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2018 (11) TMI 59 - AAR - GSTScope 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. 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, development or preparation of goods. Therefore the activity of conversion of natural gas and other inputs to industrial gas qualify as ‘treatment or process’ of inputs. Hence the activity squarely fall under the scope of ‘job work’. Valuation - Held that:- Any activity whether amounting to manufacture or not, could qualify as job work activity, subject to the condition that the inputs owned by the principal and the job worker carried treatment or process on the inputs/goods. The value on which GST would be payable by the applicant for rendering of job work services shall be the transaction value ie, price actually paid or payable as per the commercial arrangement between the applicant and principal. No other cost shall be required to be considered for the valuation of the job work activity unless the same is specifically included in the job work charges as agreed between the parties. Rate of GST - Held that:- 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. 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. 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. GST is payable on the transaction value for which job work service is rendered.
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