QUESTION
One unregistered dealer provides the service of testing and refining of gold to
registered dealer. Dealer refining the old gold jewellery which are received
from registered dealer and after refining this old gold jewellery send back the
gold coins and issue the certificate of testing. For this transaction dealer
received consideration from registered dealer. Can dealer liable for
registration if his turnover exceed the limit of Rs. 20 lakh? If yes, under
which SAC should register under GST? Please provide any reference of AAR
regarding this transaction.
Attachments area
ANSWER
Facts of the Case:
A unregistered dealer provides the service of testing and refining of gold to
registered dealer. After refining the old gold jewellery send back the gold
coins and issue the certificate of testing.
Law Applicable:
Notification No. 11/2017 Central tax (Rate):
|
21. Heading 9983 (Other professional, technical and business services) |
||
|
(i) Selling of space for advertisement in print media. |
2.5 |
- |
|
(ia) Other professional, technical and business services relating to exploration, mining or drilling of petroleum crude or natural gas or both |
6 |
- |
|
ii) Other professional, technical and business services other than (i) and (ia) above and serial number 38 below |
9 |
- |
|
26. Heading 9988 (Manufacturing services on physical inputs (goods) owned by others) |
||
|
(i) Services by way of job work in relation to- (a) Printing of newspapers;
(b)
Textiles and textile products falling under Chapter 50 to 63 in the
First Schedule to the Customs Tariff Act, 1975 (51of 1975) |
2.5 |
- |
|
(iv) Manufacturing services on physical inputs (goods) owned by others, other than (i), (ia), (ib), (ic), (id), (ii), (iia) and (iii) above. |
9 |
- |
SECTION 2 OF CGST ACT
(68) 'job work' means any treatment or process undertaken by a person on
goods belonging to another registered person and the expression 'job worker'
shall be construed accordingly;
SECTION 22 OF CGST ACT
(1) Every supplier shall be liable to be registered under this Act in the State
or Union territory, other than special category States, from where he makes a
taxable supply of goods or services or both, if his aggregate turnover in a
financial year exceeds twenty lakh rupees:
Provided that where such person makes taxable supplies of goods or services or
both from any of the special category States, he shall be liable to be
registered if his aggregate turnover in a financial year exceeds ten lakh
rupees.
Interpretation:
The testing and certification of gold ornaments are covered under SAC 998346.
The rate of GST applicable to 998346 is 18% as per Sl No. 21 (ii) Other
professional, technical and business services- of Notification No, 11/2017
Central Tax (Rate) dated 28.06.2017.
As per section 2(68) any treatment or process undertaken by a person on goods
belonging to another registered person amounts to job work. In your case you are
doing job work by refining old gold jewellery and converting it into gold coins.
Thus the rate of GST applicable for manufacturing services on physical inputs
(goods) owned by others is 5%; if undertaken on goods belonging to registered
persons as per SI No.26 (i) (c) and 18% GST, if job work undertaken on goods
belonging to unregistered persons as per SI. No. 26 (iv) of Notification No.
11/2017 Central Tax (Rate) dated 28.06.2017.
The similar decision is given by Kerala Authority of Advance ruling in case of
M/S CGR Gold Trading. the same is enclosed for your reference.
Regarding Registration as per section 22, every person is required to take
registration when his aggregate turnover exceeds threshold limit i.e. 20 lakhs.
Conclusion:
If turnover exceeds 20 lakhs then you are liable for registration. The service
of testing of Gold ornaments is covered under SAC 9983 and taxable @ 18%. The
service of Converting old gold jewellery into gold coins is covered under SAC
9988 and taxable @ 5% as the goods belong to registered person.