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GST Rate for Job Work, Goods and Services Tax - GST

Issue Id: - 115487
Dated: 3-10-2019
By:- Basha AbdulRazack
GST Rate for Job Work

  • Contents

Sir,

Please clarify the current rate of GST for following category of job work

9988 Manufacturing services on physical inputs (goods) owned by others

99889 Other manufacturing services

998898 Other manufacturing services n.e.c.

Thanks & Regards

Abdul Razack

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Posts / Replies

Showing Replies 1 to 15 of 18 Records

1 Dated: 3-10-2019
By:- Rajagopalan Ranganathan

Sir,

Please refer to Sl. No. 26 (ii) of Notification No. 11/2017-Central Tax (Rate) for services. The rate specified is 9% CGST + 9% SGST. This rate is applicable to (i) 9988- Manufacturing services on physical inputs (goods) owned by others, (ii) 99889-Other manufacturing services and (iii) 998898-Other manufacturing services n.e.c.


2 Dated: 3-10-2019
By:- Basha AbdulRazack

Sir,

Thank you for your reply, actually i am asking about as per new notification dated 30.09.2019, what is the GST rate for Job work charges for Service Code 9988

Thanks & Regards

Abdul Razack


3 Dated: 3-10-2019
By:- KASTURI SETHI

9988 -Manufacturing services on physical inputs (goods) owned by others : It is job work. (service). It has sub-headings

99889-Other manufacturing services 12% (6%+6%)*

998899 -Other manufacturing services n.e.c. 12 % (6%+6%) *

* Which is not specifically mentioned will attract GST rate @12% and others i.e. Job-work in relation to bus body building will attract 18%, Diamond 0.75 %, goods belonging to Ch.48 or 49 will attract 6% etc.


4 Dated: 3-10-2019
By:- Basha AbdulRazack

Thank You sir


5 Dated: 4-10-2019
By:- PAWAN KUMAR

Dear Sir,

as per my view, gst rate is as under :

9988 (i) - 5%

9988 (ii) - 18%

9998-Other Domestic Services - 18%.


6 Dated: 4-10-2019
By:- KASTURI SETHI

W.e.f. 1.10.19, if job-work process amounts to manufacture, rate of tax is 18% and if job-work process does not amount to manufacture, rate of GST is 12%. For example; powder-coating does not amount to manufacture, it will attract 12%. The job-work processes like machining, casting etc. amounts to manufacture, hence this job-work will attract GST @18%.

So registered person has to differentiate/identify what job-work amounts to manufacture and what does not amount to manufacture. Very tedious indeed. Here the definition of 'manufacture', 'manufacturing process' provided in Section 2(f) of Central Excise Act can help which is as follows:-

Section 2(f) of Central Excise Act

[(f) “manufacture” includes any process, -

(i) incidental or ancillary to the completion of a manufactured product;

(ii) which is specified in relation to any goods in the Section or Chapter notes of [the Fourth Schedule] as amounting to [manufacture; or]

[(iii) which, in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer,]

and the word “manufacturer” shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account;]

[(f) “manufacture” includes any process, -

(i) incidental or ancillary to the completion of a manufactured product;

(ii) which is specified in relation to any goods in the Section or Chapter notes of [the Fourth Schedule] as amounting to [manufacture; or]

[(iii) which, in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer,]

and the word “manufacturer” shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account;]


7 Dated: 4-10-2019
By:- Alkesh Jani

Sir,

The definition of Job-work is defined at Section 2(68) of CGST Act,2017 and is as below:-

"(68) “job work” means any treatment or process undertaken by a person on goods belonging to another registered person and the expression “job worker” shall be construed accordingly."

Now, “manufacture” of goods is settled by Hon’ble Supreme Court in various decisions, few are listed below

- To levy Central Excise duty, it is necessary that a new article should come into existence as a result of manufacturing activity – Hawkins Cooker Ltd. Vs. Collector – 1997 (96) ELT 507 (S.C.) = 1996 (12) TMI 77 - SUPREME COURT

- Incidental or ancillary process must be an integral and inextricable part of production or manufacture resulting in presenting a ‘finished’ or ‘manufactured’ product bearing a distinct name – U.O.I vs. Keshedeo Shivprasad – 2002 (145) ELT A163 (SC) = 1998 (2) TMI 609 - SUPREME COURT

- Manufacturing process continues till article is put in suitable packaging in which it is marketed – J.K.Synthetics Ltd. Vs. Collector- 1998 (97) ELT 310 (Tri.) = 1997 (3) TMI 250 - CEGAT, NEW DELHI

Hope this will help in the matter.

Thanks,

With Regards


8 Dated: 4-10-2019
By:- Ganeshan Kalyani

Yes, the residual entry is made at two clause. 12% would be applicable if the process does not amounts to manufacture and 18% would be applicable if the process amount to manufacture. Thus a retook in to the process by the tax payers is necessary. The change is with effect from 01.10.2019.


9 Dated: 8-10-2019
By:- Irudaya Raja

I have one doubt in "KASTURI SETHI" Sir's reply.

Sir, as per your example "powder-coating does not amount to manufacture", but as per Section 2(f) of Central Excise Act, "manufacture" includes any process, - i) incidental or ancillary to the completion of a manufactured product;

So that, if the Powder-coating has done for completion of a final product, does it amount to manufacture?


10 Dated: 8-10-2019
By:- Alkesh Jani

Dear Irudaya Raja,

The reply given by Sh. Kasturiji Sir, is perfectly correct, as the definition of erstwhile law was reproduced. The doubt raised by you is settled by Hon’ble Supreme Court in case of Keshedeo Shivprasad, cited above.

Thanks,


11 Dated: 8-10-2019
By:- KASTURI SETHI

2008 (10) S.T.R. 317 (Tri. - Bang.) = 2008 (1) TMI 105 - CESTAT BANGALORE A.G. SHIBU Versus COMMISSIONER OF CUS., C. EX. & S.T., COCHIN


12 Dated: 9-10-2019
By:- KASTURI SETHI

Just sharing illustrations.

Powder coating neither changes character nor functioning of the goods. It is a cosmetic exercise.It has only aesthetic value. For example ; if we mix tea in the milk, it will change the character and functioning of milk and a new product (beverage-tea) is emerged. Similarly, Curd, paneer, ghee etc. are manufactured from milk by different processes. Similarly, sugar is manufactured from sugarcane. Jaggery is manufactured from sugarcane. Character and functioning of sugarcane is changed by various processes.

If any job-work process changes the character and functioning of any goods, it will amount to manufacture, otherwise not.


13 Dated: 9-10-2019
By:- Tax learner

Sir ji

U r talking about powder coating but one of my client has work of electroplating so he will be also covered under reduced tax rate of 12 % ?


14 Dated: 9-10-2019
By:- atul rathod

I understand that electroplaring amounts to manufacture and therefore 12% would be applicable under 26(i)(id) if it is done for registered person and at 18% if the same is done for unregistered person under 26(iv)


15 Dated: 10-10-2019
By:- Tax learner

Dear sir

How did u get to know that it amounts to manufacture ? I think its not.


1

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