Opinion on Job work Activities-Reg
Queries with regard to Job Work have been legally discussed and opinion is made as under:
S.No. 26 of Notification 11/2017 Central Taxes (Rate) Dt. 28.06.2017 has been amended vide Notification 20/2019 Central Taxes (Rate) Dt. 30.09.2019, there has been a confusion about the rate of GST applicable for certain job work activities. The confusion is due to the fact that there are two residual entries, viz., (id) and (iv) attracting 12 % and 18 % respectively.
In order to understand the issue, it is relevant to refer to the series of amendments made to this entry over a period of time.
It may be noted that while clause (i) and the entries thereunder, viz., (a), (b), (c), (d), (da), (e), (ea), (f), (g), (h), (i), (ia), (ib), (ic) and (id) starts with “Services by way of job work in relation to”, S.No. (ii) starts with ” Services by way of any treatment or process on goods belong to another person in relation to “. It may be noted that some entries under clause (i) and (ii) are common, for example “Printing of Newspaper” falls under both (i) and (ii).
It may be observed from the above that the coverage of S.No. 26 (i) and 26 (ii) are clearly demarcated. So, in order to understand the difference, we have to refer to the definition of the term “job work” as per Section 2 (68) of the CGST Act, 2017 which reads as,
“job work” 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;
It may be noted from the above that any treatment or process undertaken by a person on goods belonging to another person would become “job work” only if the another person is a “registered person”. The same activity, if undertaken for an unregistered person, would not amount to “job work”.
The rate of GST prescribed under clause (i) of S.No. 26 of Notification 11/2017-CTR, as amended by Notification 20/2019-CTR, would apply if the activity amounts to “job work”, i.e. when undertaken for a registered person. The rate of GST prescribed under Clause (ii) and (iv) would apply, when the activity is undertaken for any person other than a registered person. Clause (iii) would apply to both.
Hence, the residual entry under S.No. 26 (i)(id) would apply, if any treatment or process is undertaken by a person on goods belonging to another registered person and would attract 6 % CGST + 6 % SGST; if the same treatment or process is undertaken by a person on goods belonging to another unregistered person it shall attract 9 % CGST + 9 % SGST, under S.No. 26 (iv).
Job work undertaken for unregistered persons.
– wherever specific rate (CGST 2.5 %) is prescribed, the same shall apply.
– wherever specific rate (CGST 6 %) is prescribed, the same shall apply.
– If the activity is not covered under any of the specific entry, 9 % CGST would apply.