I mean to say that painting service is not restricted to the services mentioned at serial no.i,ii,iii,iv v under HSN 995473. This HSN also covers other painting services meant for movable properties as mentioned in the query.

In my view, it is not job-work. It can be classified be under the category of renovation, maintenance etc. but not under job-work.

[Alkesh Jani]

Shri Kasturiji Sir,

Thanks for your reviews. However, in the instant case, a thought for composite or mixed supply may also be given.

Thanks,

With Regards

[Alkesh Jani]

Please read 'views' instead of 'reviews'

[KASTURI SETHI]

Sh.Alkesh Jani Ji,

Yes. I agree with you to the extent of composite supply inasmuch as painting material and painting service are integrally linked. You may say naturally bundled. However, we are not aware of full facts of the issue. Our reply is always based on what is disclosed to us in the query. Even minor change in the facts and circumstances can change the whole scenario or classification of service/rate of tax..

[Alkesh Jani]

Shri Kasturiji Sir,

I fully agree with you. That is the reason clarification was sought from the querist. The other reason is each of the above activity is supplied to same recipient or to the others is not known. Each activity can be classified under different HSN code. If racks or oil tanks are fixed to earth, gas cylinders are part of the plant and machinery etc.

Thanks

With Regards

[KASTURI SETHI]

Sh.Alkesh Jani Ji,

YES. In any way, this painting service will not qualify as job-work.

[Shilpi Jain]

What is the implication whether it is job work or not? Maybe only procedural aspects.

In this case the painting undertaken can be considered as a process on the goods belonging to others.. can be Considered as job work and compliance be done under law.

Also if this view would mean 12percent rate of tax if the principal is a registered person

[SSOE SSOE]

Thank you all

Actually definition of job work is defined very vaguely in Gst Act.

Even repair work on goods can be considered as Job work, if we strictly go with the definition.

But this may not be the intention of law maker.Law maker failed to include his intention in the definition.

If that is the case there is no need to give separate SAC codes for job work services , Repair and maintenance services, cleaning /washing services,Painting services, Technical testing services on goods etc., which requires some treatment or process on goods belongs to others.

Further as per Gst Act, job work and manufacturing defined separately.

In Scheme of classification of services - Heading 9988 speaks about "Manufacturing services on physical inputs (goods) owned by others"

But in Gst rate notification, 9988 - Words "Manufacturing services" and "Job work services" are used interchangeably.

Main problem in Gst - When Act says some thing Rules say some other thing, When act and rules says some thing Gst website (returns filing) says some other thing.

We wish to cover any "any treatment or process undertaken by a person on goods belonging to another registered person" under Job work service, only if it is not covered under any other specific service category like repairs.

[KASTURI SETHI]

Dear Querist,

I agree with your views regarding vagueness and ambiguity. You are in a dilemma whether to opt for job work or not. In other words, whether to resort to 12 % or 18 % rate. In my view, the safer and better option is to opt for Advance Ruling.

[CAHemanth Kumar]

Agreed with Kasturi Sethi Sir,

May be the option of advance ruling can be chosen. Once we go for advance ruling stress should be given on classification and not on rate of tax. If we go for rate of tax, high changes to say that it is not a JW services.

[Shilpi Jain]

Going for an advance ruling would be suicidal, so that would not be recommended unless the customer agrees to follow the advance ruling for reimbursing the taxes.

Also main diff between manufacture and job work when it comes to the 12% or 18% rate is whether the principal is registered or not.

THere is an article online of Dr. Arpit Haldia on this. Very elaborately explained. You can have a look at that.

[KASTURI SETHI]

Madam Shilpi Jain,

Can you provide link of the article on job work written by Dr.Arpit Haldia ? Or date of article ? Thanks a lot.