Page 32 - GSTL_30th April 2020_Vol 35_Part 5

J84 GST LAW TIMES [ Vol. 35
(ii) Is there any restriction in GST laws to supply raw materials
to the job work unit and get the finished goods to the appli-
cant from the job work unit as per the required design and
supervision of the engineers of the applicant and what will be
the rate of tax under GST law for the above works chargeable
by the service provider?
(iii) In case consumables like paints, primers and consumable
spares, like locking ring, are arranged by the job work unit, is
there any change on the rate of tax under GST law on such
job works provided by the job work unit?
(in this case, the consumables which are estimated at less
than 9% of the total cost of raw materials are arranged by the
job work unit and the said 9% of the estimated cost of con-
sumables is going to be added to the job work charges.)
(iv) Is there any tax liability on the applicant under GST laws on
the value of the scrap held with the job work unit?
(in this case, the applicant is not collecting the scrap of raw
materials from the job work place due to the fact that if the
applicant has collected the same the applicant would suffer
excess amount for transportation and labour charges for the
scrap than the cost realizable from the scrap. However, the
job work unit would pay GST on any receipt of their disposal
of scrap.)
Contention of the applicant :
They purchase all raw materials such as CR sheets/Tin sheets, paints,
closure fittings and locking ring and deliver the same as such to the job
work unit. The purchase orders are directly placed to the suppliers and
direct delivery made to job worker by using the process “Bill to the ap-
plicant and Ship” to the job work unit. The job worker executes the work
in accordance with the specific terms and conditions of the applicant.
The job work unit is having sufficient facility and use their own machin-
ery. The finished goods are required to be directly dispatched from job
work unit to the prospective customers using the delivery challan and E-
way Bill of the applicant. The job worker unit is free to dispose of the
scrap and applicant is not claiming any cost on such scrap.
Observation and findings of AAR :
The ownership of the goods does not transfer to the job worker but it
rests with the principal. The job worker is required to carry out the pro-
cess specified by the principal, on goods. Sending goods for job work is
not a supply as such, but it acquires the character of supply only when
the inputs sent for job work are neither received back by the principal
nor supplied further by the principal from the premises of the job worker
within a period of one year of being sent out. The responsibility for send-
ing the goods for job work as well as bringing them back or further sup-
ply has been cast on the principal.
The job worker, being a supplier of services, is liable to pay GST if he is
registered. He shall issue an invoice at the time of supply of the services
as determined in terms of Section 13 read with Section 31 of the

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