Job work valuation for industrial gas manufacture follows transaction value where parties are unrelated and charges are sole consideration.

Processing atmospheric air, industrial water and electricity into industrial gases for a principal amounted to job work because the activity involved treatment or process on goods belonging to another registered person, and the output remained the principal's property under the commercial arrangement. The supply was valued under transaction value because the parties were not related and the agreed job work charges were the sole consideration. As the value could be determined under the transaction value rule, alternative valuation provisions were not required.

---

---

Issues: (i) Whether the activity of manufacturing industrial gases by using atmospheric air, electricity and industrial water supplied by the principal amounts to job work; (ii) Whether GST is payable on the transaction value under section 15(1) of the CGST Act and the corresponding State Act.

Issue (i): Whether the activity of manufacturing industrial gases by using atmospheric air, electricity and industrial water supplied by the principal amounts to job work.

Analysis: Job work requires a treatment or process undertaken by one person on goods belonging to another registered person. Atmospheric air, industrial water and electricity were treated as goods for this purpose. The manufacturing activity consisted of processing those inputs to produce oxygen, nitrogen and argon for the principal. The inputs were supplied by the principal, the commercial arrangement showed that the output belonged to the principal, and the land and supporting inputs were provided as part of the same arrangement. On these facts, the activity answered the statutory description of processing goods belonging to another registered person.

Conclusion: The activity amounts to job work.

Issue (ii): Whether GST is payable on the transaction value under section 15(1) of the CGST Act and the corresponding State Act.

Analysis: The value of supply is the transaction value where the supplier and recipient are not related and price is the sole consideration. The applicant and the principal were not related persons within the statutory meaning. The agreed job work charges constituted the sole consideration for the supply. As the value could be determined under section 15(1), recourse to alternative valuation provisions was not warranted.

Conclusion: GST is payable on the transaction value, namely the agreed job work charges.

Final Conclusion: The manufacture of industrial gases on the described arrangement is taxable as job work, and valuation is to be made on the agreed transaction value.

Ratio Decidendi: Where a registered person processes goods belonging to another registered person under a commercial arrangement in which the agreed processing charges are the sole consideration and the parties are not related, the activity is job work and the supply is valued under the transaction value rule.

---