GST Leviable by Job Worker - Engineering Industry

[A SenthilKumaran]

Dear Sir,

We have outsourced the steel MS/SS raw material to cut through lazer cutting machines on various sizes based on the drawings to our job worker which is parts of our manufacturing final product by us. My query is in this case our job worker has to charge weather 12% GST or 18% GST. In this case the material sent by us and they are only providing the lazer cutting services.

[KASTURI SETHI]

The issue is debatable. Some experts are of the view that if the activity amounts to manufacture GST @18% is applicable otherwise GST is applicable @12%. In the absence of the definition of the term, 'manufacturing service' in CGST Act, the situation is fluid. The phrase, 'manufacturing service' should be defined.

I have already explained my views in detail in this forum in October, 2019.

[YAGAY and SUN]

What is the end use of MS/SS raw material at your end, which are duly being cut by the job worker through lazer cutting machine.

[YAGAY and SUN]

In our view, rate of GST should be 18% as it is being used in your finished/final products.

AI Summary

GST rate on job work depends on whether laser cutting constitutes manufacture; end use of parts affects rate.
GST applicability on laser cutting by a job worker for supplied MS/SS material depends on whether the operation constitutes manufacture. Experts are divided: if treated as part of manufacturing, the higher GST rate for manufactured components applies; if not, a lower GST rate applicable to job work may apply. Absence of a statutory definition of "manufacturing service" contributes to classification uncertainty; the end use of the cut parts in the principal's finished product is a key practical consideration.