Page 134 - GSTL_26th March 2020_Vol 34_Part 4

644 GST LAW TIMES [ Vol. 34
STEP 15 : FINAL INSPECTION - To finally ensure whether all the pro-
cess are done properly and also to produce an inspection report.
STEP 16 : PACKING - To make the parts safe during the transit
4. The applicant is under the administrative jurisdiction of Central Tax
and it is reported by the Deputy Commissioner, Ambattur Division that there is
no proceedings in respect of the applicant. The Central Tax Authorities has not
furnished any comments on the questions raised by the applicant. The State Tax
authorities have not furnished any comments.
5. We have carefully examined the contents raised by the application,
submissions in personal hearing and additional documents submitted after per-
sonal hearing. Further, it is reported by the Central Tax authorities that there is
no proceedings in respect of the applicant and the State Tax Authorities has not
responded. It is construed that there are no proceedings pending in the case of
the applicant on the question raised by them and the application is taken up for
decision. The applicant has stated that they do not have clarity on the SAC and
Rate of Tax and has sought the applicable classification and rate for the nature of
job done by them.
6.1 The applicants are undertaking the work of electroplating the com-
ponents of automobiles, etc., provided by the customers as per their specifica-
tions made in the diagram. For doing the electroplating, they purchase metals
such as Zinc Ingot, Silver Bullion, Nickel, Copper, Chemicals., Hydrochloric and
Nitric Acid, SC casting. The customers send the components under Delivery
challan with the reason for Transport as ‘Outward-Job-work’ in the E-Way bill to
the applicant. After doing Electroplating as per the specifications of the custom-
er, the applicant raises invoice charging applicable GST and return the compo-
nents stating ‘outward supply’ in the E-way bills. The components are owned by
the applicants’ customers and are sent to the applicant for electroplating and re-
turn back. The final product is also owned by the applicants’ supplier.
6.2 Para 3 of the Schedule-II of the CGST Act, specifies certain activities
to be treated as supply of goods or supply of services, in accordance to which -
“Any treatment or process which is applied to another person’s goods is
a supply of services”.
Therefore, the supply of the applicant is that of ‘Supply of Service’.
6.3 Having decided that the supply is one of service the relevant Ser-
vice code is ascertained as under. SAC 9988 as per the Explanatory notes is given
under :
9988 Manufacturing services on physical inputs owned by others
The services included under Heading 9988 are performed on physical in-
puts 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.
From the above, it is clear that this heading covers those services characterized as
outsourced portions of a manufacturing process. In the case at hand, the electro-
plating job done by the applicant is a portion of manufacturing process of the
customer of the applicant and therefore, the activity of the applicant is covered
under SAC 9988.
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