PROLOGUE
If we see the provisions of the CGST Act and SGST Act for respective states, we come across identical provisions for the incidence of GST as provided in section 7 which provides for scope of supply under the CGST Act and the SGST Acts. The common feature is that if the supply is for consideration as per section 7(a) and as provided in section 7(c), a supply without consideration shall, as per Schedule I shall be liable to GST. Hence, essential feature is that the consideration, and ordinarily, must be interpreted to be flowing from the recipient of supply and not from the supplier to recipient. In supply of goods for performing job work the consideration is flowing from supplier to recipient. Therefore, substantially it can be said that the supply for performing job work is out of purview of incidence and levy of GST, save and except as provided in section 143(3) and (4), as deeming fiction.
It cannot be said any such provisions which provides effectively GST on supply of goods for job work, without consideration, as per correct interpretation, is not unconstitutional since as per provisions of Article 246A and definition of goods and service tax as per article 366(12A) does not disable the Centre or State from taxing supply without consideration. It simply provides for power of Center and State to levy tax on supply of goods and /or services.
The provisions of Act, Rules, Notifications and Circulars, apart from judicial precedents, are part of complete code on the law of taxation under GST regime.
Provisions of Law|
Job work has been defined as in section 2(68) as:
“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.
The definition of job work provides that the principal should be a registered person. Thus, rigorous provisions and relaxation of levy of tax for such supply is not available to unregistered person. Hence, unregistered person, though a taxable person, shall not be entitled to relaxation of liability of tax u/s 143 and his supply to job worker may be liable to GST at notified rates. Hence, it is advisable to get registration, though not liable for registration because of threshold limit of turnover, if the person is undertaking transaction of supply for job work, since u/s 2(94) registered person as defined means registered u/s 25 Thus, if some treatment or process is undertaken by a job worker on goods belonging to an unregistered person, it will not be considered as job work as per the above definition. Therefore, in a case where the principal is not a registered person, the activity may not qualify as job work and entitlement for supply without payment of GST if he remains or defaults in registration, though liable.
The Registered Person has to comply with the conditions as provided in section 143 in order to escape from supply to job worker being treated as taxable supply.
In order to treat supply to job worker as not liable to tax, as per rule 45, the supply must be through a challan which must contain particulars as prescribed in Rule 55.
The Rule 55 provides that challan shall be serially numbered not exceeding sixteen characters containing following particulars:
(i) date and number of the delivery challan,
(ii) name, address and GSTIN of the consigner, if registered,
(iii) name, address and GSTIN or UIN of the consignee, if registered,
(iv) HSN code and description of goods,
(v) quantity (provisional, where the exact quantity being supplied is not known),
(vi) taxable value,
(vii) tax rate and tax amount – central tax, State tax, integrated tax, Union territory tax or cess, where the transportation is for supply to the consignee,
(viii) place of supply, in case of inter-State movement, and
(ix) signature.
The delivery challan shall be prepared in triplicate, in case of supply of goods, in the following manner: –
(a) the original copy being marked as original for consignee;
(b) the duplicate copy being marked as duplicate for transporter; and
(c) the triplicate copy being marked as triplicate for consigner.
In cases where to goods imported are supplied directly to job worker the customs station of import, the goods may move from the customs station of import to the place of business/premises of the job worker he principal shall issue shall issue a copy of the Bill of Entry and the challan under rule 45 of the CGST Rules and send the same to the job worker directly.
Where goods are being transported on a delivery challan in lieu of invoice, the principal should declare the details of goods and generate an e-way bill for movement of goods if it exceeds threshold limit for E Way Bill which is, at present, more than Rs 50,000.But for intra state movement. As per third proviso to Rule 138(1) of the CGST Rules, 2017, it is it is provided that where principal and job worker are situated in different State or Union Territory, in case of job work movement of goods, e-way bill must be generated either by principal or by job worker irrespective of value of consignment.
The details of the goods sent to job worker or received from job worker or from one job worker to another job worker is required to be disclosed in GST ITC 04 for the respective period.
