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Issues: (i) Whether the process and treatment carried out on the goods belonging to the principal and made available by the principal amounts to job work. (ii) Whether the activity of job work carried out on goods falling under Chapter headings 5702 and 5703 is liable to CGST at the rate of 2.5% under Entry No. 26(i)(b), Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017.
Issue (i): Whether the process and treatment carried out on the goods belonging to the principal and made available by the principal amounts to job work.
Analysis: Any treatment or process undertaken on goods belonging to another registered person is covered by the statutory definition of job work. The service is performed on physical inputs owned by the principal, and the job worker may also use his own goods while supplying the service. The output remains a service and not ownership of manufactured goods.
Conclusion: Yes. The activity constitutes job work and falls under SAC 9988.
Issue (ii): Whether the activity of job work carried out on goods falling under Chapter headings 5702 and 5703 is liable to CGST at the rate of 2.5% under Entry No. 26(i)(b), Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017.
Analysis: The materials supplied by the principal were held to fall under Chapters 50 to 63 of the First Schedule to the Customs Tariff Act, 1975. Job work services in relation to such goods are covered by the relevant entry in the GST rate notification and are taxable at the specified concessional rate.
Conclusion: Yes. The job work on the supplied materials falling under HSN 5702 and 5703 is taxable at 2.5% CGST and 2.5% SGST under Entry No. 26(i)(b).
Final Conclusion: The ruling recognizes the process as job work and extends the concessional GST rate applicable to job work services on the specified textile-related goods.
Ratio Decidendi: Processing of goods belonging to the principal is job work when the service is rendered on physical inputs owned by another person, and such job work attracts the concessional GST rate applicable to the notified class of goods.
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