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The activity undertaken by the applicant of processing natural gas and other inputs received from BPCL free of cost basis and manufacturing industrial gases from them shall fall under the scope of ‘job work’ under GST.

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Supply of Service — Authority for Advance Ruling — Job Work – The applicant a manufacturer of industrial gases and 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 supplied by the customer BPCL. BPCL sells all inputs to the applicant collecting Sales Tax/VAT and applicant sells manufactured industrial gases to BPCL charging GST. Natural gas provided by BPCL is the major input which is a commodity outside the levy of GST, whereas the finished product, industrial gas attract GST. They desire to change the business model to job work model. BPCL would commence movement of inputs to applicants plant through pipeline as a principal supplier on free of cost and the applicant acting as job worker would converting the inputs to industrial gases and same would be sent back to BPCL through pipelines. The applicant sought for advance ruling as to (i) whether the activity undertaken by the applicant amounts to job work under the Act (ii) in case the proposed activity is considered as job work, what would be the tax rate and value for supply of job work services.
Held that:- The Hon’ble Authority for Advance Ruling ruled out that the activity of processing natural gas and other inputs received from BPCL free of cost basis and manufacturing industrial gases from them shall fall under the scope of ‘job work’ under GST. This activity is a provision of service and falling under serial No.(ii) of the 9988 taxable GST and GST is payable on the transaction value for which job work service is rendered.Prodair Air Products India (P.) Ltd. [2018] 5 TAXLOK.COM 85 (AAR-Kerala)