2024-VIL-54-AAR
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SGST Advance Ruling Authority

GST – Tamil Nadu AAR - Section 2(68) of the CGST Act, 2017 - Conversion of copper scraps from the customers for conversion into Winding Wire and then to enamel it – Applicant propose to replace the old scrap received from the customers with the already processed enameled Winding wire and not engaged in repairing the same copper, but are replacing it with already converted copper Enameled Wire from Scraps – Whether activity performed by the applicant amounts to Supply of goods or Supply of job-work service – HELD - the instant transaction of the applicant involving replacement of copper scrap, with the enameled copper winding wire cannot be considered as a supply of ‘service’, whatsoever, and that the same amounts to supply of goods. That is to say, the supply of enameled copper wire by the applicant to the customer is to be considered as an outward supply of goods by the applicant, and that the receipt of copper scrap from the customers is to be considered as an inward supply of goods to the applicant. It is clear that both the legs of this transaction (inward and outward) are independent of each other, and we hold that both relates to supply of ‘goods’ - the proposed business model of the applicant does not fall within the category of ‘job-work’ service - supply of enameled copper wire by the applicant to the customer is an outward supply of goods by the applicant – the enameled winding wire of copper which operates as an insulated electric conductor merits classification under chapter sub-heading 8544 11 10 of the GST Tariff which attracts 18% GST - Ordered accordingly - Whether the transaction in question comes under ‘Composite Supply’ – HELD - the receipt of copper scrap is not an outward supply made by the applicant, but an inward supply made to the applicant. Secondly, the treatment or process carried out by the applicant to convert the copper scrap to copper winding wire, and then to make it a enameled copper winding wire, are not carried out at the behest of customers or other persons – Further, the supply of the fully finished manufactured product, viz., enameled copper winding wire to the customers is the one and only outward supply of goods made by the applicant. Therefore, as only one outward supply of goods is made by the applicant in the instant case, it does not get covered under the category of ‘composite supply’ - Applicant’s liability under reverse charge mechanism on the purchase old Copper Scraps from the motor mechanics (customers) – HELD – RCM provisions on purchases from unregistered persons was applicable only on the class of registered persons to be notified in future, and hence the temporary blanket exemption from RCM provisions on such purchases was made permanent through the said amendment - As on date, except ‘Promoters’ and ‘Builders’, no other registered person is liable to pay taxes under RCM in respect of the receipt of goods or services from an unregistered supplier, and therefore, the applicant is not liable to pay taxes under RCM on the purchase of copper scraps from Motor mechanics.
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