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Section - 10 - Composition levy.
Schedule 2: - ACTIVITIES TO BE TREATED AS SUPPLY OF GOODS OR SUPPLY OF SERVICES
THE CENTRAL GOODS AND SERVICES TAX ACT, 2017
Rule - 5 - Conditions and restrictions for composition levy
Central Goods and Services Tax Rules, 2017
As per the scheme of Composition under GST, a service provider is not eligible to avail the benefit of composition scheme (except specified restaurant / Dhaba Walas).
Therefore a Job worker, who is undertaking activities on the goods supplied by others, is considered as a service provider and not eligible to avail the benefit of composition scheme.
The situation would not change, despite the fact that the nature of activities undertaken by the Job worker is amounting to manufacture. He will not be eligible to avail the benefit of composition scheme.
As defined, ‘job work’ means any treatment or process is undertaken by a person on goods belonging to another registered person and the expression ‘job worker’ shall be construed accordingly. [Section 2(68) of the CGST Act, 2017].
Further, Entry no. 3 of Schedule 2 of the CGST Act, 2017 specifically states that, "Any treatment or process which is applied to another person's goods is a supply of services."
Contrary view
Some experts feels that a Job worker, whose activity is amounting to manufacture, will be eligible for the benefit of Composition scheme. But, it should not be forgotten that Job worker is a service provider and all the service provider (except one case) are specifically excluded from the scope of composition scheme u/s 10(2)(a).
Job worker treated as service under Schedule entry - excluded from composition scheme even if activity amounts to manufacture. A person undertaking treatment or process on another's goods is classified as a service provider under the statutory definition of job work and the Schedule entry treating such treatment as a supply of services; therefore, even if the activity amounts to manufacture, the nature of supply remains a service and the job worker is excluded from the composition scheme.
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