Sending inputs for processing into industrial gases without GST payment ruled compliant under CGST/KSGST Acts

The authority ruled that the activities described by the applicant, involving sending specific inputs for processing into industrial gases and buying them back without payment of GST under job work provisions, comply with the CGST/KSGST Acts. The movement of inputs and processed goods between the parties does not constitute taxable supplies under GST. The ruling clarified the tax implications of these transactions, affirming that they fall within the definition of job work as per GST laws.

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Issues involved:
1. Whether certain inputs can be sent by the applicant to another party without payment of GST under job work provisions.
2. Whether certain industrial gases can be bought back by the applicant from the other party without payment of GST under job work provisions.

Analysis:

Issue 1:
The applicant, a public sector undertaking operating an oil refinery, sought an advance ruling on whether specific inputs such as Re-gasified Liquefied Natural Gas (RLNG), De-mineralized water (DM Water), Hydrogen Rich off Gas, and raw water can be sent to another party for processing without payment of GST under job work provisions. The applicant supplies these inputs free of cost to the other party, which processes them into industrial gases. The key input RLNG falls outside the ambit of GST. The other party collects processing charges along with GST and returns the processed industrial gases to the applicant. The authority examined the scenario and ruled that this activity falls within the definition of job work as per GST laws. The movement of inputs and processed goods between the parties does not constitute a taxable supply under GST.

Issue 2:
The second issue raised was whether the applicant can buy back Hydrogen, Nitrogen, and Steam (industrial gases) from the other party without payment of GST under job work provisions. The authority analyzed that the industrial gases are produced using materials supplied by the applicant, and the other party uses minor ancillary goods in the process. Despite some manufacturing involved, the processing by the other party qualifies as job work. Therefore, the transport of inputs for processing and the return of processed goods to the applicant are not considered taxable supplies under GST. The ruling stated that the activity of sending inputs to the other party for manufacturing industrial gases and receiving them back falls under the definition of job work as per GST laws.

In conclusion, the authority determined that the activities described by the applicant regarding the processing of inputs into industrial gases and their subsequent procurement without payment of GST under job work provisions are in compliance with the CGST/KSGST Acts. The rulings provided clarity on the tax implications of such transactions and affirmed that the movements of inputs and processed goods between the parties do not attract GST.

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