{"id":4181,"date":"2017-11-10T13:41:48","date_gmt":"2017-11-10T08:11:48","guid":{"rendered":"https:\/\/taxclick.org\/?p=4181"},"modified":"2017-11-10T13:42:27","modified_gmt":"2017-11-10T08:12:27","slug":"gst-update-job-work-composite-supply","status":"publish","type":"post","link":"https:\/\/taxclick.org\/type\/gst\/gst-update-job-work-composite-supply\/","title":{"rendered":"GST Update on job work and composite supply"},"content":{"rendered":"

We have already given an update on job work of textiles. In the said update, it was mentioned that refund of unutilized credit is not admissible to the supplier of textiles. Notification No. 5\/2017-Central Tax(Rate) dated 28th<\/sup> June,2017 has been issued in this regard. It is worthwhile to mention here that the raw material or consumables used in textile manufacture such as colour, chemicals, etc. are chargeable to tax @ 18% while output will suffer the tax @ 5% only. Therefore, since there is restriction of non-admissibility of credit to the trader only, the job worker will get the refund of credit so accumulated. Therefore, it is interpreted that dealers of textiles will send the material for job work only. By doing this, the tax implication will be the same but the refund of overflow of credit will be available as there is no specific denial like that in the case of supply of textiles.<\/span><\/p>\n

Now, another set of experts is of the view that in case of job work, the principal supply is of material, therefore, while assessing the transaction, it should also be considered as an independent supply. Accordingly, it is alleged that the valuation should be as per composite supply. In this regard, it is submitted that the term composite supply or mixed supply comes into existence only if there is more than one supply. In the instant case, there is only one type of supply namely “job work”. According to schedule II of CGST Act, it is considered as supply of service. Accordingly, it shall be treated as a supply of service only for the purpose of determining the value, classification and rate of tax. It cannot be said that the job work has to be seen after splitting up the component of goods and service.<\/span><\/p>\n

Under GST regime, the term job work is defined in section 2(68) of CGST Act, 2017 as follows:-<\/span><\/p>\n

“(68) \u201cjob work\u201d means any treatment or process undertaken by a person on goods<\/u><\/strong> belonging to another registered person<\/u> <\/strong>and the expression \u201cjob worker\u201d shall be construed accordingly;”<\/em><\/span><\/p>\n

The analysis of above definition makes it clear that any process carried out by a person on the goods belonging to another registered person will be construed as job work. Thus, the goods will always belong to other person. If the view point as above is accepted, the concept of job work will lose its relevance. Interestingly, this analogy is applied only in case of textiles as there is bar on claiming the refund of accumulated credit on it. In other cases, this analogy is not been drawn.<\/span><\/p>\n

It is pertinent to note that in respect of Printing of Books a Circular No. 11\/11\/2017-GST dated 20th October 2017 has been issued to clarify as follows:-<\/span><\/p>\n