2018 (11) TMI 59 – AUTHORITY FOR ADVANCE RULINGS, KERALA – 2018 (18) G. S. T. L. 817 (A. A. R. – GST) – Scope of Job-Work – supply of services – BPCL would commence movement of inputs to applicants plant through pipeline as a principal supplier on free of cost and the applicant acting as job worker would converting the inputs to industrial gases and same would be sent back to BPCL through pipelines – tax rate for supply of job work services – Valuation for GST.
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Activity amounting to Job-work or not? – Held that:- The applicant being a job worker satisfy the necessary ingredients to carry out job work activity. The treatment or process undertaken by the applicant on the goods belong to the principal ie, BPCL. The goods on which treatment or process apply are the inputs of the principal. The principal transfer the inputs meant for job work on free of cost under intimation to the ‘job worker’. The term ‘process’ is wide enough to include any activity of conversion, manufacture, dev
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ces performed on physical inputs owned by others. The activity of the applicant is job work as the output is not owned by the applicant providing this service. Hence the activity falls under serial No.(ii) of the HSN 9988 taxable @18% GST.
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Ruling:- 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.
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The activity of the applicant being job work; is a provision of service, as the input as well as output is owned by the principal and not owned by the applicant and falls under serial No.(ii) of the 9988 taxable GST.
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GST is payable on the transaction value for which job work service is rendered. – AAR No. KER/22/2018 Dated:- 20-10-2018 – B.G. KRISHNAN AND B.S. THYAGARAJABABU, MEMBER Authorized Representative: Adv. Nitin Vijaiveergia and Paresh Sancheti for the Applicant. The applicant is a manufacturer of
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puts to applicants plant through pipeline as a principal supplier on free of cost and the applicant acting as job worker would converting the inputs to industrial gases and same would be sent back to BPCL through pipelines. Under this circumstances the applicant sought for advance ruling on the following: i) Whether on facts and circumstances of case, the activity undertaken by the applicant amounts to job work as defined under Section 2(68) of GST Laws and consequently classified as supply of services? ii) In case the proposed activity is considered as job work, what would be the tax rate for supply of job work services? iii) In case the proposed activity is considered as job work, what is the value on which the applicant would be liable to pay GST? The authorized representative of the applicant was heard. It is stated that the customer BPCL would commence the movement of natural gases and other inputs through pipeline on the basis of job work delivery challan under Rule 55(b) of GST
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which is required to be submitted by the principal supplying goods to the job worker on a quarterly basis. The applicant would be disclosing the value of tax invoices raised in respect of supply of job work services as taxable supplies in GSTR-1 as well as GSTR-3B. Job work is defined under Section 2(68) of GST Law as any treatment or process undertaken by a person on goods belonging to another registered taxable person. The word goods means every kind of movable property other than money and securities. The essential requirement to be fulfilled to establish a transaction as job work is the treatment or process undertaken on the goods belonging to another. Section 143 of GST Law explain the procedure to be followed in the case of job work transaction. A registered taxable person may, under intimation, send any inputs without payment of tax to a job worker for job-work and bring back inputs after completion of job work or otherwise, within one year of their being sent out, to any of the
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ly includes the words, manufacturing services on physical inputs owned by others. The term manufacture defined under Section 2(72) of GST Law as processing of raw material or inputs in any manner resulting in emergence of a new product having distinct name, character and use. The inputs received by the applicant send back to the principal as industrial gases, which have a distinct name, character and use as compared to the inputs. In Eaton Fluid Power Ltd case it has specifically observed that a job work may or may not amount to manufacture, and just because activities undertaken result in a new commodity, it cannot be said that there was no job work involved. In the case of JSW Energy Ltd, Maharashtra Appellate Authority for Advance Ruling observed that job work may include manufacture or bringing into existence a new distinct product. Hence the definition of job work under the GST Act is much wider compared to the pre-GST regime. Therefore any activity whether amounting to manufactur
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any treatment or process undertaken by a person on goods belonging to another registered taxable person. As for as a job worker is concerned, statute does not specify any restriction that the inputs subject to the treatment or process shall be taxable goods. Therefore, irrespective of whether the goods received by the applicant are taxable or not, job work activity should be allowed to be carried out on such activity. The principal is a taxable person under GST Law. The ownership of all the inputs as well as the output are vested with the principal. These inputs and out puts are used in the course or furtherance of business of manufacture of petroleum products. Under GST regime inputs have wider meaning, as such the goods sent by the principal such as natural gas, de-mineralized water raw water etc should fall under the definition of inputs as the same being indirectly used for ultimate manufacturing of petroleum products. Further, the industrial gas received by the principal shall al
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process. The application of minor items by the job worker would not detract it being a job work. Therefore the processing undertaken by the applicant on the goods belong to the principal, another registered person qualifies as job work even if it amounts to manufacture. Therefore the activity carried out by the applicant of processing natural gas and other inputs received from BPCL on free of cost basis and manufacturing industrial gases shall fall under the scope of job work under GST. The services included under the Heading 9988 are manufacturing services performed on physical inputs owned by others. The activity of the applicant is job work as the output is not owned by the applicant providing this service. Hence the activity falls under serial No.(ii) of the HSN 9988 taxable @18% GST. In the light of the discussion above, the following rulings are issued: i. The activity undertaken by the applicant of processing natural gas and other inputs received from BPCL free of cost basis an
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