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2019 (12) TMI 1007 - AAR - GSTMaintainability of Advance Ruling Application - Levy of GST - Scrap Generated from Labour job at our Vendor s Place - HELD THAT - The applicant have themselves submitted that the scrap is the property of the vendors. Hence question with respect to taxability of sale/supply of such scrap can be raised only by the concerned vendors and not by the applicant - Hence in view of the provisions of Section 95 of the GST Act, since the supply of scrap, will not be undertaken/is proposed to be undertaken, by the applicant, thus, this authority is not allowed to answer the question raised by the applicant, being out of the purview of Sec. 95 of CGST Act. The application for advance ruling is rejected, as being non-maintainable.
Issues Involved: Determination of the party liable to pay GST on scrap generated from labor jobs at the vendor's place.
Analysis: 1. Facts and Contention - As per the Applicant: The applicant, a registered person under the GST Act, sub-contracts the manufacture of products to vendors on labor job basis. The applicant pays the vendors for labor, which includes the value of scrap generated during manufacturing. The payment to vendors is a combination of cash and barter (scrap). The applicant queries whether this procedure complies with the law. 2. Contention - As per the Concerned Officer: No submissions were made by the jurisdictional officer. 3. Observations and Findings: The Authority noted that the applicant subcontracts manufacturing to vendors who are paid for labor. Scrap is generated during this process, with the applicant claiming that the labor charges paid are less than the actual charges due, with the difference representing the value of the scrap. The applicant asserts that the scrap becomes the property of the vendors. The Authority highlighted that the applicant is not undertaking the supply of the scrap, as it becomes the vendor's property, thereby falling outside the purview of the GST Act. 4. Legal Analysis: The Authority referred to the provisions of Chapter XVII of the CGST Act and Sections 95 to 98, 102, 103, 104, and 105. Section 95 defines 'advance ruling' as a decision provided by the Authority to the applicant on matters specified in Section 97(2) concerning the supply of goods or services. As the scrap becomes the vendor's property, any tax implications related to the sale of the scrap would be the vendor's responsibility, not the applicant's. Therefore, the Authority concluded that since the supply of scrap is not undertaken by the applicant, the question raised falls outside the scope of Section 95 of the CGST Act. 5. Decision: The Authority rejected the application for advance ruling as non-maintainable, as the question regarding the liability to pay GST on the scrap generated at the vendor's place was deemed to be outside the purview of the applicant's responsibilities under the GST Act. This detailed analysis of the judgment provides a comprehensive understanding of the issues involved, the contentions of the parties, the legal provisions considered, and the final decision rendered by the Authority for Advance Ruling in Maharashtra.
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