GST
TRT-2025-
AAR Gujarat
Date:-03-11-23
In:-
Issue Favourable to Tax Payer ?:-
Order Date - 03 November 2023
Key Pointers –
- The Applicant, Shree Avani Pharma, is a partnership firm and is engaged in the job work of converting raw material [inputs owned by others] viz [i] Nitroantraquinone (HSN 2909); (ii) Monon methyl Amine (HSN 2921) & (iii) Bromine (HSN 2801) into Antraquinone derivatives (HSN 2914). The applicant has further stated that they undertake job work only for clients registered with GST; that during the job work, ownership of the goods does not change i.e. remains with its client.
- The applicant is of the belief that their service of job work falls under SAC 9988 & that he has to pay GST @ 12% in terms of Sr No. 26(id), ibid.
- The issue involved here is whether the service in question falls within the entry Sr. No. 26 of notification No. 11/2017-CT (Rate) dated 28.6.2017 and attract GST @ 12%?
- The AAR observed that the description of the heading 9988 is manufacturing services on physical inputs (goods) owned by others. Job work as defined under section 2(68) of the CGST Act, 2017, 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.
- A conjoint reading of notification No. 11/2017-CT (Rate) dated 28.6.2017, as amended, together with circular No. 126/45/2019-GST dated 22.1 1.2019, clearly depicts that there is a clear demarcation between scope of the entries at item (id) and item (iv) in so far as heading 9988 of Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017 is concerned. Sr. No. 26(id) [residual entry] covers job work where inputs are sent by registered person, while Sr. No. 26(iv) covers manufacturing services (processing) wherein inputs (goods) are sent by an unregistered person.
- Hence it was held that the service in question falls within the ambit of entry Sr. No. 26(id) of notification No. 11/2017-CT (Rate) dated 28.6.2017, as amended vide notification No. 20/2017-CT (Rale) dated 30.9.2019 and is classifiable under SAC 9988 and will attract GST @ 12% [CGST 6% + SGST 6%].
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