Tanya Gupta
Published on: March 12, 2022 at 16:16 IST
The Maharashtra Authority of Advance Ruling (AAR), comprised of Rajiv Magoo and T.R. Ramnani, has Ruled that Coating Activities on Customer-Owned Goods Qualify as Job Work and are Subject to a 12% GST.
The Applicant M/S Ionbond Coatings Pvt. Ltd. is a Coating Activities’ Business that is primarily applied to Customer-Owned Goods. They also provide Decorative Coatings, high-performance Physical Vapour Deposition (PVD), and Plasma Assisted Chemical Vapour Deposition (PAVCD) wear Corrosion Protection.
High-quality Standard Coating Portfolios are provided by the Applicant for End-User Customers and Original Equipment Manufacturers (OEM).
These Coatings are then applied to the Piercing Punches, Extrusion Tools, Valves, Gear Cutting Tools, etc., that the Applicant receives via Delivery Challans.
This Tooling is processed by the Applicant by applying high-performance Coatings and Returning it to Customers with an Itemized Bill for Job Work Charges.
The Issue Raised was if the Services provided by the Applicant can be Qualified as a Job Work Under Section 2(68) of the Central Goods and Services Tax Act (CGST), 2017.
Under Section 2(68) of the Central Goods and Services Tax Act (CGST), 2017, Job Work means any Process or Treatment undertaken by a Person on the Goods Belonging to another Registered Person. It may or may not amount to Manufacturing.
The Product’s Basic Structure remains the same as no New Product surfaces after the Subjected Treatment has been carried out, the Applicant submits. Hence, the Applicant is a Job Worker.
The Authority of Advance Ruling (AAR) relied on the Apex Court’s Order in the case of Maruti Suzuki Limited Vs. CCE, that there is a Difference between Manufacturing and Processing and Noted that Electro Deposition (ED) Coating is merely done to Extend the Shelf Life of some Components.
Thus, it is a Processing Activity and not a Complete Manufacturing Activity.
Citation: GST-ARA-41/2020-21/B-28