2024-VIL-38-AAR
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SGST Advance Ruling Authority

GST – Tamil Nadu AAR - Section 2(68) of CGST Act, 2017 - Classification of activity of binding the carbon friction strips on metal components (i.e. Synchronizer Core) received from customer, under job work challan - whether the activity undertaken by the Applicant amounts to supply of job-work service under the SAC code 9988 – HELD - the activity of undertaken by the Applicant i.e. the process of bonding carbon friction strip with the metal component belonging to another person, will be supply of services in terms of Sl.No.3 of the Schedule II to CGST Act, 2017 - the activity undertaken by the Applicant amounts to job work - the job worker can use his own goods for providing the services of a job worker and therefore usage of imported carbon strips by the Applicant will not alter the nature of services provided as job work services – The activity undertaken by the Applicant of Bonding of imported Carbon friction strips to Synchronizer core received from customers amounts to supply of job work services under SAC 9988 - Ordered accordingly - Whether the bonding of imported carbon friction strips to Synchronizer cores received from customers would amount to composite supply of goods under CTH 6815 or 8708 – Supply of goods or supply of service - HELD – it is not correct to mention in the item description as ‘Synchronizer Ring’ and the relevant CTH in their invoice, as done by the Applicant. Since the activity is a ‘supply of service’, the correct service and the appropriate SAC should be mentioned in the tax invoice. The procedure to be followed by the Applicant, regarding movement of goods from the principal to the job worker, the documents and intimation required therefor, liability to issue invoice, determination of place of supply and payment of GST are clarified vide Circular No.38/12/2018-GST dated 26.03.2018 - In para 9A of the said Circular, it is clarified that the value of services would include not only the service charges but also the value of any goods or services used by him for supplying the job work services, if recovered from the principal. Attention is invited to section 15 of the CGST Act which lays down the principles for determining the value of any supply under GST. Therefore, there is no supply of goods in the entire activity of the Applicant - when the law itself clearly states that the process undertaken on another person’s goods is a supply of service, the question of composite supply does not come into picture.
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