GST@ 12% ON JOBWORK AGAINST 20/2019- Central Tax (Rate), Goods and Services Tax - GST

[RSundaram RAMASAMY]

Dear All,

We are doing job work activities to aviation customers for the Mfr of Rubber product & Metal Product. Now we charged GST @ 18%. and Using SAC Code 9988 [ (ii) Manufacturing services on physical inputs (goods) owned by others, other than (i) above.]

As per Not.No. 20/2019- Central Tax (Rate), GST rate will be change @ 12%.

Kindly suggest us, can we implement GST @ 12 % for further job work activities for rubber product and metal product ?

Thanks

Posts / Replies

[KASTURI SETHI]

Dear Sh.Alkesh Jani Ji,

What is job-work ? In this context one decision of AAR based on the judgement of Supreme Court. Relevant para is extracted below:-

2019 (27) G.S.T.L. 120 (A.A.R. - GST) = 2019 (7) TMI 758 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA IN RE : S.B. RESHELLERS PVT. LTD.

 

[mohan sehgal]

Experts,Please do Clarify...

Every Job Work Is a manufacturing service under GST;Then how do you differentiate between different Job works.....Machining also changes the character and shape of the Input Good...whether the ultimate TEST is the making(USE) of a Finished Good ready for selling in the market by a Job Worker,,

Suppose I am fabricating an intermediate item as per the principal's drawing and specifications,which the principal is going to process further and use as a component/part in the FINAL ITEM Ready for selling in the market;whether I come under the term JOB WORKER or a Manufacturer Job Worker...

Thanks in advance.

[mohan sehgal]

Dear Experts,

What would be the current rate of GST on plain and simple Powder Coating & Electroplating Job Works done by a Regd.Dealer for a Registerd Principal.

Thanks

[mohan sehgal]

POLITE REMINDERS TO THE EXPERTS TO RESPOND

THANKS

[Chintamani Bhide]

Mr. Mohan,

As already explained by Mr.Kasturiji, in absence of definition of 'manufacturing service' the issue is not free from doubt. The definition of job work and manufacture are going to create confusion and the comparison with excise regime is always going to pose this problem. Earlier, in service tax also the activity of manufacture was kept out of ambit of service tax & the activity of production and processing of goods on behalf of principal manufacturer where appropriate excise duty was payable by principal was also exempted under 25/2012 ST.

I do not find any reason for GST to deviate from this spirit. However, to make the point clear, let us take an example of medicine or cosmetics. If job worker manufactures a liquid or gel medicines as per the license, formula provided by principal or manufactures a shampoo and simply fills it in a container without any labeling and cartoning, returns it principal manufacturer who tests it, labels it, packs in printed carton and then in outer boxes, THEN in my opinion the job worker does production and processing of goods attracting 12% rate, although it amounts to manufacture in accepted sense & and definition of the manufacture. BUT it is not at all salable, marketable in the same condition and further processing like testing, labeling etc. are to be carried out on it.

In the given query of Rubber rings, O rings, Seals and nut/bolts, these are in themselves, finished goods, distinct products salable and marketable as such and though principal manufacturer brings those goods back to him for further use, department may stick to definition of manufacture and may say it is manufacturing service & demand 18% gst.

[mohan sehgal]

Sir,

Thanks for your reply..

However,the CBIC circular no.126/45/2019-GST dt.20th November,2019 has clearly removed the confusion,at least for the present,that the Job Worker Services provided to the Registered persons by a registered dealer shall attract 12% GST (9988);however the residue manufacturing processes carried out on goods belonging to unregistered persons will attract 18% GST;as scope of "Job work"is restircted to only those processes undertaken on goods belonging to another registered person.(9988..Engineering related services other than Bus Body building)

Thus,if any service provided by way of treatment or processing undertaken by a person on goods belonging to another registered person will be considered under the Job Work Service and taxed @12%.

Thanks.