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2019 (7) TMI 758 - AAR - GSTJob-work - Classification of supply - supply of goods or supply of services - use of own material substantially - activity of converting the bare shaft/beams supplied by the customer into ready to use sugar mill roller - HELD THAT:- From the combined reading on the definition of job work as aforesaid and the procedure of job work as prescribed u/s 143 of the CGST Act and Rule 45 of GST Rules, it is the principal who will send inputs to the job work for undertaking any treatment or process that may or may not amount to manufacture and will bring back same after the completion of job work. Thus the person who send goods to the job worker is a principal and the person who undertakes treatment/ processing is a job worker. In this case we find that applicants are receiving old roller, bare shaft, beams from the customer of the applicant under the cover of Rule 55 Challans. The applicant are then fitting the Shell manufactured out of their own raw material on the said shaft and then machining the same and further fitting the required accessory thereon and thus bringing into existence a usable sugar mill roller or new sugar mill roller which is no doubt a different commercial commodity as compared to the input involved. The product i.e. ready to use sugar mill rollar is handed over to the recipient on completion of the job. Thus even though applicant complies with the definition of job work, but having regard to the concept of job work as explained in the Flyer and the judgment of the Hon’ble Supreme Court cited supra, applicant cannot be considered as a job worker within the meaning of Section 2(68) and Section 143 of the GST Act and corresponding rules - In the case at hand applicant has accepted as a matter of fact that the value of the material used/ skill and labour applied by them and the value of input supplied by the customer is almost equal. In our opinion this is a clear case of supply of goods, i. e. ready to use sugar mill roller. The activity undertaken by applicant of converting the bare shaft/beams supplied by the customer into ready to use sugar mill roller (by using one’s own raw material) is “supply of goods”. Valuation - inclusion of the cost of shaft/beam supplied by the customer in the value of the said supply - HELD THAT:- In the present matter it is observed that price is not the sole consideration for the supply and hence sub-section (1) has no application in the present case but sub-section (4) is most appropriate for determination of the value of supply. As per chapter IV, value of supply is determined by applying provision of Rule 27 to Rule 31. However, we find that Rule 27 is the most appropriate and applicable rule for determination of value of supply in the present case. The consideration for the supply of ready to use sugar mill roller by the applicant to the customer is not wholly in money. Further, applicant has not provided any documentary evidence pertaining to open market value or the value of supply of goods of like kind and quality and hence in our opinion sub Rule (b) of Rule 27 is the most appropriate rule to facts of the case for the purpose of determination of value of supply. Applicant has received bare shaft or beams under the cover of Rule 55 challan with declared value of the said bare shaft or beams and as per provisions of sub-rule (b) of Rules 27 the said declared value shall be included in the value of supply of ready to use roller. The cost of shaft/beam supplied by the customer is includible in the value of the said supply for the purpose of payment of GST.
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