GEMS & JEWELLERY INDUSTRY UNDER GST REGIME (PART-3)
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 25-1-2017<\/p>\n
Job work and GST
\nGems and jewellery sector is highly labour intensive and lot of work is done on a job work basis involving manual labour. The principal manufacturer has the option to send taxable goods without payment of GST to a job worker and bring it back, after processing, to any of his own place of business, for supplying such goods on payment of GST or export it. The principal also has the option to directly supply final products to end customers on payment of GST or export from the premises of job worker itself, subject to fulfillment of applicable conditions. GST credit is allowed in case of direct receipt of inputs or capital goods by the job worker, subject to receipt of goods back by the principal within specified period i.e., one year\/ three years.
\nUnder the present service tax, job works in relation to cut and polished diamonds and<\/p>\n
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\nHowever, definition of import of service does not specify such exclusion. Logically, definition of import of service also excludes services imported from overseas branch but clarity should bring for better understanding.
\nSupply provided to domestic branch in other States shall be considered as distinct person. Accordingly, IGST would be leviable on such supplies.
\nDomestic \/ SEZ Supply
\nFor units located in SEZ having operations across India and providing supply of services to customers located across India, the issue would arise as to where to pay GST and whether this would require splitting of invoices based on various locations of the service provider or the service recipient.
\nFor this purpose, the model GST law has prescribed the requirement of determination of the location from where the services are provided and the place of supply of such services, so that GST may be paid to the appropriate Government.
\nIn the context of<\/p>\n
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\nComparison between taxability under existing indirect tax laws and the model GST are as follows:
\nTaxes
\nSEZ units
\nPresent regime
\nGST regime
\nCustoms Duty
\nExempt
\nBasic Custom Duty – Upfront exemption may continue
\nExcise Duty
\nService Tax
\nCST\/VAT
\nUpfront exemption \/ refund
\nPayable (subsequently refundable)
\nAs per revised Model GST law, if a SEZ unit is receiving zero rated supply, it shall be eligible to claim refund of IGST paid by the registered taxable person on such supply. But again this will lead to blockage of working capital which may lead to increase in price.
\nSupply of goods and\/ or services to or by a SEZ unit, shall be deemed to be a supply of goods and\/or services in the course of inter-State trade or commerce. Accordingly, on supply of goods and\/or services to or by a SEZ unit shall attract IGST at the prescribed rate but it may not exceed twenty eight percent as proposed now.
\n Exports
\nIn case of export of products, raw material and capital goods are<\/p>\n
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