Job work in GST

[KARAN VERMA]

Sir, i m engaged in activity of bottling, packaging and labelling of beer/wine on the material provided by supplier, then after bottling, i will return material to supplier.

Whether this is considered as Job work activity and i will take benefit of 12% GST rate on job work.

Or department will said that this is not job work, you have to pay 18% GST being you are doing only packaging of goods.

Please provide your valuable opinion.

[KASTURI SETHI]

All the activities mentioned above amount to manufacture. If goods belong to a registered person rate of GST is 12% Serial No. 26(id) and if goods belong to unregistered person rate of tax is 18% (serial no.26(iv). Notification No.11/17-CT(Rate) dated 28.6.17 as amended vide Notification No. 20/19-CT(R) dated 30.9.19 read with Board's Circular no.126/45/19-GST dated 22.11.19. This is legal position as on today.

In the absence of definition of 'manufacturing services', the situation is still fluid despite Board's circular no.126/45/19-GST dated 22.11.19.

[KARAN VERMA]

Sir

As per SAC explanatory note guide issued by CBIC, they mention packaging services not covered under manufacturing services on physical goods owned by others.

See 998549 SAC code explanation. As per 998549, packaging of goods for other is not job work.

[KASTURI SETHI]

Your product is not soft drink.

[KASTURI SETHI]

See HSN 998818.

[Ganeshan Kalyani]

First you need to see if there is any specific entry relevant to the service you provide in entry 26. If it is there then that specific rate will apply. If not provided then you need to see if the person who owns the goods is an registered person or unregistered person. If goods belonging to registered person then the rate of tax is 12%. And if the goods belonging to an unregistered person then the rate of tax is 18%.

AI Summary

Job work classification in GST determines applicable tax rate depending on owner registration and manufacturing character. Classification of bottling, packaging and labelling as job work or manufacture determines the applicable GST rate: if treated as manufacture the rate applied varies with whether the goods belong to a registered or unregistered person. Conflicting guidance exists between SAC explanatory notes (excluding packaging for others from manufacturing services) and rate notifications/HSN entries; therefore the precise service entry and owner's registration status must be checked to determine taxability.