The responsibility for keeping proper accounts for the inputs or capital goods sent to the Job Worker and the same returned back from the Job Worker or supplied made from the place of Job Worker shall be lie with the principal. Section 143(2).
In section 143(1) supply claimed to be under job work, it must be under intimation to the authorities. It is clarified vide Circular No. 38/2018 dated 26.03.2018 as amended by Circular No. 88/07/2019 dated 01.02.2019 that the details of job-work challans filed in Form GST ITC – 04 will itself serve as an intimation as envisaged under Section 143(1).
On this basis, it could be inferred that non-declaration of job-work challans, or non filing of GST ITC 04 or erroneously, could be termed as non-intimation and accordingly, the exemption claimed under Section 143(1) shall be denied. In such a scenario, the goods sent to job-worker will qualify as supply and the principal would be liable to pay GST along with interest.
If the taxable person has to escape from being taxed under GST law, strict adherence is required as provided in Act, Rules, Notifications and Circulars. When the compliance to the procedure and practices are not followed or complied, State is within its Constitutional power to tax such supplies. This means supply, though without consideration, it can be liable to GST, if aforesaid conditions are not complied.
So far as the supply of job work on goods processed under job work will be liable in the hands of job worker as supply of services. In case the job worker is not registered, GST would not be payable by job worker and therefore he shall not collect GST from principal. But as per section 9(4) principal shall be liable to pay the GST on reverse charge mechanism if the principal is class of category of registered person in respect of specific categories of goods as notified by the Government. Rates applicable for supply job work services in the hands of the job worker is provided at Sir 26 Heading 9988 in Notification No. 11/2017 – Central Tax (Rate) .
Schedule II Entry 3 provides thus:
“Any treatment or process which is applied to another person’s goods is a supply of services.”
The Schedule II is only provides what transaction will be treated as supply of goods and what will treated as supply of services. When such transaction is treated as supply of services, Section 15 will be restricted to valuation of services and not valuation of goods.
Procedure
Section 143 provides for procedure for job work. The sub section (1) of section 143 provides for procedure for registered person to supply goods for without payment of tax. Following are the conditions:
- The registered person which has supplied such input goods for job work to a job worker shall bring such inputs back to his any of his place of business within a period of one year from the date of initial supply without payment of tax. So it applies to input goods only and not capital goods;
- The registered person which has supplied capital goods for job work to a job worker shall bring such capital goods back to his any of his place of business within a period of three years from the date of initial supply without payment of tax.
The input goods thus received from the job worker and capital goods so received back from the job worker, as per section 143(1) (b) can be supplied on payment of tax within India or export with or without payment of tax for export from the place of the job worker directly. The place of business of job worker in such case must be declared by the principal to be his additional place of business if the job worker is not registered person. [Section 143(1) (b) First Proviso.]In respect of certain goods as notified by Commissioner, taxable persons being principal need not declare the place of job worker to be his additional place of business.[First Proviso to S 143(1)(b)(ii)} in case goods are supplied from the place of business of job worker. Where the principal being registered in one State and the job worker is located in another State, such a principal will not be able to satisfy the above condition to be allowed to make supplies directly from the premises of the job worker.
Under Rule 45(3) mandates that a details of challans under which goods are dispatched to a job worker or received from job worker or sent from one job worker to another job worker during a quarter shall be shown in GSTR ITC –04 on or before 25th day of the end of the respective quarter or any extended period.
The restrictions of time limit for bringing back the capital goods or deeming fiction of supply do not apply to:
- Moulds and dies;
- Jigs and Fixtures;
- Tools .
There are provisions in section 143(3) and (4) the Act, which provide for taxing transaction as deemed supply of input goods or capital goods on the date on which they were sent out for job work if the input goods are not returned back to principal or supplied from the place of job worker within a period of one year in case of input goods and within a period of three years in case of capital goods or within extended period by Commissioner. Therefore it can be said that by deeming fiction a supply which is not supply u/s 7 or liable to tax u/s 9 are made liable to GST by deeming fiction. The details of such deemed supply shall be disclosed by the registered person in Form GSTR 1. (Rule 45(3).)
