Coating Activities On goods Belonging To Customer Is Job work, Attracts 12% GST: AAR

The Maharashtra Authority of Advance Ruling (AAR) consisting of Rajiv Magoo and T.R. Ramnani has ruled that coating activities on goods belonging to customers qualify as job work and attract 12% GST. The applicant, a company, is in the business of coating activities, which are mainly applied to goods belonging to customers and provide high-performance Physical Vapour Deposition (PVD) and Plasma Assisted Chemical Vapour Deposition (PACVD) wear corrosion protection and decorative coatings. The applicant company provides high-quality standard coating portfolios for the cutting, moulding, and forming tool markets as well as precision engineering and decorative components, and offers customised solutions for original equipment manufacturers (OEM) and end-user customers. The coatings are applied to gear cutting tools, HSS tools, SC tools, piercing punches, press tools, cold rolls, dies and moulds, PDC Dies, hot forging tools, cold forging tools, extrusion tools, plastic injection moulding tools, valves, tappets, piston rings, tableting punches, gears, and all wear and tear parts. The coatings are applied on new as well as used tools, dies, moulds, components, etc., which are received by the applicant on delivery challans. The applicant processes this tooling by applying high performance coatings and sending it back to customers with an invoice for job work charges. The issue raised is whether the service of coating carried out by the applicant qualifies as job work in view of section 2(68) of the CGST Act, 2017. Job work is a process undertaken by a job worker on goods belonging to a principal. Job work may or may not amount to manufacturing. Job work has been defined under section 2(68) of the CGST Act, 2017 to mean any treatment or process undertaken by a person on goods belonging to another registered person. The applicant submitted that no new products emerge after the subject process has been carried out by the applicant. The basic characteristics of the product have not been lost. Thus, the applicant is a job worker. The AAR relied on the decision of the Supreme Court in the case of Maruti Suzuki Limited Vs. CCE, New Delhi, in which it was held that there is a distinction between processing and manufacture and that Electro Deposition (ED) Coating of anti-rust treatment to increase the shell life of various components is merely a processing activity and not a complete manufacturing activity. Applicant's Name: M/s lonbond Coatings Pvt. Ltd. Citation: GST-ARA- 41/2020-21/B-28 Click Here To Read/Download Order

Coating Activities On goods Belonging To Customer Is Job work, Attracts 12% GST: AAR

Mariya Paliwala

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