Page 31 - GSTL_30th April 2020_Vol 35_Part 5

2020 ] SUPPLIES TO JOB WORKER IS EXEMPTED BUT SUPPLY OF SERVICES BY JOB WORKER J83

SUPPLIES TO JOB WORKER IS EXEMPTED BUT SUPPLY OF SERVICES BY JOB WORKER
SUPPLIES TO JOB WORKER IS EXEMPTED
BUT SUPPLY OF SERVICES BY JOB
WORKER IS LIABLE TO GST — A CASE
STUDY
SUPPLIES TO JOB WORKER IS EXEMPTED BUT SUPPLY OF SERVICES BY JOB WORKER
By
Ramesh Chandra Jena, B.A. (Hons.), M.A. (Eco.),
D.M.M., LL.B.
MANAGING PARTNER, TAXPAYERS ADVISORY SOLUTIONS

“Job work” means processing or working upon
of raw materials or semi-finished goods supplied to the job worker, so as to
complete a part or of the process resulting in the manufacture or finishing of an
article or any operation which is essential for the job working process. Section
2(68) of CGST Act, 2017, defines job work as ‘any treatment or process undertak-
en by a person on goods belonging to another registered person’.
The registered person on whose goods (inputs or capital goods) job work
is performed is called the “principal” for the purpose of Section 143 of the CGST
Act. The principal must be a registered taxable person under Section 25 of the
CGST Act, 2017. The person who undertakes to carry job working of another per-
son is called “job worker”.
The transaction between principal and job worker is fully covered under
scope of supply and GST is payable thereon. But there is exception in terms of
Section 143(1) of the CGST Act, 2017 prescribed that registered person can send
any inputs or capital goods, without payment of tax, to a job worker for job work
and there subsequently send to another job worker and likewise.
The moot question arises, whether job working services provided by job
worker is liable to GST? This moot question is answered in the Advance Ruling
as under :
Advance Ruling :
The GST liability of job working services was examined by Authority for
Advance Ruling, Kerala (AAR) vide Order dated 16-9-2019 in Industrial
Engineering Corporation - 2019 (31) G.S.T.L. 344 (A.A.R. - GST).
Brief facts :
The applicant is a manufacturer of packing containers such as empty
barrels and drums mainly used by manufacturers like paint industries,
petrochemical industries, etc., as packing material. In order to meet time-
ly delivery of packing containers, the applicant plans to execute the sup-
ply order through another firm doing same line of business, and having
greater capacity. The applicant requested advance ruling on the follow-
ing :
(i) What will be the rate of tax under GST applicable to the pro-
fessional/job work charges to be paid by the applicant in this
case as explained above?

GST LAW TIMES  30th April 2020  31