How drafting is so poor can be understood when we examine Rule 45 about procedure for supply of goods for job work which is found under Chapter V for input tax credit. Moreover, Explanation to Rule 45 provides for capital goods to include plant and machinery in Explanation to Section 17.The Explanation to Section 17 provides for plant and machinery to mean apparatus, equipment and machinery fixed to earth by foundation. It is unperceivable how such machinery etc. can be supplied for job work when fixed to earth. The Explanation firstly cannot be provided in Rules when such Explanation is not provided in the Act. It is strange to note that when it is provided in Rule 45, it refers to Chapter V, and has no relevance for procedure for goods supplied for job work.
Waste and Scrap
If any waste and scrap generated during performing a job work may be supplied, if such job worker is registered, directly from his place of business on payment of tax, or by the principal, if the job worker is not registered. If job worker supplies the waste etc. even then the principal will be liable to tax [section 143(5)]
But when unregistered job-worker received goods from unregistered principal then in such case this benefit of non-payment of tax will not be available to him and value of the supply of goods of unregistered principal, after completion of job work, by job worker shall be treated as the supply of goods by him and the value of such goods shall be included in the aggregate turnover of the job worker. As a result, job-worker’s aggregate turn over may cross the threshold and become liable to be registered.
Circular No. 38/12/2018
As per the circular issued by CBEC vide Circular No. 38/12/2018 dated 26th March, 2018 salient clarifications are as under:
- The definition of job work, as contained in clause (68) of section 2 of the CGST Act, entails that the job work is a treatment or process undertaken by a person on goods belonging to another registered person. Thus, the job worker is expected to work on the goods sent by the principal and whether the activity is covered within the scope of job work or not would have to be determined on the basis of facts and circumstances of each case. Further, it is clarified that the job worker, in addition to the goods received from the principal, can use his own goods for providing the services of job work.
- The third proviso to rule 138(1) of the CGST Rules provides that the e-way bill shall be generated either by the principal or by the registered job worker irrespective of the value of the consignment, where goods are sent by a principal located in one State/Union territory to a job worker located in any other State/ Union territory.
- It may also be noted that as per Explanation 1 to rule 138(3) of the CGST Rules, where the goods are supplied by an unregistered supplier to a registered recipient, the movement shall be said to be caused by such recipient if the recipient is known at the time of commencement of the movement of goods. In other words, the e-way bill shall be generated by the principal, wherever required, in case the job worker is unregistered.
- The FORM GST ITC-04 will serve as the intimation as envisaged under section 143 of the CGST Act, 2017.
- In this case, the goods may move from the place of business of the supplier to the place of business/premises of the job worker with a copy of the invoice issued by the supplier in the name of the buyer (i.e. the principal) wherein the job worker’s name and address should also be mentioned as the consignee, in terms of rule 46(o) of the CGST Rules. The buyer (i.e., the principal) shall issue the challan under rule 45 of the 7 CGST Rules and send the same to the job worker directly in terms of para (i) above. In case of import of goods by the principal which are then supplied directly from the customs station of import, the goods may move from the customs station of import to the place of business/premises of the job worker with a copy of the Bill of Entry and the principal shall issue the challan under rule 45 of the CGST Rules and send the same to the job worker directly
- In case the goods after carrying out the job work are sent in piecemeal quantities by a job worker to another job worker or to the principal, the challan issued originally by the principal cannot be endorsed and a fresh challan is required to be issued by the job worker.
- It is further clarified that the principal shall issue the challan in triplicate in terms of Rule 45 and Rule 55 for sending the goods for job-work and send two copies of the challan with the goods to a job-worker. The goods can be returned by the job-worker along with one challan and the job worker will retain the other. In case goods are sent from one job-worker to another, either the job-worker or the principal may issue a separate challan or alternatively, the original challan issued by the principal can be endorsed. It shall be noted here that the goods if sent in piecemeal, the job-worker shall issue a separate challan for returning the goods or to send it to another job-work.
