In re M/s Gupta Steel Udyog (GST AAR Punjab)
The activity of manufacturing of Cattle Feed / Poultry Feed by the applicant on job work basis is not ‘Support services to agriculture, forestry, fishing, animal husbandry’. The activity of manufacturing of Cattle Feed / Poultry Feed by the applicant on job work basis falls under heading 9988 and attracts GST @ 5% (CGST 2.5% + SGST 2.5%).
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, PUNJAB
II. BRIEF FACTS OF THE CASE
M/s Gupta Steel Udyog, Opposite Gagan Feeds, Khanna-141401 are holding GST Registration No. 03AAJFG0841N1ZF. They are engaged in manufacturing of Cattle Feed and Poultry Feed on Job Work basis. The total raw material viz. Rice bran, Grains, Cakes, Molasses, De-Oiled Cakes etc. to be used in the manufacture of Cattle/Poultry Feed on job work, is supplied by the Principal Manufacturer. While most of the raw material are taxable in GST, the final products produced after job work i.e; Cattle Feed / Poultry Feed are exempted / Tax Free. The applicant receives job works charges for the above service rendered by him to the Principals.
III. QUESTION(S) ON WHICH ADVANCE RULING IS SOUGHT
Whether GST is applicable on the job work charges charged for manufacturing of Cattle Feed / Poultry Feed on job work basis.
IV. ELIGIBILITY OF THE APPLICATION FOR ADVANCE RULING
The Section 97(2) of the Central Goods and Services Tax Act, 2017, read with Section 97(2) of the Punjab Goods And Services Tax Act, 2017, provides for the issues on which advance ruling can be sought.
97 (2) The question on which the advance ruling is sought under this Act, shall be in respect of—
(a) classification of any goods or services or both;
(b) applicability of a notification issued under the provisions of this Act;
(c) determination of time and value of supply of goods or services or both;
(d) admissibility of input tax credit of tax paid or deemed to have been paid;
(e) determination of the liability to pay tax on any goods or services or both;
(f) whether applicant is required to be registered;
(g) whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both, within the meaning of that term.
As the queries of the applicant in para III, are related to the question as to whether GST is applicable on the job work charges charged for manufacturing of Cattle Feed / Poultry Feed on job work basis falls within the ambit of Section 97(2) (a) & (b) – classification of any goods or services or both and applicability of a notification issued under the provisions of this Act, hence, the application of the applicant is eligible for a ruling by the Punjab State Advance Ruling Authority.
V. SUBMISSIONS BY THE APPLICANT
The applicant vide their application in Form GST ARA — 01 dated 19.04.2018 have, inter-alia, stated that they are engaged in manufacturing Cattle Feed and Poultry Feed on Job Work basis. The total raw material viz. Rice bran, Grains, Cakes, Molasses, De-Oiled Cakes etc. to be used in the manufacturing activity on job work is supplied by the Principal Manufacturer. The process undertaken by job worker is as under:
> Grinding and mixing of the raw material is performed in Grider & Mixer, Thoroughly mixed Raw Materials are treated with dry steam from Boiler in steel conveyors,
> The steamed materials are palletized through pallet mill,
> After cooling, the finished goods i.e; end product is weighed & filled in HDPE Bags and then supplied.
Both the end products i.e; Cattle Feed and Poultry Feed are Tax Free goods. The applicant has further submitted that as per Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, “Support services to agriculture, forestry, fishing, animal husbandry” are ‘NIL’ rated. It has also been submitted that “Carrying out an intermediate production process as job work in relation to cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products or agricultural produce” is also ‘NIL’ Rated.
Relevant extract of the Notification is:
(i) Support services to agriculture, forestry, fishing, animal husbandry.
Explanation. —
“Support services to agriculture, forestry, fishing, animal husbandry” mean —
(i) Services relating to cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products or agricultural produce by way of—
(a) agricultural operations directly related to production of any agricultural produce including cultivation, harvesting threshing, plant protection or testing;
(b) ………..
(c) …………..
(d) ………………..
(e) …………….
(f) ………………..
(g) …………………
(ii) ………….
(iii) Carrying out an intermediate production process as job work in relation to cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products or agricultural produce
VI. HEARING
The case was taken up for hearing on 27.06.2019. Sh. Vinod Kumar, Partner and Sh. Vishal Garg, CA appeared in the Personal Hearing on behalf of the applicant and were heard in detail. During the hearing, they have submitted copies of the various representations made to different authorities and other miscellaneous correspondence / documents with CPF India Ltd.. They requested for an early;,. clarification.
VII. DISCUSSIONS AND FINDINGS
From the analysis of the applicant’s submissions and statements, the following issue merit careful consideration for final decision :
(i) Whether GST is applicable on the job work charges charged for manufacturing of Cattle Feed / Poultry Feed on job work basis
2. The undisputed fact is that applicant is engaged in business of production of cattle feed and poultry feed on job work basis and the raw materials are sent by the principal to the applicant for the purpose of undertaking job work for manufacture of cattle feed / poultry feed.
3. Section 7(1) of CGST Act defines the expression ‘supply’. As per the definition, it includes:
(a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business;
(b) import of services for a consideration whether or not in the course or furtherance of business;
(c) the activities specified in Schedule I, made or agreed to be made without a consideration; and
(d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II.
4. Further, as per Section 2(68) of CGST Act, the term ‘Job Work’ means ‘as any treatment or process undertaken by a person on goods belonging to another registered person and the expression “job worker” shall be construed accordingly’.
5. Further, Schedule II of CGST Act enumerates the activities which can be treated as Supply of Goods or Services. Para 3 of the Schedule states that “Any treatment or process which is applied to another person’s goods is a supply of services.”
6. In the present case, the applicant undertakes process on goods belonging to the principal, the same is in the nature of job work and the applicant is a job worker. the activity of manufacturing Cattle Feed / Poultry Feed by the applicant from the raw material supplied by the other registered person shall be considered as supply of services. The applicant, thus, undertakes this supply of services by way of processing the goods supplied by the principal for a consideration and the same is covered under the definition of ‘Supply’.
7. The applicant has relied on Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 (as amended) which notifies the rates for supply of SERVICES under CGST Act and states that their case falls under S.No. 24 of the Notification under the heading 9986. The relevant portion of the Notification is as under:
