GST on amount debited to Jobworker against excess rejection

[sunilkumar bhageria]

We are procuring plastic items on Job work basis. For which we are providing plastic granuels to Job worker who after processsing this granuels supply us plastic components. During this process some rejection of material take place the job worker returns back to us this rejection but the value of such rejcetion is very less than the fresh granuels. We have restricted the rejection to 2 % of total input material but in some cases the Job worker makes more rejection hence we have debited the job worker for such excess rejection with difference in the value of granuels and relisable value of rejections.My query is Will this debit amount attracts GST or not.

AI Summary

GST Applies to Excess Rejection Debits in Job Work Process Under CGST Act, 2017 for Plastic Component Production A business is procuring plastic items through a job work process, providing plastic granules to a job worker who returns processed plastic components. Occasionally, the job worker exceeds the allowed 2% material rejection rate, leading the business to debit the job worker for the excess rejection based on the difference between the granules' value and the rejected material's realizable value. The query is whether this debit amount is subject to GST. The response confirms that GST is applicable, as per the CGST Act, 2017, which holds the principal responsible for tax on inputs or goods returned with excess wastage.