VAT / CST Eligibility for Job Worker

[Sharad Sonawane]

Dear Experts

We are manufacturing Pharmaceutical Product for other companies (Job Work) at the time of dispatch we are paying Excise Duty Edu. Cess & HSC Cess as job worker VAT OR CST Applicable or not Applicable

Regards

Sharad M S

[Madhukar N Hiregange]

VAT/ CST is payable where there is transfer of property in goods. As job worker if you have not added any material to the product and ONLY work on material supplied [ other than consumables used in production] by the rawmaterial supplier then NO VAT/ CST. 

If material added then VAT / CST payable along with the proportionate CED.

Dear Sir,

We are manufacturing unit of sheet metal parts. Now we have started powder coating/CED Coating plant in our unit. We have done job work of CED coating of excisable unit. When we make bills we take 30 percent material cost amt &  70 percent job work amt. we add 4.2 percent tax on taxable amt. can this is right

pl advice

manoj aggarwal

AI Summary

VAT/CST applicability depends on transfer of property in goods; no VAT/CST if only processing supplied materials.
VAT and CST attach only when there is a transfer of property in goods. A job worker who only processes goods supplied by another (using only consumables) does not attract VAT/CST; if the job worker adds material to the goods, VAT/CST is payable on the value attributable to that addition and should be accounted with proportionate excise consequences.