- Rule 55 of CGST Rules provides that transaction of goods sent for job work can be without an invoice, but a proper delivery challan containing specific details must be issued while sending goods to the job worker. Serial number of such delivery challan shall also be provided in Table 13 of GSTR 1.
- The Circular referred to above has also clarified that the principal shall issue an invoice on the date on which the time period of one year / three years or the time period as extended by the Commissioner has lapsed and shall declare such invoice in the return filed for such tax period.
- It is further clarified that the date of sending the goods shall be termed as the date of supply and accordingly, the principal should pay the tax along with interest.
It is advisable to go through threadbare this Circular to understand the stand of the department in respect of the provisions of job work and other statutory provisions
In case of import of goods by the principal which are then supplied directly from the customs station of import, the goods may move from the customs station of import to the place of business/premises of the job worker with a copy of the Bill of Entry and the principal shall issue the challan under rule 45 of the CGST Rules and send the same to the job worker directly.
Section 19 provides for taking input tax credit in respect of inputs and capital goods sent for job work:
The principal shall, be allowed input tax credit on inputs sent to a job-worker for job-work. The principal shall be allowed input tax credit on capital goods sent to a job worker for job work.
Despite anything contained in clause (b) of sub-section (2) of section 16 regarding condition precedent, for availing input tax credit only when input goods or capital goods, are actually received, the principal shall be entitled to take credit of input tax on inputs even if the inputs are directly sent to a job worker for job-work without being first brought to his place of business. [This is to obviate condition for ITC being denied, u/s 16(2) (b). [Section 19(2) and (4).]
In a contract for job work, if any materials are to be purchased and incorporated or used for job work by job worker, the ITC will be available to the job worker.
Deemed Supply:
Where the inputs sent for job work are not received back by the principal after completion of job-work or otherwise or are not supplied from the place of business of the job worker, in accordance with clause (a) or clause (b) of sub-section (1) of section 143 within one year of being sent out, it shall be deemed that such inputs had been supplied by the principal to the job-worker on the day when the said inputs were sent out. However, where the inputs are sent directly to a job worker, the period of one year shall be counted from the date of receipt of inputs by the job worker.
Deemed supply which are getting covered under section 143(3) and 143(4), is to be reported in Table 16B of GSTR-9
Where the capital goods sent for job work are not received back by the principal within a period of three years of being sent out, it shall be deemed that such capital goods had been supplied by the principal to the job worker on the day when the said capital goods were sent out.
However, where the capital goods are sent directly to a job worker, the period of three years shall be counted from the date of receipt of capital goods by the job worker.
Registration of Job Worker:
Section 22 Explanation II provides that the supply of goods, after completion of job-work, by a registered job worker shall be treated as the supply of goods by the principal, referred to in section 143, and the value of such goods shall not be included in the aggregate turnover of the registered job worker. Hence, a job worker has to be alert to get himself registered, lest principal’s turnover is included in his turnover.
Transitional provisions relating to job work:
Where any inputs received at a place of business had been removed as such or removed after being partially processed to a job worker for further processing, testing, repair, reconditioning or any other purpose in accordance with the provisions of existing law prior to the 1st July,2017 and such inputs are returned to the said place on or after the 1st July,2017, no tax shall be payable if such inputs, after completion of the job work or otherwise, are returned to the said place within six months from the 1st July,2017.
The period of six months may, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding two months.
If such inputs are not returned within the period specified the input tax credit shall be liable to be recovered in accordance with the provisions of clause (a) of sub-section (8) of section 142.
Where any semi-finished goods had been removed from the place of business to any other premises for carrying out certain manufacturing processes in accordance with the provisions of existing law prior to the 1st July,2017 and such goods (hereafter in this section referred to as “the said goods”) are returned to the said place on or after the 1st July,2017, no tax shall be payable, if the said goods, after undergoing manufacturing processes or otherwise, are returned to the said place within six months from the 1st July,2017.
