2025 (3) TMI 472 - AAR - GST

Classification and applicable tax rate for the fish processing services provided by the applicant - job-work or not - classifiable under 998812 as Fish processing services which attracts 5% in terms of N/N. 11/2017-CT(Rate) dated 28-06-2017 amended by N/N. 31/2017-CT(Rate) dated 13th Oct 2017 - HELD THAT - In the instant case the activity of the applicant falls within the scope of job work and the Principal who is supplying the goods has to be a registered person. The registered person on whose goods job work is performed is called the Principal for the purpose of Section 143 of the CGST Act 2017. Here the person who is sending raw fish in ice to the applicant is the principal and the applicant who performs any treatment or processes shall be the job-worker. The activity of fish processing is classified under Chapter heading 998812 (manufacturing services on physical inputs (goods) owned by others vide notification No. 11/2017-CT.(Rate) dated 28th Jun 2017 which was included vide Notification No. 31/2017-CT (Rate) dated 13th Oct 2013 as Services by way of job work in relation to -(f) all food and food products falling under Chapter 1 to 22 in the First Schedule to the Customs Tariff Act 1975 (51 of 1975) chargeable @ 2.5.% each of CGST and SGST. Therefore the fish processing services are taxable at the rate of 5% with effect from 13th Oct 2017 under Chapter heading 9988. Prior to its amendment the activity was covered under the Chapter heading 998812 as (ii) Manufacturing services on physical inputs (goods) owned by others other than (i) above and attracted GST @ 18%. Conclusion - If the applicant does the fish processing service on the goods owned by other registered person it will fall within the scope of job work and hence will be charged at the rate of 5% provided all the procedures and provisions contained in the acts and rules are followed and adhered to by both the principal and by the applicant (job worker).

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

What is the classification and applicable tax rate for the fish processing services provided by the applicant?
Does the activity of fish processing performed by the applicant qualify as 'job work' under the GST framework?
Is the applicant's classification of their activity under HSN entry 998812 correct?
Is the notification cited by the applicant applicable to their services?
Does the GST liability reflected in the applicant's portal have any impact on the advance ruling application?

2. ISSUE-WISE DETAILED ANALYSIS

Classification and Tax Rate for Fish Processing Services

Relevant Legal Framework and Precedents: The applicant referred to Notification No. 11/2017-CT (Rate) dated 28-06-2017, which specifies tax rates for various services, including manufacturing services on physical inputs owned by others, under HSN entry 998812.
Court's Interpretation and Reasoning: The Court analyzed whether the applicant's fish processing services fall under the category of 'job work' as defined under the GST Act. It considered the definition of 'job work' and the specific classification of services under the notification.
Key Evidence and Findings: The applicant processes raw fish and prawns supplied by customers, which involves cleaning, cutting, freezing, and packing. This was deemed to qualify as a 'treatment or process' on goods owned by another registered person.
Application of Law to Facts: The Court found that the applicant's activities fit the definition of 'job work' and are therefore taxable at 5% under the specified notification.
Treatment of Competing Arguments: The applicant's argument that their services are classified under 998812 and taxed at 5% was accepted. The Court did not find any contrary arguments presented by the tax authorities.
Conclusions: The Court concluded that the fish processing services provided by the applicant qualify as 'job work' and are taxable at 5% under the relevant notification.

Eligibility of Notification and Job Work Classification

Relevant Legal Framework and Precedents: The legal framework for 'job work' under the GST Act requires that the process be performed on goods belonging to another registered person.
Court's Interpretation and Reasoning: The Court examined whether the applicant's activities meet the criteria for 'job work' and whether the notification applies.
Key Evidence and Findings: The applicant receives raw fish from customers, processes it, and returns it. This process was found to meet the definition of 'job work'.
Application of Law to Facts: The Court determined that the applicant's services fall under the classification of 'job work' as they process goods owned by another registered person.
Treatment of Competing Arguments: The Court found no substantial arguments against the applicant's classification and the applicability of the notification.
Conclusions: The Court ruled that the applicant's fish processing services are correctly classified under 998812 and are eligible for the 5% tax rate as per the notification.

Impact of GST Liability on Advance Ruling Application

Relevant Legal Framework and Precedents: The Court considered whether existing GST liabilities affect the advance ruling application.
Court's Interpretation and Reasoning: The Court reviewed the liabilities reflected in the GST portal and determined that they do not impact the advance ruling application.
Key Evidence and Findings: The liabilities were related to past discrepancies and penalties unrelated to the current classification and tax rate query.
Conclusions: The Court concluded that existing GST liabilities have no bearing on the advance ruling sought by the applicant.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: "The activity of 'fish processing' done to other registered person on a job work basis is classified under 998812 and attracts GST at the rate of 5% (CGST-2.5% and SGST-2.5%)."
Core Principles Established: The classification of services under GST must adhere to the definitions and criteria set forth in the Act and relevant notifications. The concept of 'job work' is central to determining the tax rate for services performed on goods owned by another registered person.
Final Determinations on Each Issue: The Court determined that the applicant's fish processing services qualify as 'job work' and are taxable at 5%. The liabilities reflected in the GST portal do not affect the advance ruling application.

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