2021 (8) TMI 786 - AAR - GST

Classification of goods - job work on Diphenylmethoxy'N' N- diethylaminethanol HCI (Job work of pharmaceutical Drugs) - GST rate @ 18% or 12% is to be charged by the supplier? - applicability of CBIC clarification on Job work vide circular No.126/45/2019- GST dated 22.11.2019 - HELD THAT - The subject activity merits to be covered at entry id of Heading 9988 at Sl. No. 26 of Notification No. 11/2017-CT (R) dated 28-6-17, as amended, as in subject matter, applicant supplies services by way of job-work on goods belonging to another registered person. GST is leviable at 12%.

Summary

Issues:
1. Applicability of GST rate on job work services on pharmaceutical drugs.
2. Clarification on the rate of tax for job work services on Diphenylmethoxy 'N, N - diethylaminethanol HCI.

Analysis:

Issue 1:
The applicant sought an advance ruling on the rate of tax applicable to job work services on pharmaceutical drugs. The applicant highlighted that job work is defined under Section 2(68) of the CGST Act, 2017 as any treatment or process on goods belonging to another registered person. The applicant referred to Notification No. 11/2017-CT (Rate) and subsequent amendments, specifically mentioning the rates applicable for job work services. The applicant also cited a CBIC Circular stating that services provided by way of treatment or processing on goods belonging to another registered person are considered job work services and attract 12% GST.

Issue 2:
The applicant also sought clarification on the rate of tax for job work services specifically on Diphenylmethoxy 'N, N - diethylaminethanol HCI. The applicant pointed out that there was no specific clarification given on this aspect in the notifications issued by CBIC. During the personal hearing, the applicant's representative confirmed that all customers providing goods for job work were registered under GST.

Findings:
After considering the submissions and the nature of the activity, the Authority for Advance Ruling found that the services provided by the applicant fall under entry 'id' of Heading 9988 at Sl. No. 26 of Notification No. 11/2017-CT (R) dated 28-6-17, as amended. Therefore, the ruling was made that GST is leviable at 12% for the job work services on pharmaceutical drugs undertaken by the applicant.

This judgment clarifies the applicable GST rate for job work services on pharmaceutical drugs and provides guidance on the tax treatment for such services. The ruling emphasizes the importance of understanding the specific provisions and notifications related to job work services to determine the correct tax rate applicable in such cases.