The period of six months may, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding two months:
If the said goods are not returned within the period specified in this sub-section, the input tax credit shall be liable to be recovered in accordance with the provisions of clause (a) of sub-section (8) of section 142:
The manufacturer may, in accordance with the provisions of the existing law, transfer the said goods to the premises of any registered person for the purpose of supplying there from on payment of tax in India or without payment of tax for exports within the period specified in this sub-section.
Where any excisable goods manufactured at a place of business had been removed without payment of duty for carrying out tests or any other process not amounting to manufacture, to any other premises, whether registered or not, in accordance with the provisions of existing law prior to the 1st July,2017 and such goods, are returned to the said place on or after the 1st July,2017, no tax shall be payable if the said goods, after undergoing tests or any other process, are returned to the said place within six months from the 1st July,2017:
The period of six months may, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding two months.
If the said goods are not returned within the period specified, the input tax credit shall be liable to be recovered in accordance with the provisions of clause (a) of sub-section (8) of section 142.
The manufacturer may, in accordance with the provisions of the existing law, transfer the said goods from the said other premises on payment of tax in India or without payment of tax for exports within the period specified in this sub-section.
The tax under above situations shall not be payable, only if the manufacturer and the job-worker declare the details of the inputs or goods held in stock by the job-worker on behalf of the manufacturer on the 1st July,2017 in such form and manner and within such time as may be prescribed. Rule 119 provides for GST TRAN 1 to be filed in this regard within time as provided in Rule 117.Rule 119.
Conditions and restrictions in respect of inputs and capital goods sent to the job worker. Rule 45
The inputs, semi-finished goods or capital goods shall be sent to the job worker under the cover of a challan issued by the principal, including where such goods are sent directly to a job-worker, and where the goods are sent from one job worker to another job worker, the challan may be issued either by the principal or the job worker sending the goods to another job worker.
However, the challan issued by the principal may be endorsed by the job worker, indicating there in the quantity and description of goods where the goods are sent by one job worker to another or are returned to the principal.
However, that the challan endorsed by the job worker may be further endorsed by another job worker, indicating there in the quantity and description of goods where the goods are sent by one job worker to another or are returned to the principal.
The challan issued by the principal to the job worker shall contain the details specified in rule 55.
The details of challans in respect of goods dispatched to a job worker or received from a job worker or sent from one job worker to another during a quarter shall be included in FORM GST ITC-04 furnished for that period on or before the twenty-fifth day of the month succeeding the said quarter [or within such further period as may be extended by the Commissioner by a notification in this behalf:
Where the inputs or capital goods are not returned to the principal within the time stipulated in section 143, it shall be deemed that such inputs or capital goods had been supplied by the principal to the job worker on the day when the said inputs or capital goods were sent out and the said supply shall be declared in FORM GSTR-1 and the principal shall be liable to pay the tax along with applicable interest.
GST rate for labour charges as providing of services for manufacturing food products is liable to 5% GST as per Notification No 11/2017 dt 28.6.2017.
Goods and Service Tax Council (for short Council) in its 45th dt 17.09.2021 Meeting considered the issue of the rate of GST applicable to job works undertaken in relation to manufacture of alcoholic liquor meant for human consumption. It was decided that alcoholic liquor for human consumption is not ‘food and food products’ and hence for the purpose of the entry prescribing 5% GST rate on job work services in relation to food and food products, the rate of 5% cannot be applied.
The CBIC has vide Notification No. 06/2021-CT(Rate) dated 30.09.2021 amended Notification No.11/2017 dt 28/06/2017 and after item (ic) and the entry has been inserted, namely item (ica) whereby Services by way of job work in relation to manufacture of alcoholic liquor for human consumption is made liable to GST at 9 % CGST and corresponding State GST as per respective States Notification will also be 9 % aggregating to 18 %. . This settles the interpretation dispute in relation to job work leading to manufacture of alcoholic liquor which was claimed by certain taxable person attracting. This based on the ground that alcoholic beverage is not a food or food product and therefore it does not attract rate for job work for ‘food / food product’ so as to deserve a concessional rate of 5% GST.
