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GST Case 8- Prodair Air Products India Pvt. Ltd.

GST Case 8- Prodair Air Products India Pvt. Ltd.

In GST Case of Prodair Air Products India Pvt. Ltd., the applicant has raised the query in relation to the services provided by him as “Job Work”. So, let us discuss the case to understand the ruling provided by the authority.

Query:

Whether activity undertaken by applicant amounts to ‘job work’ and consequently classified as the supply of services and what would be the tax rate and value thereof for levy of tax.

Facts:

Principal i.e. BPCL (taxable person under GST) would provide natural gases and other inputs to the applicant’s plant on FOC basis. The applicant would convert inputs to industrial gases such as Hydrogen, Nitrogen, Oxygen etc. Ownership of all the inputs as well as the output always vests with the principal.

Observation:

The major input provided by the principal for job work i.e. Natural Gas is not a taxable commodity under GST, however, the statute does not specify any restriction that the ‘inputs’ subject to the treatment or process shall be taxable goods. Job work is an activity which may or may not tantamount to manufacture. A job worker may undertake to manufacture of goods on account of others from inputs supplied to him free of cost. The industrial gas has been produced out of major materials or inputs supplied by the principal. The job worker has used some minor, ancillary goods to complete the process. The application of minor items by the job worker would not detract it being a job work.

Held:

The services included under the Heading 9988 are manufacturing services performed on physical inputs owned by others. The processing undertaken by the applicant on goods belong to principal i.e. another registered person qualifies as job work even if it amounts to manufacture and falls under serial No.(ii) of the HSN 9988 taxable @18% GST.

Comments:

The Judgement again emphasizes the fact amongst other that application of minor items by the job worker would not detract it being a job work. Further, Job work is an activity which may or may not tantamount to manufacture and job worker may undertake to manufacture of goods on account of others from inputs supplied to him free of cost.

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