TMI Blog2022 (3) TMI 540X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, it is found that, the applicant is only a job worker and as a job worker, carries out processes on goods supplied by its principals. 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 - 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). The activity of the Applicant fits the definition of Job work under the present law. Further, in terms of the Apex court's ruling also, activity of coating is only a process undertaken on goods. Therefore, the activity undertaken by the applicant is covered under the definition of Job work' - the impugned services supplied by the applicant are in the nature of job work servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corative components and to offer customized solutions for original equipment manufacturer (OEM) and end user customers. 2.3 PVD coatings such as TiN, TiCN, AITiCrN (Ultra), CrN, Maximizer, Crosscut, Hardcut, HLC, Concept, Ultra-Cast, and most advanced Plus Coatings, enhance performance of Cutting Tools, Stamping Tools, PDC Molds, Automobile Components and Industrial Products by increasing oxidation Resistance, Wear Resistance, Improved Surface Roughness and much more. 2.4 These coatings are applied on 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, so and so forth. 2.5 Typically, such coatings are applied on new as well used tools, dies, moulds, components etc which are received by applicant on delivery challans. Applicant processes these tooling by applying high performance coatings and sends those back to customer with invoice for job work charges. B. STATEMENT CONTAINING APPLICANT'S INTERPRETATION OF LAW AND/OR FACTS 2.6 The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 services in this Heading is based on the service fee paid, not the value of the goods manufactured. 2.10 Hence, SAC Code 9988 also includes part of the process from entire manufacturing process. It is not relevant whether the job worker process amounts to manufacturer or not. 2.11 GST council in the 37th meeting held on 20th September, 2019 at Goa has considered to reduce tax rate on Job work services. Further, the Government has issued Notification No. 20/2019-Central Tax (Rate) dated 30 September 2019 wherein the following entry has been added: (id): Services by way of job work other than (i), (ia), (ib) and (ic) above 2.12 Pursuant to the same clarificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 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 the customers. After processing/ coatings the material received from their customers are returned. Since the goods are supplied by their customers, they charge servicing charges/ coating charges to their customers. The purchase orders, invoices raised indicate that they receive goods for coating. 3.2 Since the goods are received from the customers for coating processing, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 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 manufactured. In their case, the applicant charges coating charges to their customers and not the cost of entire product. This section note was referred by the applicant in the application. It appears from this Section note that the same was issued for charging value of the service. 3.7 In view of the above legal position it appears that the activity carried out by the applicant fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aised 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 sends the said tooling back to customers with invoices for job work charges. 5.6 According to the applicant's submissions no new products emerge after the subject process been carried out by the applicant. The basic characteristics of the product have not been lost. Thus, in view of the contention of the applicant that they are a jobworker, we now discuss the speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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 other than diamonds, falling under Chapter 71 in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975); ; (d) Printing of books (including Braille books), journals and periodicals; (da) printing of all goods falling und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess on goods belonging to another person, in relation to printing of all goods falling under Chapter 48 or 49, which attract CGST @ 6per cent. 6 (iii) Tailoring services 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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