CBIC has also issued the Circular No. 164/20/2021-GST dated 06.10.2021.It provides “Services supplied by contract manufacturers to brand owners for manufacture of alcoholic liquor for human consumption providing that the job work services supplied by contract manufacturers to brand owners for manufacture of alcoholic liquor for human consumption attract GST @ 5% prescribed for job work services in relation to food and food products, in terms of Sl. No. 26 [Item 1(i)f] of Notification No. 11/2017-Central Tax (R) dated 28-6-2017 shall not include alcoholic liquor for human consumption is excluded from purview of item No. 26 [Item 1(i)f]. This entry prescribes GST rate of 5% on services by way of job work in relation to food and food products It is clarified that the expression “food and food products” in the said entry excludes alcoholic beverages for human consumption. As such, in common parlance also alcoholic liquor is not considered as food. Accordingly, services by way of job work in relation to manufacture of alcoholic liquor for human consumption are not eligible for the GST rate of 5% prescribed under the said entry. GST Council recommended that such job work would attract GST at the rate of 18%.
In the said 45th Meeting dt 17.09.2021 of GST Council it is recommended that those whose TO is more than 5 crores has to file GST ITC 04 once in six months and those whose TO is less than RS 5 crores has to file annually GST ITC 04.
Case Laws:
In case of TARANJEET SIGH TUTEJA AAR Chhattisgarh by order dt 10.10.2018 held that where there is contract for milling of paddy along with cost of transport, supply of packing materials, and incentives it will be treated as composite supply and contract of milling will be treated as principal supply.
In case of PARAS MOTOR INDUSTRIES, Haryana AAR has held 26.04.2018 that the activity of fabrication of bus bodies on chasis supplied by other party is composite supply with supply of goods being principal supply of bus bodies.
Karnataka AAR by order dt 12.09.2019 has held in HICAL TECHNOLOGIES P LTD that supply of goods in the processing of goods of others is composite supply where main supply is supply of manufacturing service on goods owned by others.
Karnataka AAR by order dt 18.09.2019 has held in SRI VENKATESHWARA ENTERPRISES that printing and supply of text books, workbooks, periodicals, brochures and text books are classifiable as job work.
Maharashtra AAR by order dt 26.8.2020 in case of KOLHAHPUR FOUNDERY AND ENGINNEERS has held that processing of sand for reuse procured at zero cost to make it reusable for sand foundry is not labour job but supply of sand.
Maharashtra AAR by order DT 4.9.2018 in case of CROWN BEARS has held that
Manufacture of beer by party for principal is taxable under GST law as service.
Karnataka AAR by order DT 08.02.2021 has held in case of SPRAYMET SURFACE TECHNOLOGIES that business of thermal spray or metal coating using metal powders, carbide powders, and wire rods for various engineering applications activity of job work.
IN RATAN PROJECTS AND ENGINEERING CO. PRIVATE LIMITED’ – 2019 (23) G.S.T.L. 416 (A.A.R. – GST),] Goods that are used up in the galvanizing process cannot be separated from the galvanized goods, Thus, the zinc, furnace oil or nickel exhausted in the process of galvanizing need not be physically returned. If the galvanized structures are returned that will be sufficient compliance of Section 143(1) (a) of the GST Act.
In M/s. TATA MARCOPOLO MOTORS LTD. 2019 (27) G.S.T.L. 283 (A.A.R. – GST) In case body is built on job work basis by using own inputs and capital goods on chassis provided by principal, activity amounts to supply of service. In case body of standardized vehicles is built without chassis and same is subsequently mounted on chassis, it amounts to composite supply of goods.
