Page 37 - GSTL_23rd April 2020_Vol 35_Part 4

2020 ] VALUATION MECHANISM OF SUPPLIES BETWEEN DISTINCT PERSONS J65
eral provision of Section 15 of the CGST Act. It is observed that there are conflict-
ing views of AAR rulings across the country with regard to availment of ITC in
respect of supply of goods or services to inter-unit/intra-transfer of goods or
services between distinct person or various units of an establishment. It is re-
quested that the GST Council sorts out the problem and recommends to the Gov-
ernment to clarify the issue/conflicting views of AAR rulings by issuing a circu-
lar so that litigation on account of ITC availment can be avoided in the coming
days.
_______

[Continued from page J58]

Individual and HUF who are not required to get their accounts audited are not
required to deduct TDS under this section.
9. A manufacturer under normal circumstances, depending upon the
size of business and the volume of manufacture, utilize the premises of job work-
er to meet the annual targets of production plan. This creates the need for job
workers.
From the viewpoint of GST law, goods may be sent either by the Con-
tractor/manufacturer to the job worker or from any other registered person, and
there is no restrictions imposed for such job work movement.
In some cases, materials are bought by job worker, as per instructions of
manufacturer, and the related value is reimbursed as per the agreement made by
them.
10. In the Income-tax Act, “Work”, is defined, by excluding manufactur-
ing or supplying a product according to the requirement or specification of a cus-
tomer by using material purchased from a person, other than such customer.
In this law Tax Deducted at Source (TDS) on contractors, is not attracted
when the job work is done by using material purchased from a person other than
customers as per the above definition.
11. The existence of two different approaches taken by the depart-
ments, for the activity of job work, in Goods and Services Tax Act, 2017 and the
Income-tax Act, 1961, requires attention to look into it.
Whereas, GST law permits the usage of any third party’s goods for the
purpose of job work, Income-tax law does not.
12. Income-tax law excludes using of goods of any other persons in re-
lation to “Work”.
Moreover, it uses the word “Purchases” for this purpose. On the plain
understanding of the term, purchases, would mean ‘outright purchases’ which
involve monetary payments as consideration, which will not normally happen in
job work trade. This needs more clarity for the purpose of proper compliance.
To conclude, we need to take care in the compliance with regard to GST
payments on job work activities which is different from TDS provisions in In-
come-tax Act.
_______

GST LAW TIMES  23rd April 2020  157