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TMI Blog2018 (11) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... rincipal ie, BPCL. The goods on which treatment or process apply are the inputs of the principal. The principal transfer the inputs meant for job work on free of cost under intimation to the ‘job worker’. The term ‘process’ is wide enough to include any activity of conversion, manufacture, development or preparation of goods. Therefore the activity of conversion of natural gas and other inputs to industrial gas qualify as ‘treatment or process’ of inputs. Hence the activity squarely fall under the scope of ‘job work’. Valuation - Held that:- Any activity whether amounting to manufacture or not, could qualify as job work activity, subject to the condition that the inputs owned by the principal and the job worker carried treatment or proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icant. The applicant is a manufacturer of industrial gases such as Hydrogen, Nitrogen, Oxygen etc. The applicant set up an industrial gases plant adjacent to Bharath Petroleum Corporation Ltd, who is the sole customer. The plant is owned and operated by the applicant on the land owned by BPCL on lease rent basis. The applicant manufactures Industrial Gases using various inputs such as natural gas, de-mineralized water, raw water etc supplied by the customer BPCL. Certain quantum of natural gas provided by the customer is supplied to the gas turbines for generation of electricity which is used to power the entire plant. At present BPCL sells all inputs to the applicant collecting Sales Tax/VAT and applicant sells manufactured industrial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xygen etc. The industrial gases would be sent back to BPCL plant on the basis of the Job work delivery challan under Rule 55(b) of GST Rules. Applicant would be issuing monthly tax invoice charging the conversion charges for processing / conversion of inputs to industrial gases along with applicable GST. The applicant would be recovering the job work charges for processing of natural gas and other inputs into industrial gases for BPCL. The job work charges would include the job work fee and conversion guarantee fee. As the inputs are received on free of cost, the job work/processing charges will be significantly lower than the market value of industrial gases provided by the applicant to the principal. The BPCL would be disclosing the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or process apply are the inputs of the principal. The principal transfer the inputs meant for job work on free of cost under intimation to the job worker . The term process is wide enough to include any activity of conversion, manufacture, development or preparation of goods. Therefore the activity of conversion of natural gas and other inputs to industrial gas qualify as treatment or process of inputs. Hence the activity squarely fall under the scope of job work . Under GST regime the scope of job work includes manufacture as well, The HSN 9988 pertains to job work, specifically includes the words, manufacturing services on physical inputs owned by others. The term manufacture defined under Section 2(72) of GST Law as processi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. The inputs supplied by the principal such as natural gas, de-mineralized water, raw water etc can be classified as goods. The industrial gas returned to the principal would also fall under the definition of goods. Natural gas is the major inputs provided by the principal for job work, which is not a taxable commodity under GST. Job work is defined as any treatment or process undertaken by a person on goods belonging to another registered taxable person. As for as a job worker is concerned, statute does not specify any restriction that the inputs subject to the treatment or process shall be taxable goods. Therefore, irrespective of whether the goods received by the applicant are taxable or not, job work activity should be allowed to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he major materials or inputs supplied by the principal. The job worker used some minor, ancillary goods to complete the process. The application of minor items by the job worker would not detract it being a job work. Therefore the processing undertaken by the applicant on the goods belong to the principal, another registered person qualifies as job work even if it amounts to manufacture. Therefore the activity carried out by the applicant of processing natural gas and other inputs received from BPCL on free of cost basis and manufacturing industrial gases shall fall under the scope of job work under GST. The services included under the Heading 9988 are manufacturing services performed on physical inputs owned by others. The activity of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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