GST
TRT-2025-
AAR West Bengal
Date:-09-02-23
In:-
Issue Favourable to Tax Payer ?:-
Order Date – 09 February 2023
Facts –
- The applicant, Aabhushan Jewellers Pvt. Ltd. received an order for the manufacture of gold ornaments from the principal who has provided 1000 grams of pure gold and allowed a provision for wastage of 40 grams which is in the nature of normal loss and it is an industry-wide practice to allow such provision. The consideration for providing this manufacturing service would be Rs.50,000/ - on which GST would be levied @ 5%.
- The applicant subcontracts this job to another job worker wherein on the basis of his experience, he allowed provision for wastage of 30 grams to the job worker. Thus the applicant is ultimately left with 10 grams of pure gold which, according to him is not a consideration for the supply of services but self-generated.
- The applicant is of the view that the 10 grams of pure gold which is left cannot be termed as consideration. Hence he is not liable to pay GST on it.
Issue –
- Whether the applicant is liable to pay GST on the 10 grams of pure gold?
Orders –
- The Tribunal finds that the Government of India, Ministry of Commerce and Industry, in the HANDBOOK OF PROCEDURES has prescribed the percentage of wastage that may be allowed for the gold ornament manufacturing process.
- The Tribunal finds that the wastage allowed by the principal had exceeded the wastage norm limit that enabled the applicant to retain a certain amount of pure gold. However, retaining a certain amount of input cannot be treated as “wastage” or “normal loss”. Therefore the value of such excess wastage allowed shall be considered as non-monetary consideration.
- The Tribunal stated that the value of 10 grams of pure gold shall form a part of the value of supply of job work services provided by the applicant and therefore the applicant is liable to pay tax on such value.
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