West Bengal AAR in the case of Vrinda Engineers Private Limited

Case Covered:

Vrinda Engineers Private Limited

Facts of the Case:

The applicant is a supplier of building structure, railway bridge equipment, technical structure, blast furnace shell, civil structure. Apart from supplying items, the applicant does job work on the materials and design belonging to another registered person. The applicant wants to know the applicable rate of tax in terms of Sl No. 26 of Notification No. 11/2017- Central Tax (Rate) dated 28/06/2017, amended time to time, (hereinafter “Rate Notification”). An advance ruling is admissible on this question under section 97(2)(b) of the GST Act.

The applicant declares that the issue raised in the application is not pending nor decided in any proceedings under any provisions of the GST Act. The officer concerned from the revenue has not objected to the admission of the application. The application is, therefore, admitted.

Observations:

Job work has been defined under section 2(68) of the GST Act as any treatment or process undertaken by a person on goods belonging to another registered person. Rule 2(h) of the Cenvat Credit Rules, 2004 defines job work as processing or working upon raw materials or semi-finished goods supplied to the job worker to complete a part or whole of the process resulting in the manufacture or finishing of an article or any operation which is essential for the aforementioned process. Job work within the meaning of section 2(68) of the GST Act, therefore, is nothing but manufacturing service, classifiable under SAC 9988, supplied to a registered taxable person.

It is necessary to analyze the terms of the contract between the Principal and the applicant. The Principal delivers the raw materials for fabrication at the applicant‟s unit free of cost (Clause no 4). The fabrication work is inspected at different stages by the designated engineer/ client/Principal (Clause14). The applicant is required to paint as per the approved specification. But, the scope of painting is restricted to surface preparation, metal spraying, and one coat of paint at the shop (Clause 15). The final coat of paint will be done on-site after the completion of the erection. On receipt of the fabricated structures at the site, the Principal will do weighment, and the work shall be measured as per the above weighment (Clause 23). After completion of the fabrication work, the applicant has to return the excess materials to the Principal (Clause no 24).

Related Topic:
Printing Contracts are ‘Services’ and not ‘Goods’- West Bengal AAR

Ruling:

The applicant supplies a mixed supply constituting of the job work of fabrication of steel structures and the works contract of applying paint to the erected steel structures. It is taxable @ 12% in terms of the provisions under section 8(b) of the GST Act.

This ruling is valid subject to the provisions under Section 103 until and unless declared void under Section 104(1) of the GST Act.

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