SANGHI BROTHERS (INDORE) PRIVATE LIMITED 2019 (27) G.S.T.L. 136 (A.A.R. – GST)
Mounting or fabrication of bus/truck/ ambulance body on chassis supplied by OEMs/Principal on delivery challan or any other owner of chassis by collecting job work charges including inputs required for such fabrication work without transferring the ownership of chassis to job worker -Activity amounted to job work.
M/s. TATA MARCOPOLO MOTORS LTD. 2019 (27) G.S.T.L. 283 (A.A.R. – GST)
In case body is built on job work basis by using own inputs and capital goods on chassis provided by principal, activity amounts to supply of service. In case body of standardized vehicles is built without chassis and same is subsequently mounted on chassis, it amounts to composite supply of goods.
M/s.BPCL Advance Ruling No.Ker/21/2018 dated 20.10.2018
Natural gas, DM water sent to manufacture Hydrogen, Nitrogen. Held even if manufacture, it is job work Value of material used/skill and labour applied by them and value of input supplied by customer is almost equal. The Authority opined that this is a clear case of supply of goods, i.e. ready to use sugar mill roller. Valuation as per Rule 27. [S.B. Reshellers Private Limited’ – 2019 (27) G.S.T.L. 120
(A.A.R. – GST)
In ALOK BHANUKA – 2019 (23) G.S.T.L. 375 (A.A.R. – GST)] Repairing defective transformers involves transfer of property in goods. Contribution not limited to labour, skill done with the help of his own tools, gadgets or machinery. Supply of goods constitutes major portion of the value of the supply. The process is not job work. To be treated as Repair activity.
GUJARAT AUTHORITY FOR ADVANCE RULING by order dt 2.7.2020 in case of AB N Dhruv Autocraft (India) Pvt held that if the applicant received the chasis from the principal on Job work challan/ delivery challan and build body on it and thereafter clear to the principal by raising the Invoice of Job work charges, it would amount to supply of service. In cases applicant owned the chasis and built the body and thereafter supply as complete body built motor vehicle to the customer by raising invoice of value of motor vehicle, it would amount to supply of goods.
GUJARAT AUTHORITY FOR ADVANCE RULING in case of M/s. Petronet LNG Ltd held by order dt 11.08.2021that activity of re-gasification of LNG owned by its GST registered customers amounts to rendering of service by way of Job Work and merits to be covered at entry ‘id’ of Heading 9988 at Sl. No. 26 of Notification No. 11/2017-CT (rate) dated 28.06.2017, as amended, liable to CGST at 6%..
GUJARAT AUTHORITY FOR ADVANCE RULING in case Inox Air Products Pvt. Ltd held by order dt 21.03.2018
The applicant has entered into a Job Work Agreement dated 07.02.2014 with M/s. Essar, in terms of which the applicant acts as a job worker for M/s. Essar which undertakes to provide the necessary goods such as Electricity, Industrial quality water to the applicant on a free-of-cost basis, using which the applicant manufactures industrial gases (Oxygen, Nitrogen and Argon) for Essar on Job Work basis .This activity undertaken by the applicant falls under the ‘Job Work’ as defined under Section 2(68) of the Central Goods and Services Tax Act, 2017 and the Gujarat Goods and Services Tax Act, Kerala Advance Ruling Authority by order dt 20 .10.2018 in case of iIn case of PRODAIR AIR PRDUCTS P LTD held that the activity undertaken by the applicant of processing natural gas and other inputs received from BPCL free of cost basis and manufacturing industrial gases from them shall fall under the scope of ‘job work’ under GST.
EPILOGUE
Under the strict provisions of law, the labour job outward supply is susceptible to tax if conditions are not complied. Before adverse adjudication by authorities, goods have been taxed to recipient of goods. If conditions are not complied, it may entail additional tax burden which can not be put in seamless ITC stream since it would be time barred and tax liability of outward supply of labour job services may not attract high incidence of tax so as to absorb ITC on supply of goods. Hence, compliance has to be diligent and strict.
Author Bio
Very informative and elaborative article. Good to read.