GST - Whether a Job worker is eligible to avail the benefit of Composition Scheme u/s 10? What happened where the nature of activity undertaken by the job worker is amounting to Manufacture? will he be denied the benefit of composition as service provider?

Section - 10 - Composition levy.

Schedule 2: - ACTIVITIES TO BE TREATED AS SUPPLY OF GOODS OR SUPPLY OF SERVICES

THE CENTRAL GOODS AND SERVICES TAX ACT, 2017

Rule - 5 - Conditions and restrictions for composition levy

Central Goods and Services Tax Rules, 2017

As per the scheme of Composition under GST, a service provider is not eligible to avail the benefit of composition scheme (except specified restaurant  / Dhaba Walas).

Therefore a Job worker, who is undertaking activities on the goods supplied by others, is considered as a service provider and not eligible to avail the benefit of composition scheme.

The situation would not change, despite the fact that the nature of activities undertaken by the Job worker is amounting to manufacture. He will not be eligible to avail the benefit of composition scheme.

As defined,  ‘job work’ means any treatment or process is undertaken by a person on goods belonging to another registered person and the expression ‘job worker’ shall be construed accordingly. [Section 2(68) of the CGST Act, 2017].

Further, Entry no. 3 of Schedule 2 of the CGST Act, 2017 specifically states that, "Any treatment or process which is applied to another person's goods is a supply of services."

Contrary view

Some experts feels that a Job worker, whose activity is amounting to manufacture, will be eligible for the benefit of Composition scheme. But, it should not be forgotten that Job worker is a service provider and all the service provider (except one case)  are specifically excluded from the scope of composition scheme u/s 10(2)(a).
 

Dated: 19-7-2017