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Whether a principal is treated as manufacturer, Goods and Services Tax - GST

Issue Id: - 118119
Dated: 16-8-2022
By:- Yogesh Ashar
Whether a principal is treated as manufacturer

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Dear All

One client of ours doesn't own any factory, but undertakes 100% manufacturing done from job workers. The department is of the view as the assessee doesnot have any premises to undertake manufacture he cannot be treated as manufacturer to avail from refund under the inverted duty regime. Request the expert to share their views on the same.

Thank you

CA Yogesh Ashar

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Posts / Replies

Showing Replies 1 to 8 of 8 Records

1 Dated: 16-8-2022
By:- KASTURI SETHI

Sh.Yogesh Ashar Ji,

First of all in the GST regime, taxable event is not 'manufacture'.However, the definitions of 'manufacturer' and 'manufacture', have been given in CGST Act. The definitions of 'job-work' and 'job-worker' are different from that given in Central Excise Act. Despite these above definitions, as per legal dictionary meaning, ' a job-worker always works 'for and on behalf of the principal (owner). The whole liability regarding discharging GST liability is cast upon the principal. The principal is the registered person. This very fact is sufficient for all purposes including refund claim. You can take support of the case laws pertaining to pre-GST era in your favour. There are case laws in your favour.


2 Dated: 16-8-2022
By:- Ganeshan Kalyani

In my view, a principal can be called as manufacturer if the process that he carries out on his products with the help of Job worker results in emerging of new product. If the principal does trading where he only converts the bulk package into retail pack thru Job worker and the product remains the same then he will not be called as a manufacturer.


3 Dated: 17-8-2022
By:- KASTURI SETHI

Raw material supplier can be treated as a manufacturer as per the following case laws :-

1.Shree Agency Vs. S.K. Bhattacharjjee reported as 1971 (12) TMI 43 - SUPREME COURT,

2. Bajrang Gopilal Gajabi reported as 1986 (7) TMI 95 - SUPREME COURT

3. B.S.Rajasekar Vs.COLLECTOR OF CENTRAL EXCISE 1991 (8) TMI 216 - CEGAT, NEW DELHI

4.Light Metal Extrusion Pvt. Ltd Vs. CCE -1996 (4) TMI 319 - CEGAT, MADRAS

5.Ekbote Interiors Vs. CCE, 2001 (4) TMI 155 - CEGAT, MUMBAI

6.Interspace Vs. CCE, 2003 (7) TMI 155 - CESTAT, NEW DELHI

7.Delhi Papers Products Vs.CCE, 1995 (8) TMI 203 - CEGAT, NEW DELHI

Each case has different facts. So go through all case laws and see the ratio of which case law(s) applies to your situation.


4 Dated: 19-8-2022
By:- Yogesh Ashar

Thank you Kasturiji. You have always been so helpful and spot on with your replies. Thank you all for the support

CA Yogesh Ashar


5 Dated: 19-8-2022
By:- KASTURI SETHI

Sh.Yogesh Ashar Ji,

Thanks & regards. It gives me immense pleasure if any querist in TMI forum is satisfied with my answer.


6 Dated: 20-8-2022
By:- Amit Agrawal

The criteria that 'client does not have own factory' and 'whether he can be called as manufacture or not' are not relevant for claiming refund under inverted duty structure.

I agree with Shri Kasturi Sethi's views.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.


7 Dated: 21-8-2022
By:- vijay kumar

Section 143 of the CGST Act'17 which deals with job work, does not stipulate that the principal must have premises to undertake manufacture. He shall only be registered under the Act. The said provision stipulates that it is the principal who is required to maintain proper accounts in the matter and he is the person liable to pay the tax, either after return of goods or supply from JW's premises. Hence, the principal can very much file refund claim under IDS u/s 54(3), notwithstanding the fact that he does not have any premises to undertake manufacture since he is the "registered person" specified under the said section in this context. It is also immaterial whether the process undertaken by the JW amounts to manufacture or not.


8 Dated: 25-8-2022
By:- Shilpi Jain

There is no condition under GST that only a manufacturer can claim refund under inverted duty structure. Department cannot ask you to fulfill conditions not laid down in the law


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